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On May 19, 2016, FERC issued an Order on Voluntary Remand (“Remand Order”) to Kinetica Deepwater Express, LLC, formerly TC Offshore LLC (“TC Offshore”) in Docket No. CP11-544-004. At issue was the Commission’s rejection of TC Offshore’s proposed initial negative salvage rates. The Remand Order reaffirms FERC’s prior holdings. First, FERC held that, by waiting until after issuance of its requested Certificate to submit data to support its proposed initial negative salvage rates, despite being confronted with protests challenging its proposed salvage rates as unsupported, TC Offshore missed its opportunity to respond to the protests by submitting more supporting material. Further, FERC held that once a Certificate has issued, a party must show good cause to receive permission to reopen the evidentiary record to support changing a rate accepted by the Commission in issuing the Certificate. For example, a party may show changed circumstances resulting from the development of more information, such as more completed contracts with shippers, actual versus estimated inflation rates or other costs – new information that changes the estimates or other information on which accepted rates were based. In the instant case, however, FERC determined that TC Offshore was not making a showing of new, better evidence or changed circumstances, but instead was seeking to submit data it possessed prior to issuance of the Certificate and for the purpose of relitigating an issue it lost in the Certificate proceeding. FERC also held that the avenue of seeking an “amended certificate” was foreclosed by the fact that the proposed in-service or effective commencement date of the existing certificated rates was too close, and provided no opportunity for effective review and challenges by interested parties to any proposed amended certificate. FERC upheld its earlier holdings that TC Offshore must use the existing negative salvage rates accepted in the Commission’s Certificate Order and seek to change those rates in an NGA Section 4 proceeding.

On May 6, 2016, in a pending civil penalty assessment proceeding, the Federal Energy Regulatory Commission (“FERC”) denied the motion of ETRACOM LLC (“ETRACOM”) and Michael Rosenberg (collectively, “Movants”) to require production of data (“Motion”) from the California Independent System Operator Corporation (“CAISO”). In denying the motion, FERC explained that civil penalty assessment procedures do not allow for the same discovery rights afforded to litigants in administrative proceedings.

On May 6, 2016, Oklahoma Municipal Power Authority (“OMPA”) submitted a request to FERC seeking to take over its members’ mandatory purchase obligation under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). OMPA is a full-requirements provider for 42 municipalities in the State of Oklahoma. OMPA submitted its request under Section 210 of PURPA.

On April 29, 2016, FERC accepted, subject to condition, the Midcontinent Independent System Operator, Inc’s. (“MISO”) proposed revisions to its Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) that authorize MISO to extend or reopen the Day-Ahead Energy and Operating Reserve Market (“Day-Ahead Market”) when necessitated by unanticipated events.

In an April 29, 2016 order regarding cost allocation among the Entergy operating companies, FERC clarified and distinguished its approach to refunds in cost allocation and rate design cases, from its approach to refunds in cases of utility over-recovery (“April 29 Order”). Specifically, FERC clarified that it will generally decline to order refunds under disputes over cost allocation, whereas refunds will generally be awarded in cases involving allegations of a utility earning more than a just and reasonable rate during the refund period.

On April 22, 2016, FERC denied a complaint filed by the Maryland and Delaware Public Service Commissions (the “Complainants”) against PJM Interconnection LLC (“PJM”) alleging that PJM’s use of the solution-based distribution factor (“DFAX”) method to allocate the costs for a new transmission project in PJM was unjust and unreasonable. In denying the complaint, FERC accepted the proposed cost allocation for the “Artificial Island Project.”

On April 27, 2016, the Federal Energy Regulatory Commission (“FERC”) granted two concurrent complaints requesting FERC rescind waivers of its affiliate power sales restrictions that it previously granted to two Ohio franchised public utilities, as those waivers relate to particular power sales contracts (“Affiliate PPAs”). The utilities in question are AEP Generation Resources, Inc. (“AEP Generation”) and Ohio Power Company (“AEP Ohio,” and together with AEP Generation, the “AEP Respondents”) in Docket No. EL16-33; and FirstEnergy Solutions Corporation (“FE Solutions”) and FirstEnergy Corporation’s Ohio regulated utilities (“FE Ohio,” and together with FE Solutions, the “FE Respondents”) in Docket No. EL16-34. Going forward, FERC will evaluate the transactions contemplated in the Affiliate PPAs under the standards set forth in Boston Edison Co. Re: Edgar Electric Energy Co. and Allegheny Energy Supply Co. 

On April 21, 2016, FERC issued an order denying Viridity Energy, Inc.’s (“Viridity”) complaint alleging that PJM Interconnection, L.L.C.’s (“PJM”) Open Access Transmission Tariff (“OATT”) and the parallel provisions of the PJM Operating Agreement are unduly discriminatory as applicable to end users that register under PJM’s Emergency Load Response Program’s Capacity Only option, as opposed to the Full Program Option, because Capacity Only resources do not receive the guaranteed energy payment that Full Program Option participants receive despite being similarly situated. In the order, FERC found that the distinctions between the program participants are justified by the need to avoid errors in measurement and verification that may be caused by Capacity Only participants inadvertently submitting duplicate offers.

On April 28, 2016, FERC issued an Order to Show Cause and Notice of Proposed Penalty (“Order to Show Cause”) against Total Gas & Power North America, Inc. (“TGPNA”), Aaron Hall (“Hall”), and Therese Tran (“Tran”) for alleged natural gas market manipulation at four locations in the southwest United States between June 2009 and June 2012. The Order to Show Cause also directs these parties to show cause why TGPNA should not be required to disgorge $9.18 million (plus interest) in unjust profits, and the parties be assessed civil penalties in the amounts of $213,600,000 for TGPNA, $1,000,000 for Hall, and $2,000,000 for Tran. In addition, the Commission directed TGPNA’s ultimate parent company, Total, S.A. (“Total”), and TGPNA’s affiliate, Total Gas & Power, Ltd. (“TGPL”), to show cause why they should not be held liable for TGPNA’s, Hall’s, and Tran’s conduct and held jointly and severally liable for their disgorgement and civil penalties.

On April 19, 2016, the U.S. Supreme Court issued an opinion in Hughes v. Talen Energy Marketing, LLC affirming the decisions of the courts below that the Federal Power Act (“FPA”) vests in FERC exclusive jurisdiction over wholesale sales of electricity. As a result, the Supreme Court upheld the determination that Maryland’s state program to grant power plant subsidies was preempted by the FPA.