On December 1, 2017, FERC concluded that it has exclusive jurisdiction over the participation of energy efficiency resources (“EERs”) in wholesale electricity markets.  FERC also found that: (1) state or local regulators may not bar or restrict EER participation in wholesale electricity markets, unless given express authority to do so by FERC; and (2) FERC’s previous Order No. 719 on demand response may not be interpreted to permit a state or local regulator to exercise an opt-out and bar or restrict the participation of EERs.

On November 28, 2017, FERC accepted in part and rejected in part the California Independent System Operator Corporation’s (“CAISO”) two sets of tariff revisions concerning natural gas system limitations on CAISO’s system and market operations.  Specifically, FERC accepted CAISO’s proposed extension, for one additional year, of temporary Aliso Canyon tariff revisions that FERC previously accepted on an interim basis.  However, FERC rejected CAISO’s proposal to make other interim measures permanent and to extend their application to the entire CAISO-operated western grid, including the CAISO-operated Western Energy Imbalance Market (“EIM”).

On November 30, 2017, FERC upheld its denial of Rover Pipeline, LLC’s (“Rover”) request for a blanket construction certificate—which would have allowed Rover to perform certain routine construction activities and operations—in connection with the Rover Pipeline Project.  FERC determined that it was not confident Rover would comply with the blanket construction certificate’s environmental requirements due to Rover’s demolition of a historic property along the project’s route during the certificate proceeding.  FERC also concluded that Rover intentionally circumvented the National Historic Preservation Act (“NHPA”) by purchasing and demolishing the property.

On November 16, 2017, FERC denied requests for rehearing by various parties (“Petitioners”) and a request for rehearing and stay by the New York State Department of Environmental Conservation (“NYSDEC”) of FERC’s approval of Millennium Pipeline Company, L.L.C.’s (“Millennium”) Valley Lateral Project.  In doing so, FERC rejected Petitioners’ claims that (1) FERC’s National Environmental Policy Act (“NEPA”) analysis was inadequate, (2) Millennium had not demonstrated need for the project, and (3) FERC lacked jurisdiction to approve the project.  FERC also dismissed NYSDEC’s argument that FERC failed to consider the downstream greenhouse gas (“GHG”) emissions resulting from the Valley Lateral Project, holding that NYSDEC’s request was untimely.

On November 16, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) in which it proposed to approve two Reliability Standards—PRC-027-1 (Coordination of Protection Systems for Performance During Faults) and PER-006-1 (Specific Training for Personnel)—that the North American Electric Reliability Corporation (“NERC”) submitted in a petition on September 2, 2016, and which are intended to replace currently-effective Reliability Standard PRC-001-1.1(ii) (System Protection Coordination).  FERC also proposed to direct NERC to modify PRC-027-1 to require an initial protection system coordination study to ensure that applicable entities will perform (or have performed), as a baseline, a study demonstrating proper coordination of their protection systems.  Lastly, FERC proposed in the NOPR to approve new and revised definitions to the NERC Glossary of Terms, the associated violation risk factors, violation severity levels, implementation plans, and effective dates for PRC-027-1 and PER-006-1, and the retirement of currently-effective PRC-001-1.1(ii).

On November 3, 2017, FERC largely denied rehearing requests from a group of generation developers (“Generation Developers”) regarding the Midcontinent Independent System Operator, Inc.’s (“MISO”) revisions to its Generator Interconnection Procedures (“GIP”) and its pro forma Generator Interconnection Agreement (“GIA”).  With the exception of one issue, FERC otherwise rejected the Generation Developers requests that FERC reconsider prior MISO revisions regarding the efficiency and timeliness of MISO’s generator interconnection queue process contained in Attachment X of its Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”).

On November 15, 2017, PJM Interconnection LLC (“PJM”) released two proposals to modify how Locational Marginal Prices (“LMPs”) are formed in its wholesale energy market and to enhance compensation for resources providing essential grid services during “shortage” periods.  The LMP proposal seeks to enhance system reliability by expanding the eligibility criteria for setting wholesale energy market prices in the PJM footprint.  Practically speaking, this proposal will allow a wider variety of energy resources, notably less economically flexible generating units such as coal and nuclear generators, to set LMPs and increase their revenue recovery prospects.  Along with the U.S. Department of Energy’s Notice of Proposed Rulemaking currently before FERC (see October 2, 2017 edition of the WER), PJM’s dual proposals represent the latest developments in an ongoing national discussion about whether, and how, organized electricity markets can play a role in ensuring fuel diversity and system reliability through pricing mechanisms.

On November 9, 2017, FERC issued an order conditionally accepting proposed revisions to Attachment AE of the Southwest Power Pool, Inc. (“SPP”) Open Access Transmission Tariff (“Tariff”).  SPP’s proposed Tariff revisions modify SPP’s so-called “scarcity pricing” methodology in response to FERC Order No. 825.  Under this newly-approved methodology, SPP will institute variable demand curves that will more accurately reflect the value of resources during times of shortages, thereby reducing price signal distortions that can reduce incentives for resources to respond to dispatch signals.  In its order conditionally accepting the Tariff revisions, FERC directed SPP to make a compliance filing to show that certain provisions be placed in SPP’s Tariff as opposed to its Marketplace Protocols.

On November 7, 2017, FERC approved a settlement between FERC’s Office of Enforcement and Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, and Karen Levine (collectively with Barclays, “Defendants”) that resolves FERC’s claims that Defendants manipulated physical electricity markets.  Under the settlement, Barclays is required to pay $105 million in civil penalties and disgorgement, a big reduction compared to the $488 million FERC originally ordered.