On February 15, 2017, the PJM Interconnection, L.L.C. (“PJM”) Board authorized more than $1.5 billion in electric transmission projects in the PJM-region as part of the Regional Transmission Enhancement Plan process. According to PJM President and CEO Andy Ott, the current round of project approvals addresses “the growing need to replace aging infrastructure, energy efficiency, and the resulting reduction in the growth of demand for electricity.” Both the list of approved projects and the proposed cost allocation for each project will be the subject of future filings with FERC.
On February 3, 2017, FERC partially granted a complaint against the New York Independent System Operator, Inc. (“NYISO”) regarding the application of buyer-side market power mitigation rules to demand response resources in NYISO’s installed capacity market (“ICAP”). In its order, FERC found that NYISO’s application of its mitigation rules was unjust and unreasonable as to future demand-side generators. FERC allowed prospective exemptions for such resources, but denied exemptions for such resources currently subject to NYISO market power mitigation. Separately, outgoing Commissioner Bay wrote a lengthy concurrence in which he argued that FERC should reconsider the rationale behind its minimum offer price rule policy (“MOPR”) and its applicability in wholesale electricity markets. Continue Reading FERC Exempts Certain Demand Response Resources from Buyer-Side Mitigation in NYISO; Bay Questions FERC’s Minimum Offer Price Rule Policy Rationale in Concurrence
On January 30, 2017, FERC granted in part a request for rehearing of its May 16, 2013 order, which accepted in part and rejected in part the New York Independent System Operator, Inc.’s (“NYISO”) August 19, 2011 compliance filing implementing Order No. 745. Continue Reading FERC Grants Rehearing in Part on NYISO Order No. 745 Compliance Filing
On January 24, 2017, President Donald Trump issued an Executive Order and two Presidential Memoranda directing relevant federal agencies to take expedited review and approval action on various infrastructure projects, including the Keystone XL and Dakota Access pipeline projects. Additionally, President Trump issued a Presidential Memorandum directing relevant federal agencies to develop a plan under which all new U.S. pipeline projects will use domestically sourced materials and equipment.
On January 19, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to reform approaches to real-time uplift cost allocation and transparency practices by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”). FERC stated that the proposed reforms to uplift cost allocation should incentivize market participants to schedule sufficient resources to satisfy the system’s real-time needs, thus avoiding RTO’s/ISO’s need to procure additional resources after the day-ahead market has cleared. Meanwhile, FERC stated that the proposed reforms to transparency practices will help market participants understand how prices reflect the actual marginal cost of serving load and the operational constraints of reliably operating the system.
On January 9, 2017, FERC approved ISO New England Inc.’s (“ISO-NE”) proposed revisions to its Transmission, Markets and Services Tariff (“Tariff”) to change the source of natural gas prices used in calculating the daily energy market offer threshold for Import Capacity Resources, the Peak Energy Rent Strike Price, and the Forward Reserve Threshold Price under ISO-NE’s Tariff. In doing so, FERC found that ISO-NE’s proposal to calculate these thresholds using the Intercontinental Exchange’s (“ICE”) AGT-CG (Non-G) hub instead of ICE’s AGT-CG hub was just and reasonable because it changes the natural gas price index from one that is rarely liquid to one that is reliably liquid and satisfies FERC’s requirements for using price indices in tariffs. Continue Reading ISO-NE Modifies Natural Gas Price Source Used to Calculate Market Thresholds
On January 11, 2017, the United States House of Representatives (“House”) passed the Regulatory Accountability Act of 2017, which would, among other things, end the Chevron doctrine of requiring judicial deference toward administrative agencies with respect to the interpretation of statutes that the agency is charged with administering. Continue Reading House Passes Bill That Would End <em>Chevron</em> Deference
In December, 2016, the North American Electric Reliability Corporation (“NERC”) released its 2016 Long-Term Reliability Assessment (“LTRA”). Among its key findings, NERC projected that the capacity reserve margin—the primary metric used to measure resource adequacy—would fall below its target level in the Midcontinent Independent System Operator, Inc. (“MISO”) region, and could also fall below its target level in the Electric Reliability Council of Texas (“ERCOT”) region, depending on the outcome of certain pending regulatory proceedings. NERC also made a number of recommendations designed to address identified reliability issues. Continue Reading NERC Publishes 2016 Long-Term Reliability Assessment, Warns of Shortages in MISO and ERCOT
On December 5, 2016, the United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) ruled that the United States District Court for the District of Minnesota (“District Court”) did not have federal question jurisdiction over the breach of contract suit filed in Great Lakes Transmission Limited Partnership v. Essar Steel Minnesota., LLC. The Eighth Circuit vacated the lower court’s $32.9 million judgment in favor of the pipeline and remanded for dismissal. Continue Reading Eighth Circuit Rules No Federal Question Jurisdiction Over Breach of Contract Claim Involving Pipeline Transportation Agreement
On December 5, 2016, the U.S. Commodity Futures Trading Commission (“CFTC”) reproposed regulations implementing limits on speculative futures and swaps positions (“Reproposal”). Notably, in the Reproposal, the CFTC: (1) proposes limits on speculative positions in 25 physical commodity futures contracts and their “economically equivalent” futures, options, and swaps; (2) proposes numerous adjustments to the bona fide hedging position definition; and (3) proposes to allow exchanges to recognize non-enumerated bona fide hedging positions and certain enumerated anticipatory hedge positions, and to grant spread exemptions. Continue Reading CFTC Reproposes Position Limits Rule