FERC Enforcement

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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 Commission denied a complaint filed by Boundless Energy NE, LLC, CityGreen Transmission, Inc. and Miller Bros. (collectively, “Competitive Transmission Developers” or “CTD”) against the New York Independent System Operator, Inc. (“NYISO”), alleging that NYISO violated its Open Access Transmission Tariff (“OATT”) in its most-recent solicitation for projects to address public policy transmission needs identified by the New York State Public Service Commission (“NYPSC”). The Commission determined that CTD had failed to demonstrate that NYISO had violated its OATT, or that NYISO had improperly abdicated its responsibilities to the NYPSC in the implementation of its public policy transmission planning process.

On September 9, 2016, FERC conditionally accepted an unexecuted Generator Interconnection Agreement (“GIA”) filed by the Midcontinent Independent System Operator, Inc. (“MISO” or the “ISO”) involving Duke Energy Indiana, LLC (“Duke Indiana”) as the interconnection customer, Duke Energy Business Services, LLC, on behalf of Duke Indiana, as the transmission owner, and MISO as the transmission provider. In so doing, FERC declined a request from Duke Indiana to require MISO to amend its pro forma GIA to address potential future situations in which an integrated utility acts as both the transmission owner and interconnection customer.

On September 14, 2016, FERC denied a Federal Power Act (“FPA”) Section 206 complaint filed by Vineland Municipal Electric Utility (“Vineland”) alleging that Atlantic City Electric Company (“ACE”) applied unauthorized weather normalization adjustments to Vineland’s capacity peak load contribution, which increased the capacity charge PJM Interconnection, LLC (“PJM”) assessed to Vineland during the 2015-2016 delivery year by 18.6 percent, or $1.6 million. In denying the complaint, FERC validated ACE’s application of the weather normalization adjustment and precluded Vineland from receiving refunds requested for past adjustments.  

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 August 31, 2016, FERC conditionally approved Arizona Public Service Company’s (“APS”) request to amend its market-based rate tariff to facilitate APS’ participation in the western Energy Imbalance Market (“EIM”) administered by the California Independent System Operator Corporation (“CAISO”). Another western utility, Puget Sound Energy (“PSE”) is also expected to join the EIM. With respect to its market-based rate authorization to participate in the EIM, PSE filed a Non-Material Change in Status on March 9 in Docket ER10-2374-010. FERC has not yet acted on this submittal. On October 1, 2016, APS and PSE are expected to begin participating in the EIM alongside existing members—PacifiCorp, and NV Energy—to form a six-balancing authority area EIM footprint. 

On September 7, 2016, FERC accepted the New York Independent System Operator Inc.’s (“NYISO”) proposed revisions to Attachment Y of its Open Access Transmission Tariff (“OATT”) to modify its Public Policy Transmission Planning Process. Additionally, FERC clarified its requirement that NYISO establish a cost allocation methodology for the transmission portion of an “Other Public Policy Project” that is selected during the regional transmission planning process consistent with Order No. 1000.

On September 1, 2016, the Commission granted a petition for waiver filed by the California Independent System Operator Corporation (“CAISO”) requesting permission to treat the Bay Area Rapid Transit District (“BART”) as a Load-Serving Entity (“LSE”) for purposes of eligibility for Congestion Revenue Rights (“CRRs”) and resource adequacy responsibilities under the CAISO Open Access Transmission Tariff (“Tariff”).

On August 26, 2016, FERC established a proceeding to determine whether transmission owners in the footprint of the PJM Interconnection L.L.C. (“PJM”) are complying with the requirements of Order No. 890. This proceeding follows a November 2015 technical conference in which several PJM transmission customers and other parties suggested that PJM stakeholders are unable to meaningfully participate in the transmission planning process for certain PJM projects, in contravention of Order No. 890’s planning requirements.

On July 21, 2016, FERC issued a declaratory order related to a qualifying facility’s (“QF”) right to sell its capacity and energy pursuant to a legally enforceable obligation under the Public Utilities Regulatory Policies Act of 1978 (“PURPA”). Specifically, FERC held that: (1) regardless of whether a QF has previously sold its renewable energy credits (“RECs”) under a separate contract, a QF has the right to sell its output pursuant to a legally enforceable obligation (“LEO”), and (2) regardless of whether a QF has participated in a request for proposal, a QF has the right to obtain a LEO.