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On February 18, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued a Notice of Inquiry (“NOI”) seeking comments on the need for reforms to its rules and regulations regarding the provision and compensation of primary frequency response. As described by the Commission, “Frequency Response” is “a measure of an Interconnection’s ability to arrest and stabilize frequency deviations within pre-determined limits following the sudden loss of generation or load.” Primary frequency response is used to maintain an electrical frequency of 60 Hz among the three synchronous interconnections in the United States (Eastern, Western, and the Electric Reliability Council of Texas), when certain contingencies (e.g. the loss of a large generator) disrupt the balance between generation and load.

On February 12, 2016, FERC issued an order accepting the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed tariff revisions. Specifically, FERC approved, subject to condition, tariff revisions to (1) permit suspended generation resources to participate in the Planning Resource Auction (“Auction”), (2) extend the period of time for a market participant to rescind its Attachment Y Notification from 5 business days to 15 business days after receiving notice by MISO that the Attachment Y study is complete, and (3) allow suspended generation resources to qualify for deferred Generation Verification Test Capacity (“GVTC”) testing. MISO stated that these tariff changes are intended to improve alignment between the Auction and the Attachment Y process in order to remove barriers to Auction participation for generation resources that are in suspension or have filed to be suspended or retired.

On January 29, 2016, the Federal Energy Regulatory Commission (“FERC”) denied American Electric Power Service Corporation’s (“AEP”) request for a limited waiver of provisions of the PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariff (“Tariff”) and the Reliability Assurance Agreement (“RAA”) that impose capacity performance non-performance charges (“CPNP Charges”) on fixed resource requirement (“FRR”) entities beginning in the 2019/2020 delivery year. AEP’s waiver request stemmed from a June 9, 2015 order (see June 17, 2015 edition of the WER) in which FERC approved PJM’s capacity performance construct (“CP Construct”) that requires PJM load-serving entities to decide by March 7, 2016 whether to participate in PJM’s Reliability Pricing Model (“RPM”) capacity auction or alternatively to elect to be an FRR entity. Under the CP Construct, should AEP elect to be an FRR entity, it will be subject to (i) enhanced capacity performance rules including a requirement to submit to PJM a capacity plan that includes at least 80 percent capacity performance qualifying resources, and (ii) the requirement to implement full financial or physical non-performance assessments.

On February 5, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) accepted proposed revisions to the Joint Operating Agreement (“JOA”) between PJM Interconnection, L.L.C. (“PJM”) and the Midcontinent Independent System Operator, Inc. (“MISO”) that eliminated the $20 million minimum cost threshold that a transmission facility must meet in order to qualify as an Interregional Market Efficiency Project (“IMEP”)—a designation under the JOA that permits the construction of transmission upgrades between PJM and MISO.

On February 11, 2016, the U.S. Commodity Futures Trading Commission (“CFTC”) announced that the Energy and Environmental Markets Advisory Committee (“EEMAC”) will hold a public meeting at the CFTC’s headquarters in Washington, D.C. on February 25, 2016 from 10:00 AM to 1:30 PM. The CFTC further announced that, at the meeting, EEMAC will (1) present a report summarizing its 2015 proceedings; (2) examine the CFTC’s Proposed Order exempting certain Transmission Congestion Rights, Day-Ahead and Real-Time Balancing Market, and Operating Reserve Transactions in the Southwest Power Pool from the CFTC’s fraud and manipulation jurisdiction and scienter-based prohibitions; and (3) consider the CFTC Staff Preliminary Report regarding the Swap Dealer De Minimis Exception (see November 18, 2015 edition of the WER).

On January 29, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) and the North American Electric Reliability Corporation (“NERC”) issued a Report on the FERC-NERC-Regional Entity Joint Review of Restoration and Recovery Plans (the “Report”). The Report was the result of a joint review initiated by FERC in September, 2014 and conducted in coordination with NERC and the NERC Regional Entities. The joint review examined a representative sample of nine registered entities with significant bulk power system responsibilities, with the stated objective of: (i) assessing and verifying the electric utility industry’s bulk power system recovery and restoration planning; and (ii) testing the efficacy of related NERC Reliability Standards in maintaining and advancing reliability.

On February 2, 2016, the General Counsel of the Federal Energy Regulatory Commission (“FERC”), Max Minzner, testified before the Committee on Energy and Commerce Subcommittee on Energy and Power for the United States House of Representatives (“Committee”) regarding two proposed bills that would amend the Federal Power Act (“FPA”). One bill would modify Section 203 of the FPA to set a minimum threshold value of $10 million on the merger or consolidation of facilities belonging to public utilities that would be subject to FERC approval. A second bill, H.R. 2984, would amend Section 205 of the FPA to permit a party to seek rehearing and subsequent appellate review of any rate change filed pursuant to that provision that takes effect without FERC action. Going forward, the Committee may consider the testimony in deciding how to act on the proposed bills.

On February 1, 2016, FERC denied a complaint filed by NRG Power Marketing LLC (“NRG”) against the Midcontinent Independent System Operator, Inc. (“MISO”) alleging that MISO violated its tariff when it modified the Commercial Pricing Nodes (“CPNodes”) in the MISO South region to reflect the incorporation of Entergy into MISO. In particular, NRG claimed MISO’s modifications to the CPNodes effectively nullified the results of the Financial Transmission Right (“FTR”) auctions and rendered the FTRs purchased by NRG in those auctions “valueless.”

On February 3, 2016, FERC announced that it will hold a technical conference on June 1, 2016 from 10:00 AM to 4:00 PM to discuss policy issues related to the reliability of the bulk-power system. FERC stated that it will issue an agenda for the technical conference at a later date. The Commission has held similar technical conferences on policy issues related to reliability on an annual basis for the last few years (see April 21, 2014 edition of the WER).