On October 28, 2020, FERC declined to abrogate or modify firm natural gas transportation service agreements (“Gulfport TSAs”) between Gulfport Energy Corporation (“Gulfport”) and Rockies Express Pipeline LLC (“Rockies Express”) in response to a Rockies Express petition anticipating a potential Gulfport bankruptcy filing. After an expedited paper hearing, FERC concluded that the public interest does not presently require any modification, and thus, that the Gulfport TSAs on file remain just and reasonable. In doing so, FERC found that Gulfport failed to provide the evidence needed under Mobile-Sierra for FERC to find that abrogation of the Gulfport TSAs would be in the public interest. FERC’s order also follows its recent determination that it shares concurrent jurisdiction with the Bankruptcy Court over abrogation or modification of gas transportation agreements (see July 1, 2020 edition of the WER).
Continue Reading FERC Finds Abrogation of Gas TSAs Would Not Be in the Public Interest Ahead of Possible Bankruptcy Proceeding

On October 6, 2020, the California Independent System Operator (“CAISO”), California Public Utilities Commission (“CPUC”), and the California Energy Commission (“CEC”) (collectively, “Joint Entities”) announced that their preliminary analysis pointed to a number of factors that caused two mid-August electricity outages in CAISO. Specifically, the group’s Preliminary Root Cause Analysis report (“Preliminary Analysis”) concluded that the outages resulted from a convergence of factors, including (i) the extreme west-wide heat storm, (ii) shortfall in system planning, and (iii) certain day-ahead energy market practices.  As directed by Governor Newsom, the Preliminary Analysis includes immediate, near, and longer-term actions that can be taken to minimize future power outages.

Continue Reading CAISO, CEC, and CPUC Conclude Several Factors Caused Mid-August Outages in California

On September 30, 2020, FERC held a technical conference focusing on how state-adopted carbon pricing intersects with a Regional Transmission Organization/Independent System Operator (“RTO/ISO”) administered market, and specifically what considerations a carbon-pricing framework may raise for FERC and/or the markets it oversees. The conference included three panels focused on: (i) the legal considerations associated with the integration of state carbon prices in FERC-regulated markets, including FERC’s statutory authority to implement carbon pricing in RTO/ISO markets and prior FERC precedent on RTO/ISO proposals to incorporate costs associated with state cap-and-trade programs, (ii) carbon pricing mechanisms, including current RTO/ISO initiatives to consider the integration of state carbon pricing actions and challenges for carbon pricing in multi-state RTO/ISO markets, and (iii) market design considerations, such as methods to reduce leakage and the potential operational impacts arising from carbon pricing. Finally, the technical conference concluded with a roundtable discussion reflecting on key issues and insights raised during the conference (see September 10, 2020 edition of the WER).
Continue Reading FERC Holds a Technical Conference on Carbon Pricing in Organized Markets

On September 9, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing updated regulations that will establish a one-year period for state agencies or other certifying authorities (“Certifying Agencies”) to act on requests for water quality certifications related to sections 3 and 7 of the Natural Gas Act (“NGA”). Under the Clean Water Act (“CWA”), should a Certifying Agency fail to act on such a request within one year, they are deemed to have waived the certification requirements.
Continue Reading FERC Proposes to Modify Water Quality Certification Waiver Period for Natural Gas Projects

On September 9, 2020, the United States Court of Appeals for the First Circuit (“First Circuit”) affirmed the United States District Court for the District of Massachusetts (“District Court”)  dismissal of a lawsuit alleging Eversource Energy and Avangrid (“Defendants”) manipulated Algonquin Gas Transmission, LLC (“Algonquin”) pipeline capacity and violated federal and state antitrust laws. The First Circuit followed its previous decision addressing a lawsuit challenging the same conduct by Defendants, but brought by different plaintiffs (see September 25, 2019 edition of the WER), which held that because the Defendants’ actions were permitted under a tariff filed with and accepted by FERC, the filed rate doctrine barred any attempt to challenge or change those rates or terms in federal court. Notably, the First Circuit also admonished FERC for being “slow to recognize market defects that create opportunities to exploit market power.”

Continue Reading First Circuit Affirms that Complaints About Gas Pipeline Capacity Hoarding in New England Are Barred by Filed Rate Doctrine, Criticizes FERC for not Policing Markets

On July 17, 2020, FERC issued three orders relating to the executed cost-of-service agreement (“Mystic Agreement”) among Constellation Mystic Power, LLC (“Mystic”), Exelon Generation Company, LLC (“Exelon”), and ISO New England Inc. (“ISO-NE”).  The Mystic Agreement provides for cost-of-service compensation to Mystic for the continued operation of two gas-fired generating units.  In the first two orders, FERC addressed requests for rehearing of its 2018 orders accepting the Mystic Agreement (the “July 2018 Order” and the “December 2018 Order”), including its conclusion that Mystic should recover from ratepayers 91% of the operating costs of the Everett Marine Terminal (“Everett”), a non-jurisdictional liquified natural gas import terminal.  In its third order, FERC accepted in part a Mystic compliance filing submitted in response to the December 2018 Order.  Commissioner Glick issued dissents to each of the July 17 orders.  Commissioner Glick concluded that FERC was forcing consumers to pay the full cost of service for Mystic in order to “bail out” Everett, and that each of the orders exceeded FERC’s jurisdiction under the Federal Power Act (“FPA”).

Continue Reading Divided FERC Permits Mystic to Recover Operating Costs of Non-Jurisdictional LNG Terminal

On June 22, 2020, FERC issued a declaratory order confirming its view that it shares jurisdiction with the United States Bankruptcy Court (“Bankruptcy Court”) over transportation agreements between ETC Tiger Pipeline, LLC (“ETC Tiger”) and Chesapeake Energy Marketing L.L.C. (“Chesapeake”). As a result, aside from obtaining approval from the Bankruptcy Court to reject its contracts with ETC Tiger, Chesapeake must seek a determination from FERC as to whether a filed rate may be modified or abrogated under the Natural Gas Act (“NGA”).
Continue Reading FERC Asserts Concurrent Jurisdiction with Bankruptcy Court over Natural Gas Transportation Service Agreements

On June 18, 2020, FERC issued an order directing New Fortress Energy LLC (“New Fortress Energy”) to show cause, within 30 days, why the liquified natural gas (“LNG”) handling facilities it constructed adjacent to the San Juan Combined Cycle Power Plant in San Juan, Puerto Rico, are not subject to FERC’s jurisdiction under section 3 of the Natural Gas Act (“NGA”).

Continue Reading New Fortress Energy Directed to Show Cause Why Its LNG Facility is Not Subject to FERC Jurisdiction

On June 9, 2020, FERC ordered amendments to its regulations to prohibit natural gas projects authorized under Sections 3 and 7 of the Natural Gas Act (“NGA”) from commencing construction activities until after (i) the deadline for filing a request for rehearing has lapsed without a request being filed, or (ii) FERC has acted upon the merits of any timely-filed request for rehearing (“Order No. 871”). The new regulation will become effective, without any opportunity to file comments, 30 days after the Final Rule is published in the Federal Register. Because FERC’s orders on rehearing sometimes take several months, and in some cases more than a year to be issued, both liquefied natural gas (“LNG”) and natural gas pipeline projects approved by FERC could be significantly delayed from commencing construction as a result of Order No. 871.
Continue Reading FERC to Block LNG, Pipeline Project Construction Until After Rehearing Process is Complete

On May 20, 2020, FERC issued a notice that it will convene a Commissioner-led technical conference on Wednesday and Thursday, July 8–9, 2020 from approximately 9:00 a.m. to 5:00 p.m. Eastern time each day “to consider the ongoing, serious impacts that the emergency conditions caused by COVID-19 are having on various segments of the United States’ energy industry.” The notice stated that the technical conference will explore potential long-term impacts on FERC-regulated entities to ensure the continued efficient functioning of energy markets, electric transmission, transportation of natural gas and oil, and reliable operation of energy infrastructure, while also protecting consumers.
Continue Reading FERC to Convene Technical Conference on Impacts of COVID-19 on the Energy Industry