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Russell Kooistra

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Russell Kooistra counsels an array of energy companies on various issues related to natural gas and electricity markets. Russell uses his in-depth knowledge of Federal Energy Regulatory Commission (FERC) policy and regulations to advise clients on complex regulatory matters.

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On November 1, 2016, FERC rejected arguments raised by numerous intervenors (“Environmental Intervenors”) that FERC had too narrowly defined its jurisdiction over Trans-Pecos Pipeline, LLC’s (“Trans-Pecos”) Presidio Border Crossing Project (the “Project”) and interconnecting intrastate pipeline (the “Trans-Pecos Pipeline”), which resulted in an abbreviated environmental review that failed to comply with the National Environmental Policy Act of 1969 (“NEPA”). In doing so, FERC found that the Trans-Pecos Pipeline will be an intrastate pipeline receiving natural gas produced solely in Texas, and thus environmental review of the construction and operation of the pipeline is not subject to FERC’s Natural Gas Act (“NGA”) Section 7 jurisdiction.

On October 25, 2016, FERC held that a pipeline providing interstate service pursuant to Natural Gas Policy Act (“NGPA”) Section 311 may not give preferential curtailment priority to preexisting, intrastate customers unless their intrastate transportation service agreements expressly provide for a higher curtailment priority above the pipeline’s other firm services. In doing so, FERC clarified that it is not enough that a preexisting intrastate service agreement has “different” curtailment provisions than the pipeline’s Statement of Operating Conditions (“SOC”) used to provide interstate service pursuant to NGPA Section 311.

On October 17, 2016, the U.S. Commodity Futures Trading Commission (the “CFTC”) clarified that certain transactions in Regional Transmission Organization (“RTO”) and Independent System Operator (“ISO”) markets are exempted from the Commodity Exchange Act (the “CEA”) provisions governing private rights of action, marking a reversal of the CFTC’s proposal in May 2016 which sought to subject the transactions to private rights of action. In addition, the CFTC granted Southwest Power Pool, Inc.’s (“SPP”) request to exempt certain transactions in its markets from most CEA provisions and CFTC regulations, excluding those relating to the CFTC’s anti-fraud and anti-manipulation authority.

On October 13, 2016, FERC found that the M2 Milestone Payment in the Midcontinent Independent System Operator, Inc. (“MISO”) interconnection process should apply to all interconnection customers, including generators external to MISO that want to participate in MISO’s capacity and energy markets through network resource interconnection service—External Network Resource Interconnection Service (“E-NRIS”) and Network Resource Interconnection Service-only (“NRIS-only”) customers. The M2 Milestone Payment is a payment that interconnection customers entering the final phase of MISO’s interconnection process are required to make to MISO, and is used to help alleviate the costs of necessary network upgrades and restudies that are shifted to other interconnection customers in the event that an interconnection customer withdraws from the interconnection queue.

On October 3, 2016, FERC clarified that Order No. 827’s reactive power requirements for newly interconnecting non-synchronous generators do not apply to all existing non-synchronous generators making upgrades that require interconnection requests. FERC further clarified that, instead, transmission providers may propose changes to their tariffs to define “newly interconnecting non-synchronous generators” to include repowering an existing generator. 

On September 26, 2016, FERC approved a settlement between FERC’s Office of Enforcement (“Enforcement”) and Maxim Power Corp. (“Maxim”), Maxim Power (USA), Inc., Maxim Power (USA) Holding Company Inc., Pawtucket Power Holding Company, LLC, and Pittsfield Generating Company, LP (“Pittsfield”; collectively, the “Respondents”) requiring Maxim to make a disgorgement payment of $4 million to ISO New England Inc. (“ISO-NE”) and a civil monetary payment of $4 million. The settlement resolves FERC’s petition to enforce penalties against Maxim for market manipulation based on misrepresentation of fuel prices in the District Court of Massachusetts (the “District Court”), which had ordered the parties to participate in a full civil trial, as well as Enforcement’s separate non-public investigation into Maxim for market manipulation based on falsely inflating its recurring Energy charge (the “Investigation”).

On September 22, 2016, FERC issued a Notice of Inquiry (“NOI”) to examine whether to revise its market power analysis for transactions under section 203 of the Federal Power Act (“FPA”) and market-based rate (“MBR”) applications under section 205 of the FPA to provide greater alignment between the two. Specifically, in the NOI, FERC requests comment on whether it should: (1) simplify its analysis for certain FPA section 203 transactions that are unlikely to raise market power issues because they are likely to have a de minimis effect on competition; (2) add a supply curve analysis to its FPA section 203 analysis; (3) retain its current pivotal supplier analysis in the MBR context and also add this test to its FPA section 203 analysis; (4) expand its FPA section 203 analysis to require the filing of a market share analysis; (5) revise how it accounts for capacity associated with long-term firm power purchase agreements (“PPAs”) in its FPA section 203 review; and (6) require the submission of additional merger-related documents for FPA section 203 transactions that require a full Competitive Analysis Screen. FERC also requests comments on its scope of review, including blanket authorizations under FPA section 203.

On September 8, 2016, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) upheld FERC’s determination that various marketers and generators of electricity (“Petitioners”) violated the California Independent System Operator Corporation (“CAISO”) tariff by scheduling electricity in advance for export and in real-time for import, overscheduling load by submitting exaggerated day-ahead demand schedules to CAISO, and submitting bids at prices that did not reflect marginal costs and/or market prices.

On July 21, 2016, FERC proposed new data collection and reporting requirements for market-based rate (“MBR”) sellers and entities trading virtual products or holding financial transmission rights in organized wholesale markets (“Virtual/FTR Participants”). Specifically, in an effort to streamline and reduce the burden of proposed information collection, FERC proposed in the Notice of Proposed Rulemaking (the “Data Collection NOPR”) to (1) revise the information to be submitted on ownership, employee, debt, and contractual connections (“Connected Entity Information”) from a prior proposed rule (the “Connected Entity NOPR”); (2) better align the information to be provided on “affiliates” in connection with Connected Entity Information submissions with the information MBR sellers must provide on “affiliate owners” under FERC’s MBR regulations; and (3) remove the existing requirement that MBR sellers submit corporate organization charts adopted in Order No. 816.

On July 11, 2016, FERC imposed fines on BP America Inc., BP Corporation North America Inc., BP America Production Company, and BP Energy Company (collectively, “BP”) of over $20 million in civil monetary penalties, and disgorgement of over $200,000 in profits, for manipulating natural gas prices by, FERC found, uneconomically trading physical natural gas at the Houston Ship Channel to benefit BP’s financial spread positions based on the price differential between the Houston Ship Channel and the Henry Hub.