On March 21, 2013, FERC issued a final rule approving the North American Electric Reliability Corporation’s (“NERC”) modified reliability standard for vegetation management along transmission right-of-ways.  The modified reliability standard, FAC-003-2, makes several revisions to the current standard, FAC-003-1, by (1) expanding the applicability of the standard; (2) requiring a minimum vegetation clearance distance (“MVCD”) regardless of whether an outage occurs or not; and (3) implementing a new annual vegetation inspection and work requirement.

On March 15, 2013, the United States Court of Appeals for the District of Columbia (“D.C. Circuit”) determined that FERC did not have the authority to fine energy trader Brian Hunter – previously a natural gas trader for Amaranth Advisors LLC (“Amaranth”) – $30 million for manipulating natural gas futures markets.  Instead, the D.C. Circuit determined that the Commodity Futures Trading Commission (“CFTC”) has “exclusive jurisdiction over all transactions involving commodity futures contracts” and that nothing in the Energy Policy Act of 2005 (“EPAct 2005”) clearly and manifestly repeals CFTC’s exclusive jurisdiction.

On March 4, 2013, FERC accepted the Midwest Independent Transmission System Operator, Inc.’s (“MISO”) first ever use of a cost of service agreement to avoid reliability concerns presented by a generator’s planned retirement.  Called a system support resource (or “SSR”) agreement, MISO tendered the agreement to the City of Escanaba, Michigan (“Escanaba”)* to prevent the City from mothballing two generating units over concerns that system reliability in the upper peninsula of Michigan could be compromised if the units were permitted to shut down.  Under the MISO tariff, MISO must provide SSR agreements to generators who plan to mothball or retire, but who are needed for some interim period to maintain system reliability.

On March 12, 2013, FERC and the United States Coast Guard (“USCG”) announced the signing of a Memorandum of Understanding (“MOU”) regarding applications to site, construct and operate hydrokinetic power generation projects in waters under the jurisdiction of the United States.  The MOU defines hydrokinetic projects as those “designed to harness the power of waves, tides, currents, and the free-flow of rivers and streams.”  The goal of the MOU is to increase cooperation and collaboration between FERC and the USCG while proposed hydrokinetic projects are being considered and reviewed by FERC.

On March 5, 2013, FERC conditionally approved the ISO New England, Inc. (“ISO-NE”) and New England Power Pool Participants Committee’s (“Power Pool Committee”) proposal to share confidential information with other Independent System Operators (“ISOs”), Regional Transmission Organizations (“RTOs”), or their respective market monitors if such information is requested by the ISO, RTO, or market monitor as part of an investigation.

On February 28, 2013, FERC accepted and suspended Potomac Electric Power Company and Delmarva Power & Light Company’s (collectively, “PHI Companies”) tariff revisions to recover costs related to abandonment of the Mid-Atlantic Power Pathway (“MAPP”) Project.  The Commission, however, required the removal of previously-awarded return on equity (“ROE”) incentive adders for regional transmission organization (“RTO”) participation and for the risks and challenges of the project.  FERC concluded that due to the abandonment of the MAPP Project, the adders were no longer appropriate.  FERC set the issue of the reasonableness of the specific amount of abandonment costs for hearing.

On March 4, 2013, President Barrack Obama announced the nominations of Gina McCarthy for Administrator of the Environmental Protection Agency (“EPA”), and Ernest Moniz for Secretary of the Department of Energy (“DOE”).  If confirmed, Ms. McCarthy will replace Administrator Lisa Jackson, while Dr. Moniz will succeed Secretary Steven Chu.

On March 5, 2013, FERC announced the details of its upcoming technical conference focused on the scheduling practices of natural gas and electric markets.  The technical conference is the second of two technical conferences ordered by FERC in a November 15, 2012 order to address common issues raised during regional conferences (see November 16, 2012 edition of the WER).  The first technical conference was held on February 13, 2013, and addressed communication issues between the two industries (see February 14, 2012 edition of the WER).

On Thursday, February 28, 2013, the North American Electric Reliability Corporation (“NERC”) filed proposed revisions to its Standard Processes Manual (“SPM”) with FERC.  The SPM contains the procedures that govern NERC’s development of mandatory reliability standards.  NERC explained that the purpose of updating the SPM is to streamline the drafting, commenting and balloting processes used to develop mandatory reliability standards, and to provide greater clarity throughout the entire process.

On February 21, 2013, FERC authorized Cheniere Creole Trail Pipeline, L.P. (“Creole Trail”) to modify its current pipeline system in Cameron and Beauregard Parishes, Louisiana so that it will allow bi-directional flow to deliver domestic gas to the liquefied natural gas (“LNG”) terminal owned by Sabine Pass LNG, L.P. (“Sabine Pass”).