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On November 13 and 14, 2013, the North American Electric Reliability Corporation (‘NERC”) completed its international biennial Grid Security Exercise (“GridEx”) – a series of exercises that simulate cyber and physical attacks on the bulk power system.  The simulated exercises at GridEx are designed to test participating entities’ physical and cyber security procedures in response to a coordinated, disruptive attack.

On November 12, 2013, President Barack Obama announced the nomination of Timothy Massad to become chairman of the Commodity Futures Trading Commission (“CFTC”), replacing former chairman Gary Gensler.  The CFTC regulates commodity and financial futures and options, and Massad’s appointment requires Senate confirmation.

On Friday, November 1, FERC approved changes to ISO New England, Inc.’s (“ISO-NE”) Transmission, Markets and Services Tariff expanding the instances in which ISO-NE can penalize resources that have capacity supply obligations and are completely or partially unavailable during periods of high demand in the ISO-NE’s Forward Capacity Market (“FCM”).  ISO-NE’s tariff changes became effective on November 3, 2013, as requested.

Jeffrey Jakubiak, a partner in Troutman’s New York office, has authored an article in Fortnightly Spark regarding FERC enforcement risk.  The article, titled “Don’t Fear The FERC” includes four steps for companies engaging in energy trading to follow and discuss with counsel in order to help minimize the likelihood of an investigation and lower the risk of any adverse outcome in the event of an investigation.

On October 29, 2013, Jeff Wright, Director of FERC’s Office of Energy Projects, testified before the House of Representatives Subcommittee on Energy and Power regarding H.R. 3301, the proposed North American Energy Infrastructure Act (“H.R. 3301”).  In part, H.R. 3301 requires that FERC approve new pipeline projects at the Canadian and Mexican borders within 120 days of receiving requests for approval, unless the project is not in the interest of national security, and that approval of such projects are not major federal actions under the National Environmental Policy Act (“NEPA”).

On October 23, 2013, the Inspector General of the Department of Energy (“DOE IG”) released an audit report evaluating FERC’s Unclassified Cyber Security Program.  In the audit, the DOE IG concluded that despite FERC’s progress in improving its internal processes related to cyber security, FERC needs to take additional actions to improve its cyber security systems.

On October 17, 2013, FERC issued an order denying PPL Electric Utilities Corporation’s (“PPL Electric”) request to be relieved of its mandatory obligation under the Public Utility Regulatory Policies Act of 1978 (“PURPA”) to purchase the output of Sounderton LLC’s (“Sounderton”) cogeneration facility, which is a small Qualifying Facility (“QF”) with an output of less than 20 MW. 

On October 22, 2013, the National Institute of Standards and Technology (“NIST”) released its voluntary Preliminary Cybersecurity Framework (“the Framework”) to provide a cost-effective, performance-based, flexible, and repeatable approach for critical infrastructure organizations to manage cybersecurity risks.  A key objective of the Framework, which was drafted pursuant to Executive Order 13636, is to encourage critical infrastructure organizations to consider cybersecurity a priority similar to financial, safety, and operational risk.