On October 25, 2019, FERC found that Vitol, Inc. (“Vitol”) and one of its traders, Federico Corteggiano, violated the Federal Power Act (“FPA”) and FERC’s rules prohibiting energy market manipulation by importing power at a loss from October 28 through November 1, 2013, at the border of the California Independent System Operator Corporation’s (“CAISO”) wholesale electric market in order to relieve transmission congestion and to benefit Vitol’s congestion revenue rights (“CRRs”) sourced at that location. The order follows an investigation into Vitol’s and Corteggiano’s trading practices that was initiated in 2014 by FERC’s Office of Enforcement. In July 2019, following the completion of Enforcement Staff’s investigation, FERC issued an order directing Vitol and Corteggiano to show cause why they should not be assessed Enforcement Staff’s recommended civil penalties of $6 million and $800,000 respectively, and directing Vitol to show cause why it should not disgorge $1,227,143 in unjust profits. FERC’s October 25 order affirmed Enforcement Staff’s conclusion that Vitol and Corteggiano engaged in market manipulation, and ordered Vitol to disgorge $1,227,143 in unjust profits. However, FERC significantly reduced Vitol’s civil penalty to $1.5 million and increased Corteggiano’s civil penalty to $1 million after concluding that Corteggiano was primarily responsible for the manipulative conduct.
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On October 17, 2019, FERC directed PJM Interconnection, L.L.C. (“PJM”) and other interested parties to provide information with respect to how uplift costs—i.e., the costs associated with make-whole payments provided by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to market participants whose commitment and dispatch resulted in a shortfall between the generator’s offer and the revenue earned through market-clearing prices—should be allocated to virtual transactions in PJM, and in particular to Up-to-Congestion (“UTC”) transactions. FERC’s order seeks to update the record in an ongoing Federal Power Act Section 206 investigation into PJM’s UTC and uplift practices that FERC initiated in 2014.
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On October 17, 2019, FERC issued two separate orders accepting in part PJM Interconnection L.L.C.’s (“PJM”), and Southwest Power Pool, Inc.’s (“SPP”) proposals to comply with FERC’s orders addressing energy storage resources’ (“ESR”) participation in Regional Transmission Organization (“RTO”)-operated markets, subject to further compliance (see February 20, 2018 edition of the WER; April 10, 2019 edition of the WER; and May 22, 2019 edition of the WER for more background and context on Order No. 841). SPP’s and PJM’s ESR participation proposals are the first to be accepted by FERC, which found that the RTOs generally complied with Order No. 841 by enabling ESRs to provide all services they are technically capable of providing, to be compensated for those services in the same manner as other resources, and by recognizing ESRs’ unique physical and operational characteristics. However, FERC initiated further proceedings to require both RTOs to include the minimum run-time requirements applicable to ESRs and other generation resources in their Tariffs, and initiated an investigation into whether PJM’s application of minimum run-time requirements to ESRs participating in its capacity markets is just and reasonable. FERC also directed SPP and PJM to take further action, requiring both RTOs to submit compliance filings within 60 days that, as one example, address the basic metering and accounting practices applicable to ESRs. Commissioner McNamee issued separate opinions concurring with both orders.
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On October 17, 2019, FERC denied a complaint filed in June 2019 by Nevada Hydro Company, Inc. (“Nevada Hydro”) alleging that the California Independent System Operator Corporation (“CAISO”) failed to follow its Tariff requirements in studying the Lake Elsinore Advanced Pumped Storage Project (“LEAPS”) as a transmission facility in CAISO’s 2018-2019 transmission planning process. FERC concluded that Nevada Hydro failed to demonstrate that CAISO violated its Tariff in studying LEAPS as a proposed reliability-driven transmission solution and as a proposed economic transmission project. Rather, FERC accepted CAISO’s conclusion that it could identify no reliability need for LEAPS, and that the project’s economic benefits are far outweighed by its costs. FERC’s October 17 order also explained that it found no evidence that CAISO’s treatment of LEAPS was biased by a predetermined conclusion that LEAPS is a generation asset or that storage cannot qualify as transmission. FERC went on to note that a project’s ability to provide transmission benefits does not equate to a transmission need, nor does it guarantee eligibility to recover costs through transmission rates.
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On October 4, 2019, FERC rejected without prejudice a stated rate tariff and Open Access Transmission Tariff (“OATT”), among other filings, by Tri-State Generation and Transmission Association, Inc. (“Tri-State”) and its subsidiary Thermal Cogen Partnership, L.P. (“Thermal Cogen”). Tri-State, an electric cooperative previously exempt from FERC’s jurisdiction, submitted the filings in an attempt to submit to FERC regulation after Tri-State admitted Mieco, Inc., a jurisdictional public utility, to its Board of Directors. FERC concluded that Tri-State’s stated rate tariff and OATT filings were patently deficient because they failed to provide the supporting data required for FERC to assess whether the proposed rates were just and reasonable, and for potentially interested parties to determine how the rates might affect them.
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On September 30, 2019, FERC issued two orders denying requests for rehearing of orders that respectively granted Pacific Gas & Electric Company (“PG&E”) and Southern California Edison Company (“SCE”) 50-basis point return-on-equity adders for their continued participation in the California Independent System Operator Corporation (“CAISO”) (“RTO-Participation Incentive”). PG&E requested the RTO-Participation Incentive as part of its nineteenth transmission owner tariff filing; SCE requested the RTO-Participation Incentive as part of its 2018 transmission revenue requirement filing. FERC granted both requests in two separate orders issued in 2017. The California Public Utilities Commission (“CPUC”) and Transmission Agency of Northern California requested rehearing of both 2017 orders; the Sacramento Municipal Utility District (“SMUD”) also requested rehearing of the 2017 order granting PG&E the RTO-Participation Incentive (CAISO, CPUC and SMUD are collectively referred to as the “California Parties”). FERC’s September 30, 2019 orders denying the California Parties’ rehearing requests concluded that is appropriate to grant both PG&E and SCE the RTO-Participation Incentive because California law does not mandate that either utility participate in CAISO.
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On September 25, 2019, FERC issued a notice stating that the results of the ISO New England, Inc. (“ISO-NE”) thirteenth Forward Capacity Auction (“FCA”) went into effect as of June 28, 2019 by operation of law—i .e., without FERC action. FCA 13 went into effect by operation of law due to a lack of quorum in the proceeding in which ISO-NE submitted the auction results and requested FERC approval of the auction as being conducted in accordance with ISO-NE’s Tariff and producing just and reasonable rates. Under Section 205 of the Federal Power Act, FERC has 60 days to act on a proposed rate filing; if FERC takes no action in that 60-day period—a very rare occurrence—then the rate becomes effective automatically. On September 27, 2019, Commissioner Richard Glick issued a statement indicating that he did not participate in the proceeding due to an ethics pledge that precludes him from working on any matters in which his former employer, Avangrid Inc., or any of its affiliates or subsidiaries is a party until November 29, 2019. Commissioner Glick explained that he could not participate because Vineyard Wind LLC, a joint venture between Avangrid Renewables, LLC and Copenhagen Infrastructure Partners, was a party to the proceeding.
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On September 19, 2019, FERC granted in part and denied in part a complaint by EDF Renewable Energy, Inc. (“EDF”) which alleged that the Midcontinent Independent System Operator, Inc. (“MISO”), Southwest Power Pool, Inc. (“SPP”), and PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariffs (“Tariffs”), the MISO-SPP Joint Operating Agreement (“JOA”), and the MISO-PJM JOA are unjust and unreasonable because they lack sufficient detail and transparency regarding the process each Regional Transmission Organization (“RTO”) uses to coordinate with Affected Systems, i.e., other transmission systems that may be affected by a proposed generator interconnection.  FERC’s order comes after an April 2018 technical conference that explored the issues raised in EDF’s complaint as well as broader Affected Systems issues (see February 13, 2018 edition of the WER).  FERC’s September 19 order agreed that the lack of transparency in Affected System coordination creates cost uncertainty that presents a significant obstacle to the development of new generation resources, and required MISO, SPP, and PJM to memorialize their current Affected System study coordination processes in their Tariffs and JOAs.  FERC also required the RTOs to add to their Tariffs and JOAs clear references to further Affected System coordination details in business practices and other coordination documents.  However, FERC declined to initiate a generic proceeding on the Affected Systems coordination issues raised in the technical conference in regions beyond those identified in the complaint.
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Summary of NOPR

On September 19, 2019, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its regulations implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) in light of changes in the energy industry since 1978.[1]
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On September 10, 2019, the United States Court of Appeals for the Third Circuit (“Third Circuit”) vacated a federal district court order permitting PennEast Pipeline Company (“PennEast”) to exercise eminent domain power under the Natural Gas Act (“NGA”) over property interests owned by the State of New Jersey.  The Third Circuit found that while the NGA delegates the federal government’s eminent domain authority to private gas companies, it does not delegate the federal government’s separate and distinct exemption from state sovereign immunity under the Eleventh Amendment.  After acknowledging concerns that its decision would disrupt the interstate gas pipeline industry, the Third Circuit suggested that in the case of state-owned property, a “work-around” might be for a federal official to file the necessary condemnation actions, and then to transfer the property to the natural gas company.
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