On June 16, 2016, FERC affirmed its process outlined in Opinion No. 538 for analyzing whether natural gas storage companies lack significant market power for the purposes of determining whether to grant market-based rate (“MBR”) authority for natural gas storage service. However, FERC clarified that the burden to show lack of control over an affiliate rests with the applicant.

On June 16, 2016, FERC denied as inconsistent with section 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”) a proposal that would require members of a generation and transmission cooperative to compensate the cooperative when the members purchase power from qualifying facilities (“QFs”) instead of from the cooperative. Specifically, Tri-State Generation and Transmission Association, Inc. (“Tri-State”) had petitioned FERC for a declaratory order finding that Tri-State’s policy of requiring compensation from Tri-State’s members when they purchase power from QFs in excess of five percent of their requirements is consistent with PURPA. FERC denied the request.

On June 16, 2016, FERC directed the Midcontinent Independent System Operator, Inc. (“MISO”) to either: (1) revise its Tariff to ensure that a generation or non-generation resource owner will no longer receive compensation for Reactive Supply and Voltage Control Service (“Reactive Service”) after it has deactivated or transferred its unit(s), and to clarify the treatment of Reactive Service revenue requirements for such unit(s); or (2) show cause why it should not be required to do so. FERC also directed MISO to post and maintain a chart listing all resource owners receiving compensation for Reactive Service, along with their current Reactive Service revenue requirements.

On June 16, 2016, FERC revised the pro forma Large Generator Interconnection Agreement (“LGIA”) and the pro forma Small Generator Interconnection Agreement (“SGIA”) to require wind generators to design their facilities to be capable of providing reactive power at their points of interconnection as a condition of interconnection. As a result, going forward all newly interconnecting non-synchronous generators, including wind generators, must be able to provide reactive power as a condition of interconnection.

On June 16, 2016, FERC clarified some of its Electric Quarterly Report (“EQR”) reporting requirements, including EQR Data Dictionary modifications that (1) clarify certain EQR fields, (2) require all EQR users to report transactions that occur on a sub-hourly basis, and (3) emphasize the requirement for transmission providers to report transmission service information. FERC’s order also indicates that, in the future, it will post certain non-material changes to the EQR reporting requirements and EQR Data Dictionary to its website and notify EQR users via e-mail of any such changes. 

On June 1, 2016, FERC issued First ECA Midstream LLC (“FECAM”) a certificate of public convenience and necessity to operate an existing 16-mile, 4- to 16-inch-diameter pipeline as a jurisdictional interstate pipeline. Notably, FERC denied FECAM’s request to file two negotiated rate agreements in lieu of an open access tariff, stating that an exception to FERC’s policies favoring open access was not warranted where FECAM was operating a pipeline to transport gas for third parties and where shippers did not have contractual rights and long-standing arrangements already in place.

On June 1, 2016, FERC granted in part and denied in part National Fuel Gas Supply Corporation’s (“National Fuel’s”) request for rehearing regarding its request to expand the reservoir and buffer boundaries of its Beech Hill Complex natural gas storage facility. In its initial order, issued December 17, 2015, the Commission stated that it “grants jurisdictional storage field operators additional certificate authority to revise the boundaries of storage fields when the applicant can demonstrate, with engineering and geological data, that such authorization is required . . . to improve the operation of a storage field or to maintain its integrity.” In its June 1 rehearing order, the Commission found geochemical data and evidence of hydraulic connections to be persuasive evidence that gas was migrating, discounted theories based on seismic evidence, and observed that “[w]hile geochemical data is not always required to support expansion of certificated boundaries, it is highly persuasive.”

On June 3, 2016, FERC accepted a compliance filing made by the New York Independent System Operator, Inc. (“NYISO”) providing for changes to the NYISO tariff in order to expand participation in NYISO’s Day-Ahead Demand Response Program (“DADRP”) to include demand response from behind-the-meter generation. The tariff changes will become effective 60 days after the issuance of the June 3, 2016 order.

On June 2, the California Assembly passed a proposal to amend the state constitution and reduce the California Public Utilities Commission’s (“CPUC”) regulatory authority. Assembly Constitutional Amendment 11 (“ACA”), also referred to as the Public Utility Reform Act of 2016, was passed by the California Assembly by a 61-to-9 vote, and may ultimately be placed on the November 2016 ballot for consideration by California’s voters. If passed, the ACA would restructure the CPUC and reallocate many of the CPUC’s functions to other state agencies, departments, or boards. 

On June 1, 2016, FERC granted the joint application of Elba Liquefaction Company, L.L.C. (“ELC”) and Southern LNG Company, L.L.C. (“Southern LNG”) requesting authorization to construct and operate new natural gas liquefaction and export facilities at Southern LNG’s existing liquefied natural gas (“LNG”) terminal located on Elba Island, Chatham County, Georgia (the “Elba Liquefaction Project”). FERC also granted Southern LNG’s request to abandon its LNG truck loading facilities at the terminal. In the same order, FERC granted the separate application of Elba Express Company, L.L.C. (“Elba Express”) to add north-to-south transportation capacity to the existing Elba Express pipeline system by constructing and operating additional compressors at the existing Hartwell Compressor Station in Hart County, Georgia, and constructing and operating two new compressor stations in Jefferson and Effingham Counties, Georgia (the “Elba Express Modification Project”). Elba Express proposed this expansion in part to enable Elba Express to transport domestic natural gas on a firm basis to the Elba Liquefaction Project.