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On October 17, 2016, the U.S. Commodity Futures Trading Commission (the “CFTC”) clarified that certain transactions in Regional Transmission Organization (“RTO”) and Independent System Operator (“ISO”) markets are exempted from the Commodity Exchange Act (the “CEA”) provisions governing private rights of action, marking a reversal of the CFTC’s proposal in May 2016 which sought to subject the transactions to private rights of action. In addition, the CFTC granted Southwest Power Pool, Inc.’s (“SPP”) request to exempt certain transactions in its markets from most CEA provisions and CFTC regulations, excluding those relating to the CFTC’s anti-fraud and anti-manipulation authority.

On September 30, 2016, FERC accepted the change in status filing submitted by Puget Sound Energy, Inc. (“Puget”) and certain affiliated generators. The filing informed FERC that Puget intended to join the Energy Imbalance Market (“EIM”) administered by the California Independent System Operator Corporation (“CAISO”) beginning on October 1, 2016. FERC accepted the change in status filing and authorized Puget to transact at market-based rates (“MBR”) in the EIM, based on Puget’s market power analysis submitted (and supplemented) as part of the change in status filing.

On August 25 and 26, 2016, the California Independent System Operator Corporation (“CAISO”) filed Readiness Certifications with the Commission for Puget Sound Energy, Inc. (“PSE”) and Arizona Public Service Company (“APS”), respectively, signaling that PSE and APS are ready to begin participation in the Energy Imbalance Market (“EIM”) administered by the CAISO. According to the CAISO, the expanded, six-Balancing Authority Area (“BAA”) EIM is scheduled to commence on October 1, 2016.

On August 26, 2016, FERC established a proceeding to determine whether transmission owners in the footprint of the PJM Interconnection L.L.C. (“PJM”) are complying with the requirements of Order No. 890. This proceeding follows a November 2015 technical conference in which several PJM transmission customers and other parties suggested that PJM stakeholders are unable to meaningfully participate in the transmission planning process for certain PJM projects, in contravention of Order No. 890’s planning requirements.

On July 21, 2016, FERC issued an order in a proceeding on remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”). In its order, FERC acknowledged that it had committed legal error by accepting, without refund commitment, proposed revisions to the Southwest Power Pool Inc.’s (“SPP”) Open Access Transmission Tariff (“Tariff”) implementing a formula rate for Tri-County Electric Cooperative Inc. (“Tri-County”), and had failed to correct this legal error on rehearing. To remedy its error, FERC directed SPP to bill Tri-County for certain amounts collected under Tri-County’s formula rate, and issue refunds to ratepayers.

On July 27, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) accepted a compliance filing from ISO New England (“ISO-NE”) that establishes a ten-percent materiality threshold before ISO-NE will mitigate a retirement bid in its annual Forward Capacity Auction (“FCA”). In an April 2016 order, FERC previously accepted a set of proposed revisions to ISO-NE’s Transmission, Markets, and Services Tariff (“Tariff”) regarding capacity market power and FCA prices on the condition that the ISO include a price mitigation threshold for retirement bids (see April 18, 2016, edition of the WER).

On July 21, 2016, FERC issued a final rule (“Order No. 828”) modifying the pro forma Small Generator Interconnection Agreement (“SGIA”) to require newly interconnecting small generators to “ride-through” voltage and frequency variations rather than having those generators disconnect from the larger transmission system. With this final rule, FERC obligates new small generators—those less than 20 MW—to have comparable ride-through capabilities as those currently imposed on their large-scale counterparts through the pro forma Large Generator Interconnection Agreement (“LGIA”). 

On July 21, 2016, the U.S. District Court for the District of Massachusetts (“District Court”) determined that review of a FERC-issued penalty for alleged market manipulation must be treated as an “ordinary civil action” requiring de novo review and finding against FERC’s arguments to the contrary. The District Court further ordered in its decision, FERC v. Maxim Power Corp., et al., that in the corresponding civil action—to determine whether to affirm FERC’s prior penalty assessment against the owners and operators of a power plant in Pittsfield, Massachusetts (“Maxim”) and one of their employees (together, “Respondents”)—the Respondents will be entitled to the full discovery of an ordinary civil case, and the proceeding can be decided by a jury, if necessary. 

On July 21, 2016, FERC proposed new data collection and reporting requirements for market-based rate (“MBR”) sellers and entities trading virtual products or holding financial transmission rights in organized wholesale markets (“Virtual/FTR Participants”). Specifically, in an effort to streamline and reduce the burden of proposed information collection, FERC proposed in the Notice of Proposed Rulemaking (the “Data Collection NOPR”) to (1) revise the information to be submitted on ownership, employee, debt, and contractual connections (“Connected Entity Information”) from a prior proposed rule (the “Connected Entity NOPR”); (2) better align the information to be provided on “affiliates” in connection with Connected Entity Information submissions with the information MBR sellers must provide on “affiliate owners” under FERC’s MBR regulations; and (3) remove the existing requirement that MBR sellers submit corporate organization charts adopted in Order No. 816.

On July 13, 2016, FERC issued an order partially lifting a long-standing pricing limitation for energy exports from the Midcontinent Independent System Operator, Inc. (“MISO”) to the PJM Interconnection, L.L.C. (“PJM”) in relation to Multi-Value Projects (“MVPs”). The order—released in response to a remand from the U.S. Court of Appeals for the Seventh Circuit (“Seventh Circuit Court of Appeals”)—resolves a multi-year-long process and debate over how to allocate costs to PJM for MISO’s MVP transmission projects that benefit customers inside of the PJM region. The central issue decided by FERC was, in light of current system, market, and technological conditions impacting these two Regional Transmission Organizations (“RTOs”), whether it was still necessary to maintain a restriction on export charges for MVP-enabled energy deliveries that originate in MISO and sink in PJM.