Troutman Pepper Locke

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On December 11, 2012, the Commonwealth of Massachusetts Department of Public Utilities (“MDPU”) assessed fines totaling $24.8 million to three utilities for their responses after Tropical Storm Irene and an October 2011 snowstorm.  In assessing the fines, the MDPU determined that National Grid USA Service Company, Inc. (“National Grid”), NSTAR Electric Co. (“NSTAR”), and the Western Massachusetts Electric Co. (“WMECo”) were all deficient in their post-storm response operations, including their response to downed wires.  The MDPU announced that all of the money collected from the penalties will be returned to the utilities’ respective customers.

On December 7, 2012, FERC announced the details for its upcoming technical conference on information sharing and communications issues between natural gas and electricity industry entities.  The technical conference follows FERC’s November 15, 2012 order directing further conferences and reports to address common issues raised in regional conferences held on gas-electric coordination in August 2012 (see November 16, 2012 edition of the WER).

On November 29, 2012, U.S. Magistrate Judge Deborah A. Robinson issued a memorandum order denying FERC’s request to compel production of certain portions of 25 email documents by J.P. Morgan Ventures Energy Corporation (“JP Morgan”).  In its petition before the court, FERC argued that JP Morgan was “overbroad” in claiming attorney-client privilege for this information.  Upon in camera review of the JP Morgan emails at issue, Magistrate Judge Robinson found that the redacted information was in fact “shielded” by attorney-client privilege.

On December 5, 2012, the Department of Energy (“DOE”) released the results of a long-awaited study that it commissioned regarding the macroeconomic impacts of liquefied natural gas (“LNG”) exports from the U.S.  Notably, the study, conducted by NERA Economic Consulting (“NERA”), concluded that “LNG exports have net economic benefits in spite of higher domestic natural gas prices.”  The study also determined that LNG exports from the U.S. would have a relatively small impact on domestic prices, and that LNG exports from the U.S. are “not likely to affect the overall level of employment in the U.S.”

On November 30, 2012, FERC approved a stipulation and consent agreement (“Settlement Agreement”) between its Office of Enforcement (“Enforcement”) and Alliance Pipeline L.P. (“Alliance”) for an unsubscribed capacity scheme that FERC determined violated its Standards of Conduct for Transmission Providers as well as Alliance’s own Open Access Transmission Tariff (“OATT”).  While Alliance neither admitted nor denied the allegations in the Settlement Agreement, it consented to a $500,000 fine and to filing semi-annual compliance reports with Enforcement for one year.

On November 30, 2012, Secretary of the Interior Ken Salazar, Deputy Secretary David J. Hayes, and Bureau of Ocean Energy Management Director Tommy P. Beaudreau announced the first ever competitive lease sales for renewable energy development for offshore wind projects in federal waters.  Described as part of the Obama Administration’s strategy to continue to expand domestic energy production, the proposed energy lease sales are for two separate Outer Continental Shelf offshore locations, described as “Wind Energy Areas.” 

On November 20, 2012, FERC granted a petition for enforcement and announced that it will take the Idaho Public Utilities Commission (“Idaho PUC”) to court for failure to adhere to the Public Utility Regulatory Policies Act of 1978 (“PURPA”) and FERC’s PURPA regulations and precedent.  In what appears to be the culmination of FERC’s frustration with the Idaho PUC’s apparent refusal to give effect to FERC’s prior interpretations of PURPA, this most recent order suggests FERC will now actively enforce its interpretation of the law through the courts.  It is not known when and in what venue FERC will file the enforcement lawsuit.

On November 19, 2012, the Commission approved a Stipulation and Consent Agreement (“Settlement”) between Gila River Power, LLC (“Gila River”) and the Commission’s Office of Enforcement (“OE”) under which Gila River agreed to pay a $2.5 million fine and disgorge $911,553 in profits plus interest.  The Settlement states that Gila River: (1) violated FERC’s Anti-Manipulation Rule, and (2) violated the California Independent System Operator Corporation (“CAISO”) Tariff and FERC’s Regulations by submitting inaccurate information in booking invalid wheeling transactions.

Late in the day on Friday, November 16, 2012, the Environmental Protection Agency (“EPA”) issued a proposal to reconsider maximum achievable control technology standards for hazardous air pollutant emissions from new electric generating units (referred to as “UMACT”). EPA’s previously-issued standards for new units, promulgated as a part of EPA’s Mercury and Air Toxics Standards rule, had been criticized by a coalition of new unit developers as unattainable. One of the new unit developers asked EPA to reconsider the standards, as did the trade association of pollution control equipment vendors, which also told EPA that its members could not issue guarantees that the standards could be met.

On November 14, 2012, FERC suspended J.P. Morgan Ventures Energy Corporation’s (“JP Morgan”) market-based rate authority for six months beginning April 1, 2013, for allegedly submitting false or misleading information to FERC and the California Independent System Operator Corporation (“CAISO”) in violation of Section 35.41 the Commission’s regulations.  Section 35.41 prohibits sellers from submitting “false or misleading information” or omitting material information in any communication with the Commission and certain other entities, including Regional Transmission Organizations and their market monitors.