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
On March 23, 2017, a group of environmental advocates including the Allegheny Defense Project, Clean Air Council, and Sierra Club (“Environmental Petitioners”) filed a petition in the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) to review a FERC order issuing a certificate for a pipeline proposed by Transcontinental Gas Pipe Line Company (“Order Issuing Certificate”), despite FERC Staff having issued an order granting rehearing for further consideration (“Tolling Order”)—a mechanism frequently used by FERC to allow it more time to act on a request for rehearing beyond the 30 days it is statutorily allowed. Continue Reading In Petition to D.C. Circuit, Environmental Groups Claim FERC Staff “Tolling Order” on Request for Rehearing Invalid
On March 21, 2017, the Wyoming Pipeline Authority (“WPA”) withdrew its request for rehearing of the delegation order that FERC issued on February 3, 2017 (“Delegation Order”) in anticipation of the Commission’s loss of quorum following the departure of former Chairman Norman Bay. The Delegation Order allows FERC staff to take action on certain matters until no later than fourteen days after a quorum is restored (see February 21, 2017 edition of the WER). WPA filed its rehearing request on March 6, 2017 and argued that the Delegation Order impermissibly grants powers to FERC staff that are greater than those conferred to the Commission itself by Congress (see March 13, 2017 edition of the WER).
WPA’s March 21 filing, which can be found here, provides no explanation for the withdrawal. It was the only formal contest to the Delegation Order.
In an order issued on March 7, 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. The District Court held that the Federal Rules of Civil Procedure (“FRCP”) applied to the action and rejected arguments that it was limited to “de novo” review of the administrative record as compiled by FERC. As a result, the District Court ordered FERC to provide discovery to the opposing parties. Continue Reading California District Court Orders Discovery in FERC Enforcement Case
On March 6, 2017 the Wyoming Pipeline Authority (“WPA”) requested rehearing of FERC’s February 3, 2017 Delegation Order (“Delegation Order”). In the filing, the WPA asserted that the Delegation Order exceeds FERC’s statutory authority because it purports to authorize agency staff members to take action that would not be possible for FERC itself to take due to the current lack of quorum. This deficiency, WPA argued, can only be cured through the appointment of new Commissioners. Continue Reading Wyoming Pipeline Authority Challenges Legality of FERC Delegation Order
On February 28, 2017 FERC Staff released their Energy Infrastructure Update for January 2017. In these monthly reports, Staff provides updates on various projects in the natural gas, hydropower, electricity generation, and electricity transmission sectors. Continue Reading FERC Staff Issues Energy Infrastructure Update for January 2017