Active Reliability Instrument
Lyle Larson is a partner at Balch & Bingham and represents client in the electric power sector, including matters ranging from FERC litigation and compliance matters, utility asset transactions, complex interconnection arrangements, IBR reliability requirements, large load integration, smart grid and distributed resources, mergers and acquisitions, Section 203 applications, market-based rates, open-access transmission tariff formulary rates, RTO capacity, and energy and ancillary services market design matters.
Chris Kirby is a partner at Balch & Bingham with clients throughout the ERCOT region on transactional, public policy, and legislative matters. He works on all aspects of transactional matters in the ERCOT market, including significant power plant acquisitions and represents market participants before the Public Utility Commission of Texas and ERCOT in compliance matters, rulemaking proceedings, and in contested cases.
As load growth accelerates and weather volatility persists, expanded use of Section 202(c) of the Federal Power Act is shaping how the grid responds during emergencies. These federal directives can require facilities to operate differently than planned and beyond otherwise applicable environmental restrictions, raising practical and financial considerations for system operators, regulators, utilities, and independent generators. Understanding the evolving process is essential for managing compliance, cost recovery, and operational readiness.
Section 202(c) of the Federal Power Act authorizes the Secretary of Energy to require temporary connections and to direct the generation, delivery, interchange, or transmission of electric energy during an emergency. Congress framed the authority broadly. An emergency may arise from sudden increases in demand, shortages of generation or transmission facilities, fuel constraints, or other causes affecting reliability.
The statutory structure is deliberate. DOE determines that an emergency exists, what actions are required, and compels operation. The Federal Energy Regulatory Commission addresses the economic consequences of such a directive by prescribing a just and reasonable compensation and cost allocation.