[Federal Register Volume 85, Number 202 (Monday, October 19, 2020)]
[Notices]
[Pages 66324-66327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23113]


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DEPARTMENT OF ENERGY

Southeastern Power Administration


Revision to Power Marketing Policy Kerr-Philpott System of 
Projects

AGENCY: Southeastern Power Administration, DOE.

ACTION: Notice of revision to power marketing policy.

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SUMMARY: Southeastern Power Administration (Southeastern or SEPA) 
announces revision to the power marketing policy for the Kerr-Philpott 
System of Projects (Kerr-Philpott System). The Kerr-Philpott System 
power marketing policy was published on July 29, 1985, and is reflected 
in contracts for the sale of system power, which are maintained in 
Southeastern's headquarters office. Pursuant to the Procedure for 
Public Participation in the Formulation of Marketing Policy, published 
in the Federal Register of July 6, 1978, Southeastern published on 
November 15, 2019, a notice of intent to revise the power marketing 
policy to include provisions regarding renewable energy certificates 
(RECs) from the Kerr-Philpott System. The proposed revision

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to the Kerr-Philpott System Power Marketing Policy was published in the 
Federal Register on June 19, 2020. A virtual web based public 
information and comment forum was held on August 18, 2020, with written 
comments due on or before September 2, 2020.

DATES: The power marketing policy revision will become effective upon 
publication of this notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Douglas Spencer, Engineer, 
Southeastern Power Administration, 1166 Athens Tech Road, Elberton, GA 
30635, (706) 213-3855, Email: [email protected].

SUPPLEMENTARY INFORMATION:
    Background: Southeastern published a ``Notice of Issuance of Final 
Power Marketing Policy Kerr-Philpott System of Projects'' in the 
Federal Register on July 29, 1985, 50 FR 30751. The policy establishes 
the marketing area for system power and addresses the utilization of 
area utility systems for essential purposes. The policy also addresses 
wholesale rates, resale rates, and conservation measures, but does not 
address renewable energy certificates.
    Under Section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), 
Southeastern is responsible for the transmission and disposition of 
electric power and energy from reservoir projects operated by the U. S. 
Army Corps of Engineers. Furthermore, Southeastern must transmit and 
dispose of power and energy in such a manner as to encourage the most 
widespread use at the lowest possible rates to consumers consistent 
with sound business principles. Rate schedules are developed with 
regard to the recovery of the cost of producing and transmitting such 
electric energy.
    The Kerr-Philpott System consists of two projects, the John H. Kerr 
Project (Kerr) and the Philpott Project (Philpott). The power from the 
projects is currently marketed to Preference Customers located in the 
service areas of Dominion Energy, Duke Energy Progress, American 
Municipal Power, and American Electric Power.
    Both the Kerr and Philpott Projects are located within the regional 
footprint served by the regional transmission organization PJM 
Interconnection, L.L.C. (PJM), as are the Virginia-based Preference 
Customers with power allocations. Southeastern owns no transmission 
assets and relies on PJM transmission resources to dispose of power and 
energy from the projects. As such, Southeastern joined PJM in 2005.
    As the projects are located within the PJM region and potentially 
satisfy Renewable Portfolio Standards in a number of states, 
Southeastern has subscribed to the Generation Attribute Tracking System 
(GATS) of PJM Environmental Information Services, Inc. The GATS 
provides an unbundled, certificates-based tracking system that reports 
certain operating attributes of electricity generators selling energy 
through the PJM Market Settlement System. The attributes are unbundled 
from the megawatt-hour of energy produced and recorded onto a 
certificate. As indicated in Section (2) of the GATS TERMS OF USE, 
dated January 22, 2020, these certificates may be used by electricity 
suppliers and other energy market participants to comply with relevant 
state policies and regulatory programs and to support voluntary 
``green'' electricity markets.
    Under the following revision of the 1985 power marketing policy, 
Southeastern will distribute the GATS-created certificates to current 
Preference Customers with allocations of power from the Kerr-Philpott 
System.

Public Notice and Comment

    Southeastern published a proposed revision in the Federal Register, 
85 FR 37092, dated June 19, 2020. Southeastern held a web-based 
information and comment forum, on August 18, 2020. The forum was held 
virtually due to travel restrictions related to the COVID-19 pandemic. 
Southeastern received comments from Blue Ridge Power Agency, Tennessee 
Valley Public Power Association, and Southeastern Federal Power 
Customers, Inc.

Public Comments

    Written and oral comments are summarized below. Southeastern's 
responses follow each comment.
    Comment 1: Tennessee Valley Public Power Association requested 
``that prior to SEPA setting any policies, procedures or administrative 
controls regarding the ownership or use of Renewable Energy Credits 
associated with additional hydro generation as a result of Section 212 
funding, that SEPA consult with and incorporate comments from the 
Preference Customers that authorized the Section 212 funding.''
    Response 1: TVPPA has referenced ``Section 212 funding''. ``Section 
212 funding'' refers to section 212 of the Water Resources Development 
Act of 2000, Public Law 106-541, which amended section 216 of the Water 
Resources Development Act of 1996 (codified at 33 U.S.C. 2321a). The 
provision allows the Secretary of the Army to accept and use funds for 
use in hydroelectric power project uprating provided by preference 
customers through contracts related to the marketing of power. 
Therefore, funds provided by certain preference customers may increase 
energy at the John H. Kerr and Philpott projects. Southeastern has 
considered comments of customers participating in the Section 212 
customer funding program. Any increase in energy due to the Section 212 
program will be distributed in accordance with this published revision 
of the Kerr-Philpott power marketing policy.
    Comment 2: Blue Ridge Power Agency members expressed appreciation 
they will have the choice on how to use the RECs to provide benefits 
for their customers. They support Southeastern's proposed policy to 
distribute RECs based on existing power allocations, and to separate 
out energy from each generator. They indicate enabling customers to 
take RECs from each project is the fairest way to proceed, and allowing 
each customer to designate whether the RECs are transferred to a third 
party or directly to the customer is important. They encourage 
Southeastern to work aggressively on state REC registrations for each 
generator.
    Response 2: Southeastern acknowledges Blue Ridge Power Agency 
members' comments regarding distribution of RECs in the Kerr-Philpott 
System. Southeastern continues to pursue state REC registrations for 
both the Kerr and Philpott projects.
    Comment 3: Southeastern Federal Power Customers, Inc. (SeFPC), 
expressed general support for the revision and addressed three areas of 
concern which include: (1) The revision for the Kerr-Philpott System 
should be clear that it will not establish controlling precedent on 
policies for the allocations for RECs that SEPA may adopt in the future 
for other marketing areas; (2) The revision should include language 
from the response to comments to the notice of intent to revise the 
power marketing policy that stated that the revision will not change 
the Administrator's prior determinations regarding power allocation 
within the marketing area; and (3) That SEPA should further clarify 
``SEPA reserves the right to distribute RECs that have been declined at 
a later date.''
    Response 3: Southeastern acknowledges SeFPC's comments regarding 
distribution of RECs to Kerr-Philpott Preference Customers. 
Southeastern added language to the

[[Page 66326]]

Power Marketing Policy Revision to address SeFPC's concerns.

Summary of Changes to the Power Marketing Policy Revision

    Southeastern made further changes to the Power Marketing Policy 
Revision as a result of comments received during the comment period and 
public forum. Southeastern added language stating the revision will 
only apply to the Kerr-Philpott marketing area and Southeastern may 
revise other marketing policies through a public process at a later 
date. Southeastern added language to state the revision will not change 
the Administrator's prior decisions regarding the power allocations 
within the Kerr-Philpott marketing area. Southeastern clarified 
distributions may occur outside of the quarterly distributions when 
preference entities have failed to submit proper distribution 
information or when RECs collected prior to the implementation of the 
policy are distributed. Southeastern amended the language regarding the 
initial quarterly transfer to allow for the transfer to occur in 2020.

Revision to the Power Marketing Policy

    Southeastern revises the Power Marketing Policy for the Kerr-
Philpott System to include the following additional provisions for RECs 
associated with hydroelectric generation.
    Kerr-Philpott System: The Kerr-Philpott System Power Marketing 
Policy inclusion of procedures to distribute RECs applies only to the 
Kerr-Philpott marketing area. At a later date, Southeastern may revise 
other marketing policies through a public process.
    Renewable Energy Certificates (RECs): The GATS of PJM Environmental 
Information Services, Inc. (PJM-EIS) creates and tracks certificates 
reporting generation attributes, by generating unit, for each megawatt-
hour (MWh) of energy produced by registered generators. PJM-EIS is a 
wholly-owned subsidiary of PJM Connext, L.L.C., itself a subsidiary of 
PJM. Both the Kerr and Philpott projects are registered generators 
within GATS. The RECs potentially satisfy Renewable Portfolio 
Standards, state policies, and other regulatory or voluntary clean 
energy standards in a number of states. Southeastern will proceed with 
state REC registrations of both the Kerr and Philpott projects. 
Southeastern has subscribed to GATS and has an account in which RECs 
are collected and tracked for each MWh of energy produced from the Kerr 
and Philpott projects. Within GATS, certificates can be transferred to 
other GATS subscribers or to a third-party tracking system.
    As defined by the PJM-GATS Terms, ``Certificates'' refers to a GATS 
electronic record of generation data representing all of the Attributes 
from one MWh of electricity generation from a Generating Unit 
registered with the GATS tracking system. The GATS will create exactly 
one Certificate per MWh of generation. These certificates may be used 
by electricity suppliers and other energy market participants to comply 
with relevant state policies and regulatory programs and to support 
voluntary ``green'' electricity markets.
    Southeastern will distribute the GATS-created RECs to Preference 
Customers with allocations of power from the Kerr-Philpott System. The 
Kerr-Philpott System procedures for distributing renewable energy 
certificates will not change the Administrator's prior decisions 
regarding the power allocations within the Kerr-Philpott marketing 
area.
    RECs Distribution: Southeastern shall maintain an account with GATS 
and collect RECs from the generation at the Kerr and Philpott projects. 
Southeastern will verify the total amount of RECs each month. 
Preference Customers with an allocation of power from the Kerr-Philpott 
System are eligible to receive RECs by transfer from Southeastern's 
GATS account to their GATS account or that of their agent. GATS (or a 
successor application) will be the transfer mechanism for all RECs 
related to the Kerr-Philpott System. Any further transfer, sale, use, 
or trade transaction would be the sole responsibility of a Preference 
Customer. Southeastern will summarize RECs by month for calendar year, 
quarterly distribution to customers through GATS. Southeastern will 
determine a total number of RECs to transfer to each customer based on 
the customer's monthly invoices during the same three-month period. 
RECs will be project-specific based on the customer's applicable 
contractual arrangements. Thus, customers receiving energy from 
Philpott will receive equivalent RECs from Philpott, and customers 
receiving energy from Kerr will receive equivalent RECs from Kerr.
    All RECs distributed by Southeastern shall be transferred within 
thirty days of the end of the calendar year quarter (quarterly 
distribution month). Each customer should submit to Southeastern, by 
the tenth day of a quarterly distribution month, the name, contact 
information, and identification number of the GATS account to which the 
RECs are to be transferred initially and for any quarterly distribution 
month in which the account for transfer changes. The account may be 
held by a third party. If the customer fails to designate an account by 
the tenth day of the quarterly distribution month, those RECs may not 
be distributed until the following quarter. Any RECs that were not 
transferred because a transfer account was not provided to Southeastern 
may be forfeited if they become non-transferrable in the GATS Terms of 
Use procedures, policies, or definitions of Reporting and Trading 
Periods, or any subsequent procedures for transfers as established.
    The initial quarterly transfer process in GATS will be accomplished 
by the thirtieth day after the publication of the final policy 
revision. Any balance of RECs that exist in Southeastern's GATS account 
after the first quarterly transfer may also be transferred to 
Preference Customers according to the customer's invoiced energy at the 
time of the REC creation. Southeastern reserves the right to distribute 
RECs to a Preference Customer at a later date for RECs declined by 
failure to provide a GATS account for distribution and for RECs 
currently existing in Southeastern's GATS account as part of the 
initial implementation of the revised marketing policy in a manner 
consistent with the distribution method in the policy revision.
    Effect of Costs on Rates: No rates shall be established by 
Southeastern for RECs transferred to Preference Customers. Any cost to 
Southeastern, such as the GATS subscription, will be incorporated into 
marketing costs and included in recovery through the energy and 
capacity rates of the Kerr-Philpott System.
    Environmental Impact: Southeastern has reviewed the possible 
environmental impacts of the marketing policy revision under 
consideration and has concluded that, because the RECs policy would not 
significantly affect the quality of the human environment within the 
meaning of the National Environmental Policy Act of 1969, as amended, 
the proposed action is not a major Federal action for which preparation 
of an Environmental Impact Statement is required.

Determination Under Executive Order 12866

    Southeastern has an exemption from centralized regulatory review 
under Executive Order 12866; accordingly, no clearance of the Federal 
Register notice by the Office of Management and Budget is required.

Signing Authority

    This document of the Department of Energy was signed on October 8, 
2020,

[[Page 66327]]

by Virgil G. Hobbs III, Administrator, Southeastern Power 
Administration, pursuant to delegated authority from the Secretary of 
Energy. That document, with the original signature and date, is 
maintained by DOE. For administrative purposes only, and in compliance 
with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on October 14, 2020.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2020-23113 Filed 10-16-20; 8:45 am]
BILLING CODE 6450-01-P