On May 19, 2016, FERC issued Order No. 816-A, denying requests for rehearing and granting certain requests for clarification of Order No. 816. Order No. 816 amended FERC’s regulations governing market-based rate (“MBR”) authorizations for wholesale sales of energy, capacity, and ancillary services by public utilities under the Federal Power Act (“FPA”).
Continue Reading FERC Clarifies Policies and Procedures for Market-Based Rate Sellers

On May 19, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a policy statement regarding future implementation of hold harmless commitments offered by applicants as ratepayer protection mechanisms to mitigate adverse effects on rates that may result from transactions subject to section 203 of the Federal Power Act (“FPA”). The policy statement provides guidance in four areas related to hold harmless commitments: (1) the scope and definition of the costs that should be subject to hold harmless commitments; (2) controls and procedures to track the costs from which customers will be held harmless; (3) FERC’s continued acceptance of hold harmless commitments that are limited in duration; and (4) clarification that applicants may offer another form of ratepayer protection mechanism in the place of a hold harmless commitment, and that an applicant may not require any such mechanism in order to be able to demonstrate that a proposed transaction will not have an adverse effect on rates. The policies adopted in the policy statement will be effective 90 days after publication.
Continue Reading FERC Issues Policy Statement on Hold Harmless Commitments Offered by FPA Section 203 Applicants

On May 19, 2016, FERC issued a Notice of Proposed Rulemaking in which it proposed to approve Reliability Standard BAL-002-2, Disturbance Control Standard—Contingency Reserve for Recovery from a Balancing Contingency Event (“May 19 NOPR”). In the May 19 NOPR, FERC described BAL-002-2 as designed to ensure that Registered Entities “are able to recover from system contingencies by deploying adequate reserves to return their Area Control Error to defined values and by replacing the capacity and energy lost due to generation or transmission equipment outages.” FERC also proposed in the May 19 NOPR to direct the North American Electric Reliability Corporation (“NERC”) to: (i) modify BAL-002-2 to address concerns related to the possible extension or delay of the periods for Area Control Error recovery and contingency reserve restoration; and (ii) address a reliability “gap” associated with NERC’s proposed definition of “Reportable Balancing Contingency Event.”
Continue Reading FERC Issues NOPR on Disturbance Control Reliability Standard

On May 19, 2016, FERC denied the request for limited rehearing of numerous shippers (“Complainants”) of FERC’s October 17, 2013 order granting in part Complainants’ complaints and establishing a hearing on damages (“Complaint Order”) against Enterprise TE Products Pipeline Company LLC (“Enterprise TE”) relating to Enterprise TE’s decision to abandon transportation service for distillate and jet fuel. FERC held that although Enterprise TE’s decision to discontinue transportation service for distillate and jet fuel violated a settlement agreement executed by Enterprise TE and Complainants, among others, which required Enterprise TE not to change its rates for two years, FERC does not have authority under the Interstate Commerce Act (“ICA”) to require a pipeline to provide a service that the pipeline proposes to abandon completely.
Continue Reading FERC Holds That Removing Distinct Petroleum Products from Transportation Service Does Not Violate ICA

On May 19, 2016, FERC granted Comanche Trail Pipeline, LLC’s (“Comanche Trail”) request for a Presidential Permit and authorization pursuant to section 3 of the Natural Gas Act (“NGA”) and Part 153 of the Commission’s regulations to construct and operate a border-crossing facility to export natural gas to, and import natural gas from, Mexico (the “San Elizario Crossing Project”). In doing so, FERC rejected claims that it should assert jurisdiction over Comanche Trail’s intrastate pipeline upstream from the San Elizario Crossing Project, holding that section 3 of the NGA confers FERC jurisdiction over only a small segment of the facilities close to the border.
Continue Reading FERC Issues Presidential Permit and NGA Section 3 Authorization to Comanche Trail for San Elizario Crossing Project

In an order denying rehearing, issued to the City of Clarksville, Tennessee on May 19, 2016, FERC issued an interpretation narrowing the scope of the exemption for “municipalities” found in Natural Gas Act (“NGA”) section 2(2). In several prior orders, FERC had held that a municipality is not a “person” under the NGA and would not be required to obtain the authorization provided by a section 284.224 blanket certificate to local distribution companies (“LDCs”) and Hinshaw pipeline companies engaging in the interstate transportation of natural gas. In its May 19 order to the City of Clarksville, FERC held that while a municipality is not a “corporation” under the NGA, it is a person subject to FERC’s jurisdiction when it “transports or sells gas for resale and consumption in another state, since the state cannot assert jurisdiction over such transportation or sales by the municipality.”
Continue Reading FERC Issues Interpretation Narrowing the Scope of the “Municipality” Exemption in the NGA, and Asserts Limited Jurisdiction Over Municipalities

On May 19, 2016, FERC issued an Order on Voluntary Remand (“Remand Order”) to Kinetica Deepwater Express, LLC, formerly TC Offshore LLC (“TC Offshore”) in Docket No. CP11-544-004. At issue was the Commission’s rejection of TC Offshore’s proposed initial negative salvage rates. The Remand Order reaffirms FERC’s prior holdings. First, FERC held that, by waiting until after issuance of its requested Certificate to submit data to support its proposed initial negative salvage rates, despite being confronted with protests challenging its proposed salvage rates as unsupported, TC Offshore missed its opportunity to respond to the protests by submitting more supporting material. Further, FERC held that once a Certificate has issued, a party must show good cause to receive permission to reopen the evidentiary record to support changing a rate accepted by the Commission in issuing the Certificate. For example, a party may show changed circumstances resulting from the development of more information, such as more completed contracts with shippers, actual versus estimated inflation rates or other costs – new information that changes the estimates or other information on which accepted rates were based. In the instant case, however, FERC determined that TC Offshore was not making a showing of new, better evidence or changed circumstances, but instead was seeking to submit data it possessed prior to issuance of the Certificate and for the purpose of relitigating an issue it lost in the Certificate proceeding. FERC also held that the avenue of seeking an “amended certificate” was foreclosed by the fact that the proposed in-service or effective commencement date of the existing certificated rates was too close, and provided no opportunity for effective review and challenges by interested parties to any proposed amended certificate. FERC upheld its earlier holdings that TC Offshore must use the existing negative salvage rates accepted in the Commission’s Certificate Order and seek to change those rates in an NGA Section 4 proceeding.
Continue Reading FERC Expounds Upon When A Natural Gas Pipeline May Add To The Record To Support Proposed Initial Rates For A Certificated Project

On May 6, 2016, in a pending civil penalty assessment proceeding, the Federal Energy Regulatory Commission (“FERC”) denied the motion of ETRACOM LLC (“ETRACOM”) and Michael Rosenberg (collectively, “Movants”) to require production of data (“Motion”) from the California Independent System Operator Corporation (“CAISO”). In denying the motion, FERC explained that civil penalty assessment procedures do not allow for the same discovery rights afforded to litigants in administrative proceedings.
Continue Reading FERC Denies Formal Discovery in Civil Penalty Assessment Procedures

On May 6, 2016, Oklahoma Municipal Power Authority (“OMPA”) submitted a request to FERC seeking to take over its members’ mandatory purchase obligation under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). OMPA is a full-requirements provider for 42 municipalities in the State of Oklahoma. OMPA submitted its request under Section 210 of PURPA.
Continue Reading Oklahoma Municipal Power Authority Requests to Take On PURPA Mandatory Purchase Obligations on Behalf of its Members

On May 12, 2016, the EPA issued a final rule aimed at curbing methane emissions from new and modified sources of oil and gas. In addition to methane, the final rule regulates volatile organic compounds (“VOCs”) and several air pollutants that, according to the EPA, come “packaged” with methane when emitted from oil and gas infrastructure. EPA believes that the final rule will reduce methane emissions by 520,000 short tons by 2025, and thus help attain the Obama administration’s goal in the Climate Action Plan to reduce methane emissions from the oil and gas industry by 40 to 45% by 2025 from 2012 levels.
Continue Reading EPA Finalizes Methane Rule for New Oil, Gas Sources