On January 11, 2018, FERC denied Constitution Pipeline Company, LLC’s (“Constitution”) request asking FERC to conclude that the New York State Department of Environmental Conservation (“New York DEC”) waived its authority to issue a water quality certification under Section 401 of the Clean Water Act (“CWA”).  In so doing, FERC reiterated its authority to address such issues, as they relate to “setting and enforcing” Natural Gas Act (“NGA”)-imposed deadlines, and reaffirmed FERC’s long-standing position that state certifying agencies have up to one year to act on a CWA Section 401 application.

On January 8, 2018, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) ruled that FERC acted arbitrarily and capriciously in approving a 50 basis-point incentive adder to Pacific Gas & Electric Company’s (“PG&E”) return on equity (“ROE”) for its participation in the California Independent System Operator Corporation (“CAISO”).  In particular, the Ninth Circuit held that FERC did not follow its precedent by approving PG&E’s incentive adder while dismissing arguments that PG&E’s ongoing membership in CAISO was required by a California Public Utilities Commission (“CPUC”) order and thus was not voluntary.

On January 9, 2018, several state Attorneys General, state agencies, and state consumer advocates (“State Advocates”) sent a joint letter to the FERC Commissioners requesting that FERC open an investigation into the continued justness and reasonableness of FERC-jurisdictional electric and natural gas utilities’ (“Public Utilities”) rates considering the recent reduction in the federal corporate income tax rate.  The State Advocates further urged FERC to promptly adjust the revenue requirements of such Public Utilities to prevent utility customers across the nation from overpaying for service. 

On December 28, 2017, the U.S. District Court for the Eastern District of Virginia (“District Court”) held that Powhatan Energy Fund LLC, Dr. Houlian Chen, and two funds owned by Dr. Chen (collectively, “Respondents”) are entitled to a full civil trial in FERC’s action to enforce penalties against Respondents for allegedly manipulating electricity markets.  Notably, the District Court held that a plenary civil trial was required because Respondents elected to forego a formal hearing before a FERC Administrative Law Judge (“ALJ”).  In lieu of a hearing before a FERC ALJ, Respondents instead elected to have FERC assess penalties upon finding a violation occurred, based on the investigative record. Thus, according to the District Court, a proper administrative record was never developed and Respondents were never permitted an opportunity to conduct their own independent discovery.

On December 21, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to direct the North American Electric Reliability Corporation (“NERC”) to modify the cybersecurity incident reporting requirements under the Critical Infrastructure Protection (“CIP”) Reliability Standards.  According to FERC, the proposal is intended to “improve awareness of existing and future cyber security threats and potential vulnerabilities.”

On December 29, 2017, FERC conditionally accepted revisions to the Joint Operating Agreement (“JOA”) between PJM Interconnection, L.L.C. (“PJM”) and Midcontinent Independent Operator System, Inc. (“MISO”) that are intended to improve the coordination of resources that are pseudo-tied between the two regional transmission organizations (“RTOs”).   A “pseudo-tie” is a mechanism used by one Balancing Authority (“BA”) to control generating resources that are physically located in another BA.  The proposed revisions were given an effective date of October 1, 2017, subject to a ministerial compliance filing.

On January 2, 2018, the California Independent System Operator Corp. (“CAISO”) announced plans to become its own reliability coordinator by spring 2019.  The plan will require CAISO to withdraw from Peak Reliability, the current reliability coordinator for the Western Interconnection. Although the full suite of reliability services to be offered remains unclear, CAISO stated that it will offer outage coordination, day-ahead planning, and real-time monitoring reliability services.

On December 21, 2017, FERC accepted the Southwest Power Pool, Inc.’s (“SPP”) proposed tariff revisions related to its Integrated Transmission Planning (“ITP”) process contained in SPP’s Open Access Transmission Tariff (“Tariff”).  In 2015, SPP created the Transmission Planning Improvement Task Force (“Task Force”) to review its transmission planning process to determine if improvements were needed.  Based on the Task Force’s recommendations, SPP proposed to revise certain language in its Tariff, including moving from a three-year transmission planning cycle to a one-year cycle.

On December 21, 2017, FERC Chairman Kevin McIntyre unexpectedly announced at his first Commission meeting that FERC will conduct a review of its 1999 Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities (“1999 Policy Statement”).  In doing so, Chairman McIntyre recognized that “[m]uch has changed in the energy world since 1999, and it is incumbent upon [the Commission] to take another look at the way in which we assess the value and viability of our pipeline applications.”  According to multiple reports, Chairman McIntyre clarified that he does not believe that the review will affect current pending pipeline applications.  Furthermore, Chairman McIntyre indicated that the review of the 1999 Policy Statement, which governs how FERC evaluates proposals for certificating new gas pipeline construction, will take place sometime in 2018.