FERC Enforcement

Subscribe to FERC Enforcement via RSS

On July 21, 2016, in Order No. 829, FERC directed the North American Electric Reliability Corporation (“NERC”) to develop a new or modified Critical Infrastructure Protection (“CIP”) Reliability Standard that addresses supply chain risk management for industrial control system hardware, software, and computing and networking services associated with Bulk Electric System operations. FERC directed NERC to submit the new or modified Reliability Standard within one year of the effective date of the order, which is 60 days after the order’s publication in the Federal Register.

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.

On July 7, 2016, FERC granted waiver of certain provisions of the Southwest Power Pool, Inc. (“SPP”) Open Access Transmission Tariff in order to permit SPP to implement the revenue crediting process for certain transmission upgrades. In its order, FERC noted that SPP’s implementation of the revenue crediting process had been delayed for eight years, and that “[u]pgrade sponsors who have been negatively affected by SPP’s delay will finally, through this order, get the appropriate relief.”

On June 16, 2016, FERC amended its regulations to require that the North American Electric Reliability Corporation (“NERC”) provide FERC Commissioners and staff with access, on a non-public and ongoing basis, to NERC’s Transmission Availability Data System (“TADS”), the Generating Availability Data System (“GADS”), and the protection system misoperations database. While FERC explained that such access would “provide the Commission with information necessary to determine the need for new or modified Reliability Standards and to better understand NERC’s periodic reliability and adequacy assessments,” it also added that “the Commission is not precluded from using the accessed data for other statutory purposes.”

On June 16, 2016, FERC affirmed its process outlined in Opinion No. 538 for analyzing whether natural gas storage companies lack significant market power for the purposes of determining whether to grant market-based rate (“MBR”) authority for natural gas storage service. However, FERC clarified that the burden to show lack of control over an affiliate rests with the applicant.

On June 1, 2016, FERC granted in part and denied in part National Fuel Gas Supply Corporation’s (“National Fuel’s”) request for rehearing regarding its request to expand the reservoir and buffer boundaries of its Beech Hill Complex natural gas storage facility. In its initial order, issued December 17, 2015, the Commission stated that it “grants jurisdictional storage field operators additional certificate authority to revise the boundaries of storage fields when the applicant can demonstrate, with engineering and geological data, that such authorization is required . . . to improve the operation of a storage field or to maintain its integrity.” In its June 1 rehearing order, the Commission found geochemical data and evidence of hydraulic connections to be persuasive evidence that gas was migrating, discounted theories based on seismic evidence, and observed that “[w]hile geochemical data is not always required to support expansion of certificated boundaries, it is highly persuasive.”

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.”

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.

On April 22, 2016, FERC denied a complaint filed by the Maryland and Delaware Public Service Commissions (the “Complainants”) against PJM Interconnection LLC (“PJM”) alleging that PJM’s use of the solution-based distribution factor (“DFAX”) method to allocate the costs for a new transmission project in PJM was unjust and unreasonable. In denying the complaint, FERC accepted the proposed cost allocation for the “Artificial Island Project.”

On April 8, 2016, the Federal Energy Regulatory Commission (“FERC”), on voluntary remand from the United States Court of Appeals for the District of Columbia Circuit (“DC Circuit”), reaffirmed its approval of an exemption of up to 200 MW of renewable resources from ISO New England Inc’s (“ISO-NE”) minimum offer pricing rule (“MOPR”) in ISO-NE’s Forward Capacity Market (“FCM”). Barring further legal challenges, the renewables exemption will remain effective as of June 1, 2014.