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On January 4, 2016, the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) vacated a federal district court’s indefinite stay of proceedings before it involving disputed Public Utility Regulatory Policies Act (“PURPA”) issues while awaiting administrative action from FERC, and instead ordered a definite period of 180 days for FERC to act.

The district court had supported its indefinite stay by applying the doctrine of primary jurisdiction—a doctrine that permits a federal court with non-exclusive jurisdiction over a proceeding to, under appropriate circumstances, defer to another forum (such as an administrative agency like FERC) that also has non-exclusive jurisdiction over the issue, based on the court’s determination that the benefits of obtaining aid from the other forum outweigh the need for expeditious litigation. While the Fifth Circuit found the doctrine applicable in the circumstances presented, it determined that the indefinite nature of the stay would unfairly harm the interests of one of the litigants.

On December 28, 2015, the Federal Energy Regulatory Commission (“FERC”) instituted two separate Federal Power Act Section 206 proceedings based on findings that ISO-NE Inc.’s (“ISO-NE”) Transmission Markets and Services Tariff (“Tariff”) is unjust, unreasonable, unduly discriminatory or preferential. One Section 206 proceeding (FERC Dockets Nos. EL16-15-000 and ER14-1639-000) seeks to require ISO-NE to submit Tariff revisions by March 31, 2016 that implement zonal sloped demand curves in its Forward Capacity Market (“FCM”) rules (“FCM Rules Proceeding”). The other Section 206 (FERC Docket No. EL16-19-000) proceeding seeks to develop just and reasonable formula rate protocols to be included in the ISO-NE Tariff and to examine the justness and reasonableness of the ISO-NE’s regional network service (“RNS”) rates and local network service (“LNS”) rates (“Formula Rates Proceeding”).

On January 6, 2016, FERC issued an order directing Coaltrain Energy, L.P. (“Coaltrain”), Coaltrain’s co-owners Peter Jones and Shawn Sheehan, and traders/analysts Robert Jones, Jeff Miller, Jack Wells, and Adam Hughes (collectively, “Respondents”), to show cause why they should not be found to have violated FERC’s Anti-Manipulation Rule and section 222 of the Federal Power Act (“FPA”) by engaging in fraudulent Up To Congestion (“UTC”) transactions in PJM Interconnection L.L.C.’s (“PJM”) energy markets. The order to show cause follows FERC’s Office of Enforcement’s (“Enforcement”) report alleging that Respondents inflated trade volumes of UTCs through transactions designed to collect large amounts of Marginal Loss Surplus Allocations (“MLSA”).

The Federal Energy Regulatory Commission (FERC) has issued an order granting a petition for declaratory order in Starwood Energy Group Global, Docket No. EL15-87-000, 153 FERC ¶ 61,332 (2015). The order found that transfer of certain passive interests would not require FERC authorization under section 203 of the Federal Power Act (FPA), such passive interests do not create affiliation requiring inclusion in certain market-based rate filings under FPA section 205, and holders of those passive interests alone would not result in the entities being considered public utilities under FPA section 201 or holding companies under the Public Utility Holding Company Act of 2005 (PUHCA).

On December 22, 2015, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) largely upheld FERC’s approval of ISO New England Inc.’s (“ISO-NE”) Winter 2013-2014 Reliability Program (the “Program”). The Program was designed to compensate selected oil-fired and dual-fuel generators to maintain sufficient supplies of fuel oil when system conditions were stressed. The court upheld FERC’s decision to allocate the Program’s costs to Load-Serving Entities (“LSEs”), as opposed to ISO-NE Transmission Owners. Lastly, the court remanded to FERC the issue of whether the Program’s rates were just and reasonable.

On December 23, 2015, FERC rejected the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to the Public Policy Transmission Planning Process (“Public Policy Process”) portion of its Comprehensive System Planning Process (“CSPP”) reflected in Attachment Y of its Open Access Transmission Tariff (“OATT”). In rejecting the proposal, FERC found that NYISO proposed tariff revisions that would subject nonincumbent transmission developers to an interconnection process with different requirements than those applied to incumbent Transmission Owners.

On December 23, 2015, the New York Public Service Commission (“NYPSC”) issued a notice soliciting comments and proposals on an interim successor to net energy metering. The order also established a preliminary conference on January 7, 2016 to discuss the matter. The NYPSC’s notice was issued in accordance with prior NYPSC orders directing the establishment of a methodology for valuing distributed energy resources (“DER”). The notice indicates that the NYPSC is seeking to establish a new methodology and process for determining the full value of DER prior to December 31, 2016.

On December 28, 2015, FERC issued an order establishing a technical conference on revenue adequacy issues relating to PJM’s allocation of Auction Revenue Rights (“ARR”) and Financial Transmission Rights (“FTR”). On October 19, 2015, PJM submitted proposed changes to Schedule 1 of its Amended and Restated Operating Agreement pursuant to Section 206 of the Federal Power Act (“FPA”). On the same day, PJM also submitted a filing pursuant to Section 205 of the FPA wherein PJM proposed revisions to its Attachment K-Appendix. According to PJM, a cost-shift is occurring where revenues from ARR holders are being redirected to FTR holders, due to a reduction in the quantity of ARRs. PJM argues that the cost shift under the existing ARR and FTR provisions renders them unjust and unreasonable, which necessitated the recent filings.

On December 11, 2015, FERC issued an order accepting PJM’s proposed tariff and operating agreement revisions that would (1) double PJM’s energy market offer cap from $1,000/MWh to $2,000/MWh for cost-justified offers, (2) cap market-based offers at $2,000/MWh only when the corresponding cost-based offer is above $1,000/MWh, and (3) allow market sellers of generation resources with demonstrated costs above $2,000/MWh to recover those costs through make-whole payments. Although PJM’s proposal was made in advance of potential natural gas price spikes in the 2015–2016 winter, PJM’s proposal would apply year-round.

On December 17, 2015, FERC issued a Notice of Proposed Rulemaking (NOPR) containing proposed revisions to its market-based rate (MBR) regulations regarding the ownership information that sellers seeking to obtain or retain MBR authority must provide. In the NOPR, FERC proposes to amend its MBR regulations to narrow the ownership information required for an assessment of horizontal or vertical market power under the MBR regulations. Additionally, FERC proposes amendments to its MBR regulations to clarify the types of ownership changes that must be reported via a notice of change in status. The NOPR indicated that these proposed revisions are intended to complement the amendments to the MBR regulations recently made in Order No. 816 (see October 19, 2015 edition of the WER).