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On April 11, 2016, FERC issued a certificate order authorizing Northwest Pipeline, LLC (“Northwest”), a Williams pipeline company, to construct a lateral to connect Northwest’s system to a proposed methanol plant that will be owned by Northwest Innovation Works (“NWIW”) in Cowlitz County, Washington. The April 11 Order, however, rejects the rates proposed for transportation service on the lateral. The Order finds that the proposed maximum recourse rates were derived using a “day-one rate base” for the return calculation, which practice FERC has previously prohibited, requiring, instead, the use of a first-year average rate base. The April 11 Order also rejects Northwest’s proposed allocation of its existing A&G costs to the incremental rates for service on the proposed lateral. The Commission holds that it “does not reallocate costs underlying existing rates in a proceeding under section 7 of the NGA,” and that Northwest must wait for its next general section 4 rate case to seek such reallocation of existing costs. The Order also holds that the proposed incremental interruptible transportation rate for the lateral was improperly designed.

On April 11, 2016, FERC initiated a new proceeding requesting comments regarding organized market rules for electric storage resources. FERC simultaneously issued letters to each of the six RTOs/ISOs (Midcontinent Independent System Operator, Inc., New York Independent System Operator, PJM Interconnection, L.L.C., Southwest Power Pool, Inc., ISO New England, Inc., and California Independent System Operator Corporation) seeking information from each regarding potential barriers that would prevent electric storage resources from participating in capacity, energy, and ancillary service markets within each RTO/ISO.

On April 4, 2016, Maryland Governor Larry Hogan signed into law Senate Bill 323 (“SB 323”), the Reauthorization of the Greenhouse Gas Emissions Reduction Act, which requires Maryland to reduce statewide greenhouse gas emissions by 40 percent from 2006 levels by 2030. Going forward, Maryland’s Department of the Environment (“MDE”) is directed to propose an initial plan to meet the reduction goals, hold workshops to provide interested parties the opportunity to comment, and then adopt a final plan by the end of 2019.

On April 6, 2016, Idaho Power announced that it has formally signed an agreement with California Independent System Operator (“CAISO”) to join the western Energy Imbalance Market (“EIM”) beginning in April, 2018.

On April 8, 2016, the U.S. Court of Appeals for the Seventh Circuit (“Seventh Circuit”) denied petitions for review from the Midcontinent Independent System Operator, Inc. (“MISO”) and the MISO transmission owners (“TOs”) regarding FERC’s Order No. 1000 requirement that transmission providers remove from their tariffs and agreements provisions granting incumbent transmission owners a right of first refusal (“ROFR”) to construct transmission facilities selected in a regional transmission plan. In addition, the Seventh Circuit also upheld FERC’s classification of baseline reliability projects as local projects. 

On March 29, 2016, FERC granted in part and denied in part a complaint filed by a group of merchant generators (the “Internal MISO Generation”) against the Midcontinent Independent System Operator, Inc. (“MISO”) which challenged, among other things, MISO’s protocol for providing network resource interconnection service (“NRIS”) delivery product to generators external to MISO that want to participate in MISO’s capacity and energy markets, without requiring the external generators to make an “M2 Milestone Payment.” The M2 Milestone Payment is a payment that certain classes of interconnection customers entering the final phase of MISO’s interconnection process are required to make to MISO, and is used to help alleviate the costs of necessary network upgrades and restudies that are shifted to other interconnection customers in the event that an interconnection customer withdraws from the interconnection queue. In its order, FERC initiated an investigation to analyze, among other things, whether or not all existing and future MISO interconnection customers should be required to make the M2 Milestone Payment.

On March 31, 2016, FERC issued an order (1) accepting and suspending Algonquin Gas Transmission, LLC’s (“Algonquin”) proposed tariff revisions exempting from FERC’s capacity release bidding requirements certain types of capacity releases of firm transportation by electric distribution companies (“EDCs”) that are participating in state-regulated electric reliability programs and (2) establishing a technical conference to determine whether the proposed tariff revisions are just and reasonable.

On March 22, 2016, FERC issued an order affirming its jurisdiction over Vermont Electric Cooperative, Inc. (“VEC”) in the context of a Federal Power Act (“FPA”) Section 206 investigation into the formula rates of ISO-New England (“ISO-NE”) Participating Transmission Owners, including their Regional Network Service (“RNS”) and Local Network Service (“LNS”) formula rates.

On March 17, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued a Notice of Proposed Rulemaking (“NOPR”) that would modify the pro forma Small Generator Interconnection Agreement (“SGIA”) originally set forth in Order No. 2006. Specifically, FERC’s proposed modifications would require small generating facilities interconnecting through the SGIA to ride through abnormal frequency and voltage events rather than disconnecting. Because FERC already imposes such requirements on large generators under the Large Generator Interconnection Agreement, FERC stated that the proposed revisions address its concerns that it is unduly discriminatory to only impose such requirements on large generating facilities and not small generating facilities.