On January 19, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to reform approaches to real-time uplift cost allocation and transparency practices by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”). FERC stated that the proposed reforms to uplift cost allocation should incentivize market participants to schedule sufficient resources to satisfy the system’s real-time needs, thus avoiding RTO’s/ISO’s need to procure additional resources after the day-ahead market has cleared. Meanwhile, FERC stated that the proposed reforms to transparency practices will help market participants understand how prices reflect the actual marginal cost of serving load and the operational constraints of reliably operating the system.

On January 19, 2017, FERC denied a request from Vote Solar Initiative and the Montana Environmental Information Center (collectively, “Vote Solar”) that FERC reconsider a November 1, 2016 order (“November Order”) dismissing Vote Solar’s complaint against the Montana Public Service Commission (“Montana Commission”), alleging that the Montana Commission violated section 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”) by altering the state’s framework for solar projects seeking to be qualifying facilities (“QFs”). In requesting reconsideration, Vote Solar alleged that FERC misconstrued its complaint as being a request for enforcement pursuant to PURPA Section 210(h) and that it was instead a request for FERC to use its remedial authority under Federal Power Act (“FPA”) section 309. In denying the request, FERC explained that the broad language of its regulations does not give FERC greater enforcement authority than the operative statute itself. FERC also reiterated the jurisdiction and standing deficiencies inherent in the complaint, and noted that many of Vote Solar’s substantive concerns were addressed in a recently issued Notice of Intent Not to Act and Declaratory Order in a similar challenge brought by a QF against the Montana Commission.

On January 19, 2017, FERC issued a Policy Statement providing guidance on the ability of electric storage resources to receive cost-based rate recovery for certain services, while also receiving market-based revenues for providing separate market-based rate services in Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”).

On January 19, 2017, FERC approved Reliability Standard BAL-002-2, Disturbance Control Standard—Contingency Reserve for Recovery from a Balancing Contingency Event, which is designed to “ensure that balancing authorities and reserve sharing groups balance resources and demand and return their Area Control Error to defined values following a Reportable Balancing Contingency Event.” In doing so, FERC also directed the North American Electric Reliability Corporation (“NERC”) to: (1) collect and report on data regarding additional energy losses following Reportable Balancing Contingency Events during the Contingency Reserve Restoration Period; and (2) study and report on reliability risks associated with energy losses above the most severe single contingency that do not cause energy emergencies.

On January 6, 2017, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) proposal to change its pricing methodology for the release of excess capacity in its upcoming Third Incremental Auction for the 2017/18 Delivery Year. FERC concluded that PJM will be permitted to use the revised pricing rules to release excess capacity exclusively for PJM’s Third Incremental Auction for the 2017/18 Delivery Year.

As part of the ongoing legal fallout from the 2000-2001 California energy crisis, on January 9, 2017, FERC issued an order clarifying that, for purposes of that proceeding, “pricing umbrella” evidence is relevant only for contextual purposes and cannot serve as a basis for finding refund liability. In this order, FERC clarified that “pricing umbrella” evidence may be introduced solely for the purposes of providing context for FERC’s consideration, and that such evidence should not constitute the basis for finding refund liability.

On January 9, 2017, FERC approved ISO New England Inc.’s (“ISO-NE”) proposed revisions to its Transmission, Markets and Services Tariff (“Tariff”) to change the source of natural gas prices used in calculating the daily energy market offer threshold for Import Capacity Resources, the Peak Energy Rent Strike Price, and the Forward Reserve Threshold Price under ISO-NE’s Tariff. In doing so, FERC found that ISO-NE’s proposal to calculate these thresholds using the Intercontinental Exchange’s (“ICE”) AGT-CG (Non-G) hub instead of ICE’s AGT-CG hub was just and reasonable because it changes the natural gas price index from one that is rarely liquid to one that is reliably liquid and satisfies FERC’s requirements for using price indices in tariffs.

On January 11, 2017, the United States House of Representatives (“House”) passed the Regulatory Accountability Act of 2017, which would, among other things, end the Chevron doctrine of requiring judicial deference toward administrative agencies with respect to the interpretation of statutes that the agency is charged with administering.

On January 3, 2017, FERC accepted the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed revisions to its Generator Interconnection Procedures (“GIP”) and its pro forma Generator Interconnection Agreement (“GIA”) contained in Attachment X of its Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”). MISO’s revisions result from an extensive stakeholder process intended to improve the efficiency of its queue for generator interconnection projects.

In December, 2016, the North American Electric Reliability Corporation (“NERC”) released its 2016 Long-Term Reliability Assessment (“LTRA”). Among its key findings, NERC projected that the capacity reserve margin—the primary metric used to measure resource adequacy—would fall below its target level in the Midcontinent Independent System Operator, Inc. (“MISO”) region, and could also fall below its target level in the Electric Reliability Council of Texas (“ERCOT”) region, depending on the outcome of certain pending regulatory proceedings. NERC also made a number of recommendations designed to address identified reliability issues.