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On February 21, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated and remanded a FERC gas storage order for failure to offer a reasoned basis for its decision.  The D.C. Circuit held that FERC acted arbitrarily and capriciously when it ordered that new natural gas storage customers pay for replenishing base gas via incremental rates, rather than spreading the costs amongst all customers through rolled-in rates.

On February 21, 2014, FERC announced that it will hold a technical conference on the “Winter 2013-2014 Operations and Market Performance in Regional Transmission Organizations and Independent System Operators.”  Through the technical conference, FERC intends to examine the impacts of cold weather events that occurred this winter and actions taken to address these impacts.  The technical conference will be held on April 1, 2014 from 9:00 am to 5:00 pm and led by FERC Staff. 

On Thursday, February 20, 2014, FERC issued a partial clarification of Order No. 784, the final rule on third-party provision of ancillary services and the accounting and financial reporting for new electric storage facilities (“Order No. 784-A”).  The clarification addressed concerns related to transmission scheduling practices required with regard to the provision of reserves, filing requirements, application to non-public utilities, deadlines for implementing data reporting, and how accounting requirements are applied.

On February 20, 2014, FERC proposed a policy statement regarding section 305(a) of the Federal Power Act (“FPA”) that would allow the payment of dividends from funds included in capital accounts by a public utility that (1) has a market-based rate tariff on file with FERC; (2) does not have captive customers; and (3) does not provide transmission or local distribution services.  Whereas such payments are generally prohibited under section 305(a), FERC reasoned that its proposed exception would not trigger the concerns underlying FPA section 305(a).  FERC is inviting comments on the proposed policy.

On February 12, 2014, as directed by President Barack Obama in Executive Order No. 13636, the National Institute for Standards and Technology (“NIST”), an agency within the Department of Commerce, released the final Cybersecurity Framework (“Framework”).  While the Framework is intended to be voluntary, and is designed to facilitate the establishment of a national set of standards for cyber risk management across all segments of the economy, the manner in which the Framework will be implemented by and through the Sector-Specific Agencies, such as DOE, remains to be seen.

On February 7, 2014, FERC approved a Stipulation and Consent Agreement (“Agreement”) between the Office of Enforcement (“Enforcement”) and Louis Dreyfus Energy Services L.P. (“LDES”) regarding LDES’ virtual trading in the markets operated by the Midcontinent Independent System Operator, Inc. (“MISO”).  LDES agreed to (1) pay MISO a disgorgement of $3,340,000 plus interest; (2) pay a civil penalty of $4,072,257; and (3) institute a new compliance program.  Additionally, one of LDES’ traders, Xu Cheng, agreed to pay a civil penalty of $310,000.

On February 11, 2014, FERC issued a final rule delegating authority to the Director of the Office of Electric Reliability (“OER”) to review and process Notices of Penalty (“Notices”) filed at FERC by the North American Electric Reliability Corporation.  In particular, the OER Director will now have the authority to extend the period of time to consider such Notices for purposes of obtaining additional information.

On February 7, 2014, FERC invoked its emergency authority under the Interstate Commerce Act in an effort to alleviate a severe shortage of propane in the Midwest and Northeast.  Specifically, FERC’s order directed Enterprise TE Products Pipeline Company, LLC (“Enterprise”) to temporarily provide priority treatment to propane shipments from Texas to the Midwest and Northeast regions.

On February 3, 2014, FERC accepted an agreement for firming service and energy exchange (“Agreement”) between Arizona Public Service Company (“APS”) and the City of Azusa, California (“Azusa”).  In doing so, FERC found that the transaction under the Agreement was indeed a simultaneous exchange that required prior FERC authorization based on FERC precedent established in Puget Sound Energy (see February 17, 2012 edition of the WER), but that the transaction did not raise open access transmission service concerns.