ERAC Regulatory Compliance & Legal Framework 2 — Questions and Answers
Question 1: Under FERC Order 1000, which of the following is a key requirement for regional transmission planning?
- Elimination of federal cost allocation for all projects
- Removal of federal rights of first refusal for incumbent utilities in competitive transmission (Correct answer)
- Mandatory rate base treatment for all merchant transmission lines
- Prohibition of interregional transmission coordination
Correct answer: Removal of federal rights of first refusal for incumbent utilities in competitive transmission
FERC Order 1000 removed the federal right of first refusal for incumbent utilities, opening competitive solicitation for certain transmission projects.
Question 2: The Clean Air Act's New Source Review (NSR) program is triggered when a stationary source undergoes a modification that causes a significant net emissions increase. Which agency administers NSR at the federal level?
- Department of Energy
- Nuclear Regulatory Commission
- Environmental Protection Agency (Correct answer)
- Federal Energy Regulatory Commission
Correct answer: Environmental Protection Agency
The EPA administers NSR under the Clean Air Act, requiring pre-construction permits for major modifications at stationary sources.
Question 3: A utility company discovers it may have violated NERC CIP reliability standards. What is the correct initial regulatory notification step?
- File a complaint directly with Congress
- Self-report the potential violation to NERC or the relevant Regional Entity (Correct answer)
- Issue a press release disclosing the incident
- Notify the Department of Homeland Security before any other agency
Correct answer: Self-report the potential violation to NERC or the relevant Regional Entity
NERC CIP standards require entities to self-report potential violations to NERC or their Regional Entity as part of compliance obligations.
Question 4: Which provision of the Energy Policy Act of 2005 granted FERC backstop siting authority for interstate electric transmission facilities?
- Section 211A
- Section 368
- Section 216 (Correct answer)
- Section 1252
Correct answer: Section 216
Section 216 of EPAct 2005 gave FERC backstop authority to issue permits for transmission in designated National Interest Electric Transmission Corridors.
Question 5: Under the Natural Gas Act, FERC's jurisdiction over natural gas transportation applies primarily to which category of entities?
- Intrastate pipelines only
- Local distribution companies only
- Interstate natural gas pipelines and related facilities (Correct answer)
- All natural gas producers operating within the US
Correct answer: Interstate natural gas pipelines and related facilities
The Natural Gas Act grants FERC jurisdiction over the transportation and sale of natural gas in interstate commerce, primarily covering interstate pipelines.
Question 6: Which legal doctrine allows FERC to preempt state regulation when state actions conflict with federally approved wholesale electricity rates?
- Dormant Commerce Clause
- Filed Rate Doctrine / Supremacy Clause preemption (Correct answer)
- Abstention Doctrine
- Primary Jurisdiction Doctrine
Correct answer: Filed Rate Doctrine / Supremacy Clause preemption
The Filed Rate Doctrine combined with Supremacy Clause preemption prevents states from setting rates or terms that conflict with FERC-approved wholesale tariffs.
Question 7: In the context of energy market compliance, a 'code of conduct' between a regulated utility and its affiliate is required under FERC Standards of Conduct primarily to prevent what?
- Affiliate lobbying of state legislators
- Cross-subsidization and preferential sharing of market-sensitive information (Correct answer)
- Joint marketing of retail electricity products
- Affiliate investment in renewable energy projects
Correct answer: Cross-subsidization and preferential sharing of market-sensitive information
FERC Standards of Conduct require separation between transmission providers and their energy affiliates to prevent preferential treatment and improper information sharing.
ERAC Regulatory Compliance & Legal Framework 2
Under FERC Order 1000, which of the following is a key requirement for regional transmission planning?