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In a case that highlights some of the regulatory challenges presented by shifts in the nation’s generation mix, on October 20, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) accepted Puget Sound Energy, Inc.’s (“Puget”) proposed Schedules 3 and 13 concerning rates for Regulation and Frequency Response Service, but suspended them for a five-month period, to become effective January 5, 2012, subject to refund, and set them for hearing and settlement judge procedures.

On October 28, 2011, the United States Court of Appeals for the District of Columbia Circuit (“DC Circuit) vacated and remanded the Federal Aviation Administration’s (“FAA”) “No Hazard” determinations for the Cape Wind Associates’ proposed wind farm off of the Nantucket Sound (“Cape Wind project”).  The DC Circuit ruling is another major setback to the Cape Wind project that had its loan program put on hold earlier this year by the Department of Energy (see May 23, 2011 edition of the WER).

On October 24, 2011, the United States Court of Appeals for the Fifth Circuit (“5th Circuit” or the “court”) issued a decision granting the Texas Pipeline Association and the Railroad Commission’s (“Petitioners”) petition for review and vacating FERC’s Order Nos. 720 and 720-A.  In its order, the 5th Circuit held that Order Nos. 720 and 720-A exceeded the scope of FERC’ authority under the Natural Gas Act (“NGA”) of 1938.

On October 20, 2011, FERC approved a new two-part compensation method for frequency regulation in wholesale power markets that would provide higher compensation for faster ramping technologies.  The Commission found that the old form of regulation service payment from regional transmission organizations (“RTOs”) and independent system operators (“ISOs”) were unjust, unreasonable, and unduly discriminatory because it failed to acknowledge the speed of different ramping resources, and in some cases this led to inefficient economic dispatch.

On October 24, 2011, the Environmental Protection Agency (“EPA”) filed with the U.S. District Court for the District of Columbia for a 30-day extension to complete the final emissions standards for the Maximum Achievable Control Technology (“MACT”) rule. Currently the EPA is operating under a 2009 consent decree with a November 16, 2011 deadline to issue a final rulemaking on standards for hazardous air pollutants from EGUs (see October 17, 2011 edition of the WER).