On June 20, 2017, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or “the court”) rejected petitions for review challenging FERC’s approval of capacity market rules set by the PJM Interconnection, LLC (“PJM”) in 2014.  The D.C. Circuit held that FERC’s approval of the rules was adequately explained and within its statutory authority under the Federal Power Act.  In particular, the D.C. Circuit rejected assertions from various environmental, clean energy, and public utility petitioners that the new capacity market rules unduly discriminated against variable energy resources. Continue Reading D.C. Circuit Rejects Challenges to PJM’s Capacity Market Rules, Including Year-Round Requirement Impacting Renewable Energy Generators

On June 8, 2017, the California Independent System Operator (“CAISO”) released the draft final proposal of Phase 2 of its energy storage and distributed energy resources (“ESDER”) initiative.  The aim of the proposal is to lower the barrier to entry and market participation for various transmission grid-connected energy storage and distribution-connected resources. “Integrating these resources,” the proposal states, “will help lower carbon emissions and add operational flexibility.” Continue Reading CAISO Issues Draft Final Proposal on Energy Storage and Distributed Energy Resources

On June 5, 2017, Advanced Energy Economy (“Advanced”), a national trade association representing organizations within the energy efficiency, demand response, and other advanced energy industry sectors, filed a petition for a declaratory order with FERC.  Among other things, the petition requests that FERC assert exclusive jurisdiction over how Energy Efficiency Resources (“EERs”) can participate in markets operated by Regional Transmission Organizations and Independent System Operators (“RTOs/ISOs”).  In particular, Advanced highlights a recent proposal from PJM Interconnection, L.L.C. (“PJM”) to initiate a stakeholder process to ultimately grant state regulators the authority to bar, restrict, or otherwise condition EER participation in PJM’s capacity market.  The petition, filed while FERC still lacks a quorum to take action, came just days before the Kentucky Public Service Commission (“KYPSC”) issued an order restricting participation of EERs in PJM wholesale markets. Continue Reading AEE Requests Declaratory Rulings on Federal Preemption for Energy Efficiency Resources in FERC-Regulated Markets

On May 19, 2017, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued a decision in which it held in part that FERC erred by determining that it lacked authority under the Federal Power Act (“FPA”) to order a non-jurisdictional entity to repay refunds that it should not have received.  The D.C. Circuit made clear that although the FPA prohibits FERC from ordering a non-jurisdictional entity to provide a refund to another entity, FPA Section 309 vests FERC with broad remedial authority, including authority to grant recoupment when it is justified and FERC otherwise has jurisdiction over the disputed funds. Continue Reading D.C. Circuit Holds that FERC has Authority to Order BPA to Forfeit Inappropriate Refunds

In an unpublished opinion issued May 12, 2017, a three-judge panel on the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) affirmed the dismissal of a civil suit alleging that a JPMorgan Chase & Co. subsidiary—J.P. Morgan Ventures Energy Corporation (“JPM Ventures”)—fraudulently manipulated rates in the California wholesale electricity market in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Continue Reading Ninth Circuit Dismisses RICO Class Action Against Power Marketer on Filed-Rate Doctrine Grounds

On May 1-2, 2017, FERC staff held a technical conference on wholesale energy and capacity market design, focused on markets operated by ISO New England Inc. (“ISO-NE”), New York Independent System Operator, Inc. (“NYISO”), and PJM Interconnection, L.L.C. (“PJM”) (collectively, “Eastern RTOs and ISOs”).  The goal of the conference was to explore the balance between FERC’s regulation of these competitive wholesale markets and recent efforts by states to ensure that certain categories of generating resources receive sufficient revenue to continue operating.  Stakeholders from various sectors of the electricity industry attended to express concern that these eastern organized markets require regulatory intervention of some sort—with a regulatory response from FERC unlikely to take place until at least a three-Commissioner quorum is established. Continue Reading FERC Holds Technical Conference to Explore Fundamental Design Issues in Eastern Organized Markets

On April 24, 2017, PJM Interconnection, L.L.C. (“PJM”) submitted an amicus curiae brief in a legal challenge against an Illinois program to provide additional revenue for some of the state’s financially-struggling nuclear energy facilities.  The program allows eligible generators to generate and sell Zero Emission Credits (“ZECs”) and obligates the state’s utilities to buy a certain share of those credits.  In its brief, PJM argued that the program allows uneconomic generators to continue participating in wholesale energy and capacity markets, thereby causing “substantial[] harm” to the markets and other participating generators. Continue Reading PJM Files Amicus Brief Opposing Illinois ZEC Program in Federal District Court Challenge

On April 20, 2017, staff from the ISO New England Inc. (“ISO-NE”), presented a proposal to its ten-member Board of Directors on how to better incorporate state-subsidized new resources into ISO-NE’s Forward Capacity Market (“FCM”).  The proposal contemplates a two-stage process whereby retiring resources that clear the annual Forward Capacity Auction (“FCA”) can transfer their capacity obligations to state-subsidized generators in exchange for payment and permanent retirement.  If approved by the Board of Directors, stakeholder discussions could begin in May, with associated tariff revisions filed with FERC in December. Continue Reading ISO-NE Staff Kicks off Consideration of Capacity Market Reforms to Manage State-Subsidized Generators

On April 10, 2017, the U.S. Department of Justice, on behalf of FERC, argued to the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) that a recent district court order requiring de novo review of market manipulation allegations under the Federal Power Act (“FPA”) is inapplicable to similar circumstances under the Natural Gas Act (“NGA”).  FERC’s counsel challenged Total Gas & Power North America Inc.’s (“Total”) reliance on a district court order in FERC v. Barclays Bank PLC et al., (“Barclays Order”) (see April 10, 2017 edition of the WER), arguing that it does not support reading a “de novo review” option into the NGA because that order interpreted a separate FPA provision for which there is no parallel under the NGA. Continue Reading FERC Counsel Argues that Review of Market Manipulation Allegations under FPA Are Distinct from Similar Circumstances under NGA

In an order issued on March 28, 2017, the United States District Court for the Eastern District of California (“District Court”) rejected arguments from FERC regarding the scope of review and applicable procedural rules governing the District Court’s review of a market manipulation enforcement proceeding.  Like every other federal court decision expressly addressing this issue—including one from a different judge in that same court earlier that month (see March 20, 2017 edition of the WER)—the District Court held that the defending parties were entitled to conduct discovery under the Federal Rules of Civil Procedure (“FRCP”). Continue Reading California District Court Allows Discovery in Review of FERC Enforcement Action Against Barclays