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On February 15, 2013, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued an order upholding FERC’s determination that the rates stemming from an ISO New England, Inc. (“ISO-NE”) Forward Capacity Market are not contractual, although challenges to the forward capacity market rates are subject to the same Mobile-Sierra public interest (as opposed to the just and reasonable) standard as contracted rates.  This case is significant because the D.C. Circuit upheld the use of a legal standard normally applied in contractual situations to rates produced by tariff provisions. 

On February 21, 2013, FERC issued the first two orders concerning Order No. 1000 Compliance Filings.  In its first order, FERC rejected compliance filings by Duke Energy Carolinas LLC and Carolina Power and Light Company, d/b/a Progress Energy Carolinas (“Duke-Progress”) and Alcoa Power Generating, Inc. (“Yadkin”) for failing to form a compliant transmission planning region.  In its second order, FERC granted Maine Public Service Company (“MPS”) waiver of the regional transmission planning and cost allocation requirements of Order No. 1000 and conditionally accepted additional Open Access Transmission Tariff (“OATT”) changes MPS submitted regarding its local transmission planning process, subject to further compliance.

On February 21, 2013, FERC issued a final rule incorporating updated business practice standards of the North American Energy Standards Board (“NAESB”) regarding the measurement and verification of demand response and energy efficiency.  The final rule revises FERC’s regulations (18 C.F.R. § 38.2) by referencing NAESB’s Phase II Demand Response Measurement and Verification, and its Wholesale Energy Efficiency Measurement and Verification standards.  These standards only apply to wholesale markets administered by regional transmission organizations (“RTOs”) and independent system operators (“ISOs”).

On February 12, 2013, President Barack Obama issued an Executive Order (“EO”) and an accompanying Presidential Policy Directive, PPD-21 (“PPD”) in an effort to improve cybersecurity for critical infrastructure.  Specifically, the EO requires improved cybersecurity information sharing between the federal government and the owners and operators of critical infrastructure – certain vital systems and assets to the U.S. – and the development by the federal government of standards to reduce cyber risks to critical infrastructure.

On Tuesday, February 12, 2013, the California Independent System Operator Corporation (“CAISO”) and PacifiCorp executed a Memorandum of Understanding (“MOU”) committing to jointly work toward the creation of a real-time energy imbalance market (“EIM”).  The parties identified several potential benefits from an EIM: participating in the EIM would allow PacifiCorp to quickly and accurately balance resources, efficiently meeting the needs of its transmission customers, while allowing CAISO to utilize its existing EIM system and processes to gain access to a wider array of resources.  Initially the EIM would be expanded only to include PacifiCorp, but both CAISO and PacifiCorp envision the EIM potentially including additional entities. 

On January 31, 2013, FERC addressed PJM Interconnection L.L.C.’s (“PJM”) proposed cost allocation methods for transmission system expansion and enhancements approved during development of Regional Transmission Expansion Plan. FERC deferred a decision on PJM’s proposed cost allocation methods until the Commission conducts a “comprehensive evaluation” of PJM’s related Order No. 1000 compliance proposal. Accordingly, FERC will address the merits of the cost allocation filing in the future order on PJM’s Order No. 1000 compliance.

On Thursday, January 31, 2013, FERC approved a contested settlement agreement regarding PJM Interconnection, L.L.C.’s (“PJM”) Cost of New Entry (“CONE”) values that are used in PJM’s Reliability Price Model (“RPM”).  Despite being contested by the Independent Market Monitor (“IMM”) and the Maryland Public Service Commission (“Maryland PSC”), FERC approved the settlement agreement, finding that “as a package, it presents an overall just and reasonable outcome for this proceeding.”

On January 29, 2013, FERC approved Southwest Power Pool, Inc.’s (“SPP”) proposal to modify the SPP through-and-out rate zonal rate to a region-wide rate equal to the average rate of all SPP zones.  Under its current methodology, SPP’s rate for point-to-point through-and-out transmission service is calculated using a combination of its Schedule 7 point-to-point rates and Schedule 11 zonal and regional rates.  The new methodology will remove the zonal component when calculating through-and-out transmission service within SPP and implement a single regional average rate for through-and-out service.

On February 8, 2013, Entergy New Orleans, Inc. (“Entergy”) issued a press release announcing that it had discovered the cause of the power outage during the Super Bowl – an electrical relay device.  Entergy explained in its press release that the relay is a device designed to “protect equipment in the event of a cable failure between the switch gear and the stadium.”