On October 25, 2017, FERC issued an order explaining the market consequences when a resource loses certain participation rights in the New York Intendent System Operator, Inc. (“NYISO”) Installed Capacity (“ICAP”) market. The order on clarification, which was requested by NRG Power Marketing LLC and GenON Energy Management, LLC (collectively, “NRG”), followed a January 27, 2017 decision in which FERC largely accepted NYISO’s proposed revisions to its Market Administration and Control Area Services Tariff (“Tariff”) to correct a pricing inefficiency in its ICAP market design. As FERC clarified in this most recent order, when a capacity resource loses its ability to participate in NYISO’s ICAP market, certain benefits or discounts tied to that participation ability—here, a so-called “Locality Exchange Factor”—fall away.
FERC Proposes to Direct NERC to Revise Cyber Proposal on Malware Risks
On October 19, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to direct the North American Electric Reliability Corporation (“NERC”) to modify the Critical Infrastructure Protection (“CIP”) Reliability Standard, CIP-003-7 (Cyber Security – Security Management Controls), which is intended to mitigate cyber security risks posed by malware from ‘transient electronic devices’ (such as laptops and thumb drives) used at low-impact cyber systems. FERC stated in the NOPR that, once those modifications have been made, it plans to make the new reliability standard effective approximately 18 months after FERC approval.
FERC Denies ROE Change for New England Transmission Owners
On October 6, 2017, FERC rejected the New England transmission owners’ (“NETOs”) amended compliance filing to reinstate their previous FERC-issued returns on equity (“ROE”), which were lowered due to a now-vacated FERC order. FERC found that reinstating the original ROE would complicate the backdating process for which refunds or surcharges would be ordered and instead ordered the NETOs to continue collecting under their current, pending ROEs.
District Court Dismisses Group’s Religious Freedom Claims Involving Pipeline Project
On September 28, 2017, the U.S. District Court for the Eastern District of Pennsylvania (“District Court”) dismissed the Adorers of the Blood of Christ’s (“Plaintiffs”) claims that FERC violated the Religious Freedom Restoration Act (“RFRA”) by authorizing Transcontinental Gas Pipe Line Company, LLC (“Transco”) to take property owned by Plaintiffs to construct and operate its Atlantic Sunrise Project on Plaintiffs’ property. In particular, the District Court held that (1) it lacked subject matter jurisdiction over Plaintiffs’ action because U.S. Courts of Appeals have exclusive jurisdiction over FERC’s decisions and issues “inhering in the controversy” and (2) Plaintiffs could not collaterally attack FERC’s certificate order authorizing Transco to take Plaintiffs’ land after Plaintiffs failed to file objections at FERC.
FERC Sets Comment Deadline and Poses Questions for Commenters on DOE Proposed Rule
On October 2, 2017, FERC issued notice of the September 29, 2017 Notice of Proposed Rulemaking (“NOPR”) from the United States Department of Energy (“DOE”) under section 403 of the Department of Energy Organization Act. In the NOPR, DOE urges FERC to act quickly to enact rules requiring regional transmission organizations and independent system operators (“RTOs/ISOs”) to provide just and reasonable rates for “fuel-secure” generation units (see October 2, 2017 edition of the WER). Shortly thereafter, on October 4, FERC staff issued a Request for Information, listing various questions for commenters to address in aiding the Commission to better understand the NOPR’s implications. Commenting parties have until October 23, 2017 to file initial comments and until November 7, 2017 to file reply comments. In recent testimony before the Senate’s Committee on Energy and Natural Resources, FERC General Counsel, James Danly, confirmed that FERC intends to review the comments and take final action within 60 days of the NOPR’s publication, as requested by the DOE.
FERC Staff Updates EIS for Pipeline Project to Address Downstream Greenhouse Gas Emissions
On September 27, 2017, FERC Staff issued a draft supplemental environmental impact statement (“EIS”) for the Southeast Market Pipelines Project (“SMP Project”) in response to the U.S. Court of Appeals for the D.C. Circuit’s (“D.C. Circuit”) decision in Sierra Club v. FERC, which directed FERC to supplement its final EIS by estimating the downstream incremental greenhouse gas emissions resulting from the SMP Project and explaining whether it considers the “Social Cost of Carbon” tool useful for National Environmental Policy Act (“NEPA”) purposes. In the draft supplemental EIS, FERC Staff (1) estimated the downstream incremental greenhouse gas emissions in Florida resulting from the project, and affirmed its conclusion in the final EIS that the SMP Project, with certain mitigation measures, will not result in significant adverse effects on the environment, and (2) explained that it does not find the “Social Cost of Carbon” tool useful for project-level NEPA analyses.
Senate Energy and Natural Resources Committee Advances FERC Nominees for Confirmation
On September 19, 2017, the Senate Committee on Energy and Natural Resources (“ENR Committee”) unanimously advanced FERC nominees Kevin McIntyre and Richard Glick to a full vote on the Senate floor. If confirmed by the Senate, Mr. McIntyre and Mr. Glick will join current FERC Commissioners Cheryl A. LaFleur, Robert F. Powelson, and Chairman Neil Chatterjee to fill all five seats at the Commission. Upon confirmation, Mr. McIntyre will become the new Chairman of FERC.
FERC Rejects SPP’s Proposal to Set Scarcity Prices
On September 20, 2017, FERC rejected Southwest Power Pool, Inc’s (“SPP”) Order No. 825 compliance filing that would have created a demand curve to set scarcity prices for energy shortages. Specifically, FERC held that SPP’s establishment of a demand curve to set scarcity prices was outside the scope of Order No. 825, which required SPP to establish triggers for shortage pricing, rather than change the actual shortage pricing levels.
FERC Rules that NY DEC Waived Authority on Water Quality Permit for Pipeline Project
On September 15, 2017, FERC issued an order determining that the New York State Department of Environmental Conservation’s (“NY DEC”) failure to act on Millennium Pipeline Co. LLC’s (“Millennium”) Clean Water Act (“CWA”) permit application before the statutory one-year deadline resulted in a waiver of its authority to issue the permit. FERC’s decision has the effect of nullifying the NY DEC’s prior denial of Millennium’s permit application. FERC’s order also allows Millennium to move forward with its “Valley Lateral Project” without the NY DEC’s water quality permit.
D.C. Court of Appeals Rejects Challenges to Exelon-Pepco Merger
On July 20, 2017, the D.C. Court of Appeals (the “Court”) upheld the Public Service Commission of the District of Columbia’s (the “DCPSC”) approval of the merger between Exelon Corporation and Pepco Holdings, Inc. (“Applicants”). Specifically, the Court held that the DCPSC provided adequate notice to the public of hearings on the merger and the DCPSC adequately explained how its decisions were in the public interest.