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On December 22, 2015, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) largely upheld FERC’s approval of ISO New England Inc.’s (“ISO-NE”) Winter 2013-2014 Reliability Program (the “Program”). The Program was designed to compensate selected oil-fired and dual-fuel generators to maintain sufficient supplies of fuel oil when system conditions were stressed. The court upheld FERC’s decision to allocate the Program’s costs to Load-Serving Entities (“LSEs”), as opposed to ISO-NE Transmission Owners. Lastly, the court remanded to FERC the issue of whether the Program’s rates were just and reasonable.

On December 23, 2015, FERC rejected the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to the Public Policy Transmission Planning Process (“Public Policy Process”) portion of its Comprehensive System Planning Process (“CSPP”) reflected in Attachment Y of its Open Access Transmission Tariff (“OATT”). In rejecting the proposal, FERC found that NYISO proposed tariff revisions that would subject nonincumbent transmission developers to an interconnection process with different requirements than those applied to incumbent Transmission Owners.

On December 23, 2015, the New York Public Service Commission (“NYPSC”) issued a notice soliciting comments and proposals on an interim successor to net energy metering. The order also established a preliminary conference on January 7, 2016 to discuss the matter. The NYPSC’s notice was issued in accordance with prior NYPSC orders directing the establishment of a methodology for valuing distributed energy resources (“DER”). The notice indicates that the NYPSC is seeking to establish a new methodology and process for determining the full value of DER prior to December 31, 2016.

On December 28, 2015, FERC issued an order establishing a technical conference on revenue adequacy issues relating to PJM’s allocation of Auction Revenue Rights (“ARR”) and Financial Transmission Rights (“FTR”). On October 19, 2015, PJM submitted proposed changes to Schedule 1 of its Amended and Restated Operating Agreement pursuant to Section 206 of the Federal Power Act (“FPA”). On the same day, PJM also submitted a filing pursuant to Section 205 of the FPA wherein PJM proposed revisions to its Attachment K-Appendix. According to PJM, a cost-shift is occurring where revenues from ARR holders are being redirected to FTR holders, due to a reduction in the quantity of ARRs. PJM argues that the cost shift under the existing ARR and FTR provisions renders them unjust and unreasonable, which necessitated the recent filings.

On December 11, 2015, FERC issued an order accepting PJM’s proposed tariff and operating agreement revisions that would (1) double PJM’s energy market offer cap from $1,000/MWh to $2,000/MWh for cost-justified offers, (2) cap market-based offers at $2,000/MWh only when the corresponding cost-based offer is above $1,000/MWh, and (3) allow market sellers of generation resources with demonstrated costs above $2,000/MWh to recover those costs through make-whole payments. Although PJM’s proposal was made in advance of potential natural gas price spikes in the 2015–2016 winter, PJM’s proposal would apply year-round.

On December 17, 2015, FERC issued a Notice of Proposed Rulemaking (NOPR) containing proposed revisions to its market-based rate (MBR) regulations regarding the ownership information that sellers seeking to obtain or retain MBR authority must provide. In the NOPR, FERC proposes to amend its MBR regulations to narrow the ownership information required for an assessment of horizontal or vertical market power under the MBR regulations. Additionally, FERC proposes amendments to its MBR regulations to clarify the types of ownership changes that must be reported via a notice of change in status. The NOPR indicated that these proposed revisions are intended to complement the amendments to the MBR regulations recently made in Order No. 816 (see October 19, 2015 edition of the WER). 

On December 18, 2015, FERC staff of the Office of Energy Projects (“OEP”) issued a notice of availability of the Draft Guidance Manual for Environmental Report Preparation (“Guidance Manual”) for natural gas projects seeking comments on the Guidance Manual on or before January 19, 2016. OEP staff is asking for public input and suggestions for modifications to the Guidance Manual from interested parties in regards to preparation of resource reports associated with natural gas projects.

On December 17, 2015, the Commission denied a request for rehearing filed by Potomac-Appalachian Transmission Highline, L.L.C. and its operating companies, PATH West Virginia Transmission Company, LLC and PATH Allegheny Transmission Company, LLC (collectively, “PATH”) of a November 30, 2012 order in which the Commission determined, among other things, that PATH could not include a 50 basis points adder in its Return on Equity (“ROE”) for participation in a Regional Transmission Organization (“RTO”) when recovering costs for a transmission project that had been abandoned.

On November 30, 2015, the Commission rejected proposed revisions to Southwest Power Pool, Inc’s (“SPP”) Open Access Transmission Tariff (“OATT”) that would have created a new category of transmission facility—called a “Seams Transmission Project”—eligible for approval under SPP’s transmission planning and cost allocation processes.

On December 4, 2015, FERC granted a petition for declaratory order filed by Central New York Oil and Gas Company, L.L.C. (“CNYOG”) to provide interruptible park and loan storage service at market-based rates. CNYOG previously obtained Commission authorization to charge market-based rates for the storage and interruptible wheeling services it currently provides.