On February 2, 2018, FERC conditionally granted FirstEnergy Service Company (“FirstEnergy”) a limited waiver of certain market-based rate affiliate restrictions to allow for the establishment of a centralized regional transmission organization (“RTO”) interface group.  The affiliate restrictions protect captive customers from potential harm if a franchised public utility interacts with its affiliates in ways that would transfer benefits to the affiliate to the detriment of the captive customer.  FERC granted the waiver to FirstEnergy, with the condition that it must keep sufficient records to permit the Commission to audit whether FirstEnergy’s representations that it would not harm captive customers are true. Continue Reading FERC Conditionally Allows FirstEnergy Holding Company System to Establish a Centralized RTO Interface Group

On January 31, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied requests for an en banc rehearing of an August 2017 decision (Sierra Club v. FERC) vacating FERC’s approval of the Southeast Market Pipelines Project (“SMP Project”), a natural gas pipeline currently under construction in the southeastern United States.  In its August decision, the D.C. Circuit held that FERC failed to analyze the greenhouse gas emissions that would result from the SMP Project, as required by the National Environmental Policy Act (“NEPA”).  On February 2, 2018, the developers for the SMP Project filed a request at FERC for expedited reissued construction approval certificates, or in the alternative, temporary emergency certificates, arguing that halting work on the SMP Project will cause “irreparable harm.” Continue Reading D.C. Circuit Denies Rehearing after Vacating Pipeline Certificate; Developers Seek Emergency Relief from FERC

On January 22, 2018, a New York state trial court largely rejected motions to dismiss various challenges to the state’s zero emission credit (“ZEC”) program established in 2016 by the New York Public Service Commission (“NYPSC”).  The ZEC program, which is also being challenged in federal court, provides subsidies to financially struggling in-state nuclear energy generators.  Although the court allowed five of the six claims against the program to proceed to trial, the court dismissed 56 of the 61 petitioners for failing to timely raise their challenges. Continue Reading New York ZEC Challenges Move Forward at the State Level

On January 18, 2018, FERC took steps to develop supply chain risk management Reliability Standards and to approve several new Emergency Preparedness and Operations (“EOP”) Reliability Standards.  First, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to direct the North American Electric Reliability Corporation (“NERC”) to develop supply chain risk management requirements under the Critical Infrastructure Protection (“CIP”) Reliability Standards.  Second, in a separate order, FERC approved several new EOP Reliability Standards aimed at addressing emergency event reporting, roles and responsibilities during system restoration via blackstart resources, system restoration plans and coordination, and the loss of control center functionality.  Continue Reading FERC Proposes to Approve Supply Chain Risk Management Reliability Standards and Approves New EOP Reliability Standards

On January 8, 2018, FERC terminated the Department of Energy’s (“DOE”) Proposed Rule on Grid Reliability and Resilience Pricing (“Proposed Rule”) proceeding, and, instead, initiated a new proceeding whereby FERC plans to collect information on resilience from regional transmission organizations (“RTO”) and independent system operators (“ISO”).  Once that information is collected, FERC will determine whether further action is necessary to address grid resilience.  While FERC’s decision was unanimous, three of FERC’s Commissioners issued separate concurring opinions.  Of note, Commissioner Neil Chatterjee stated that while he would have preferred an order that took an interim step to address the issues raised in the Proposed Rule, he looked forward to addressing those critical issues in the new proceeding established by FERC. Continue Reading FERC Terminates DOE NOPR Proceeding, Requests Information from RTOs/ISOs on Resilience

On December 28, 2017, the U.S. District Court for the Eastern District of Virginia (“District Court”) held that Powhatan Energy Fund LLC, Dr. Houlian Chen, and two funds owned by Dr. Chen (collectively, “Respondents”) are entitled to a full civil trial in FERC’s action to enforce penalties against Respondents for allegedly manipulating electricity markets.  Notably, the District Court held that a plenary civil trial was required because Respondents elected to forego a formal hearing before a FERC Administrative Law Judge (“ALJ”).  In lieu of a hearing before a FERC ALJ, Respondents instead elected to have FERC assess penalties upon finding a violation occurred, based on the investigative record. Thus, according to the District Court, a proper administrative record was never developed and Respondents were never permitted an opportunity to conduct their own independent discovery. Continue Reading Virginia District Court Orders Discovery in FERC Enforcement Case Against Powhatan

On January 2, 2018, the California Independent System Operator Corp. (“CAISO”) announced plans to become its own reliability coordinator by spring 2019.  The plan will require CAISO to withdraw from Peak Reliability, the current reliability coordinator for the Western Interconnection. Although the full suite of reliability services to be offered remains unclear, CAISO stated that it will offer outage coordination, day-ahead planning, and real-time monitoring reliability services. Continue Reading CAISO to Become Its Own Reliability Coordinator

On December 21, 2017, FERC accepted the Southwest Power Pool, Inc.’s (“SPP”) proposed tariff revisions related to its Integrated Transmission Planning (“ITP”) process contained in SPP’s Open Access Transmission Tariff (“Tariff”).  In 2015, SPP created the Transmission Planning Improvement Task Force (“Task Force”) to review its transmission planning process to determine if improvements were needed.  Based on the Task Force’s recommendations, SPP proposed to revise certain language in its Tariff, including moving from a three-year transmission planning cycle to a one-year cycle. Continue Reading FERC Accepts SPP’s One-Year Transmission Planning Cycle Proposal

On December 11, 2017, BP America Inc., BP Corporation North America Inc., BP America Production Company, and BP Energy Company (collectively, “BP”) requested FERC to dismiss its July 11, 2016 order (“July 11 Order”) assessing civil penalties against BP and requiring BP to disgorge profits for violating FERC’s anti-market manipulation rule.  In doing so, BP argued that, due to recent federal court cases, the law had changed regarding the statute of limitations for actions imposing civil penalties and disgorgement.  Therefore, according to BP, FERC’s August 5, 2013 order to show cause issued to BP failed to commence a “proceeding” within the meaning of the statute of limitations for enforcing civil fines and penalties, and thus FERC’s assessment of civil penalties and disgorgement was time-barred.  Rather, BP argued that the statute of limitations began to run on November 25, 2008 at the latest, and thus FERC was required to commence a “proceeding” by November 25, 2013, but FERC did not commence a “proceeding” until May 15, 2014 at the earliest when it set the matter for hearing. Continue Reading BP Argues FERC Must Dismiss Market Manipulation Claims due to Five-Year Statute of Limitations

On November 28, 2017, FERC accepted in part and rejected in part the California Independent System Operator Corporation’s (“CAISO”) two sets of tariff revisions concerning natural gas system limitations on CAISO’s system and market operations.  Specifically, FERC accepted CAISO’s proposed extension, for one additional year, of temporary Aliso Canyon tariff revisions that FERC previously accepted on an interim basis.  However, FERC rejected CAISO’s proposal to make other interim measures permanent and to extend their application to the entire CAISO-operated western grid, including the CAISO-operated Western Energy Imbalance Market (“EIM”). Continue Reading FERC Grants Partial Extension of Aliso Canyon Related Tariff Revisions