On June 1, 2016, FERC granted the request by MoGas Pipeline LLC (“MoGas”) for abandonment authority to transfer by sale its jurisdictional natural gas pipeline facilities to an affiliate, CorEnergy Pipeline Company, LLC (“CorEnergy”), and certificate authority to lease the facilities back for continued operation by MoGas. MoGas stated that if its parent, Corridor MoGas, Inc. (“Corridor MoGas”), sells a majority stake in MoGas to an unaffiliated third party, the income from MoGas’s lease payments will qualify as non-taxable Real Estate Investment Trust (“REIT”) rental income.

On May 31, 2016, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposal to excuse a Capacity Performance Resource from Non-Performance Charges during emergency conditions. PJM proposed to excuse such resources from Non-Performance Charges when the resource followed PJM’s dispatch instructions and operated at a ramp rate PJM had previously approved. In refusing to allow the proposed exemption, FERC emphasized that “[i]t is critical that the capacity market rules send the proper long-term investment signals to ensure capacity that can meet the reliability needs of the region.”

On June 1, 2016, former Troutman Sanders LLP attorney Lisa Hardie began her term as Chair of the Oregon Public Utility Commission. Ms. Hardie was appointed by Oregon Governor Kate Brown and confirmed by the Oregon Senate in May of 2016. Until her appointment, Ms. Hardie was a member of Troutman Sanders’ Energy Practice.

On June 2, 2016, FERC conditionally accepted revisions to the California Independent System Operator Corporation’s (“CAISO”) tariff to facilitate the participation of aggregations of distribution-connected or distributed energy resources in CAISO’s energy and ancillary services markets. The proposed revisions are effective June 3, 2016, subject to CAISO submitting a compliance filing.

On May 19, 2016, FERC issued Order No. 816-A, denying requests for rehearing and granting certain requests for clarification of Order No. 816. Order No. 816 amended FERC’s regulations governing market-based rate (“MBR”) authorizations for wholesale sales of energy, capacity, and ancillary services by public utilities under the Federal Power Act (“FPA”).

On May 19, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a policy statement regarding future implementation of hold harmless commitments offered by applicants as ratepayer protection mechanisms to mitigate adverse effects on rates that may result from transactions subject to section 203 of the Federal Power Act (“FPA”). The policy statement provides guidance in four areas related to hold harmless commitments: (1) the scope and definition of the costs that should be subject to hold harmless commitments; (2) controls and procedures to track the costs from which customers will be held harmless; (3) FERC’s continued acceptance of hold harmless commitments that are limited in duration; and (4) clarification that applicants may offer another form of ratepayer protection mechanism in the place of a hold harmless commitment, and that an applicant may not require any such mechanism in order to be able to demonstrate that a proposed transaction will not have an adverse effect on rates. The policies adopted in the policy statement will be effective 90 days after publication.

On May 19, 2016, FERC issued a Notice of Proposed Rulemaking in which it proposed to approve Reliability Standard BAL-002-2, Disturbance Control Standard—Contingency Reserve for Recovery from a Balancing Contingency Event (“May 19 NOPR”). In the May 19 NOPR, FERC described BAL-002-2 as designed to ensure that Registered Entities “are able to recover from system contingencies by deploying adequate reserves to return their Area Control Error to defined values and by replacing the capacity and energy lost due to generation or transmission equipment outages.” FERC also proposed in the May 19 NOPR to direct the North American Electric Reliability Corporation (“NERC”) to: (i) modify BAL-002-2 to address concerns related to the possible extension or delay of the periods for Area Control Error recovery and contingency reserve restoration; and (ii) address a reliability “gap” associated with NERC’s proposed definition of “Reportable Balancing Contingency Event.”

On May 19, 2016, FERC denied the request for limited rehearing of numerous shippers (“Complainants”) of FERC’s October 17, 2013 order granting in part Complainants’ complaints and establishing a hearing on damages (“Complaint Order”) against Enterprise TE Products Pipeline Company LLC (“Enterprise TE”) relating to Enterprise TE’s decision to abandon transportation service for distillate and jet fuel. FERC held that although Enterprise TE’s decision to discontinue transportation service for distillate and jet fuel violated a settlement agreement executed by Enterprise TE and Complainants, among others, which required Enterprise TE not to change its rates for two years, FERC does not have authority under the Interstate Commerce Act (“ICA”) to require a pipeline to provide a service that the pipeline proposes to abandon completely.

On May 19, 2016, FERC granted Comanche Trail Pipeline, LLC’s (“Comanche Trail”) request for a Presidential Permit and authorization pursuant to section 3 of the Natural Gas Act (“NGA”) and Part 153 of the Commission’s regulations to construct and operate a border-crossing facility to export natural gas to, and import natural gas from, Mexico (the “San Elizario Crossing Project”). In doing so, FERC rejected claims that it should assert jurisdiction over Comanche Trail’s intrastate pipeline upstream from the San Elizario Crossing Project, holding that section 3 of the NGA confers FERC jurisdiction over only a small segment of the facilities close to the border.

In an order denying rehearing, issued to the City of Clarksville, Tennessee on May 19, 2016, FERC issued an interpretation narrowing the scope of the exemption for “municipalities” found in Natural Gas Act (“NGA”) section 2(2). In several prior orders, FERC had held that a municipality is not a “person” under the NGA and would not be required to obtain the authorization provided by a section 284.224 blanket certificate to local distribution companies (“LDCs”) and Hinshaw pipeline companies engaging in the interstate transportation of natural gas. In its May 19 order to the City of Clarksville, FERC held that while a municipality is not a “corporation” under the NGA, it is a person subject to FERC’s jurisdiction when it “transports or sells gas for resale and consumption in another state, since the state cannot assert jurisdiction over such transportation or sales by the municipality.”