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On February 2, 2016, the General Counsel of the Federal Energy Regulatory Commission (“FERC”), Max Minzner, testified before the Committee on Energy and Commerce Subcommittee on Energy and Power for the United States House of Representatives (“Committee”) regarding two proposed bills that would amend the Federal Power Act (“FPA”). One bill would modify Section 203 of the FPA to set a minimum threshold value of $10 million on the merger or consolidation of facilities belonging to public utilities that would be subject to FERC approval. A second bill, H.R. 2984, would amend Section 205 of the FPA to permit a party to seek rehearing and subsequent appellate review of any rate change filed pursuant to that provision that takes effect without FERC action. Going forward, the Committee may consider the testimony in deciding how to act on the proposed bills.

On February 1, 2016, FERC denied a complaint filed by NRG Power Marketing LLC (“NRG”) against the Midcontinent Independent System Operator, Inc. (“MISO”) alleging that MISO violated its tariff when it modified the Commercial Pricing Nodes (“CPNodes”) in the MISO South region to reflect the incorporation of Entergy into MISO. In particular, NRG claimed MISO’s modifications to the CPNodes effectively nullified the results of the Financial Transmission Right (“FTR”) auctions and rendered the FTRs purchased by NRG in those auctions “valueless.”

On February 3, 2016, FERC announced that it will hold a technical conference on June 1, 2016 from 10:00 AM to 4:00 PM to discuss policy issues related to the reliability of the bulk-power system. FERC stated that it will issue an agenda for the technical conference at a later date. The Commission has held similar technical conferences on policy issues related to reliability on an annual basis for the last few years (see April 21, 2014 edition of the WER).

On January 25, 2016, the Supreme Court of the United States ruled that FERC had not exceeded its legal authority under the Federal Power Act (“FPA”) in promulgating a rule—Order No. 745—that regulates the compensation paid to demand response resources in organized wholesale markets administered by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”).

On January 19, 2016, FERC Staff issued a white paper entitled, “Guidance Principles for Clean Power Plan Modeling.” Additionally, on January 27, 2016, NERC issued a special reliability assessment entitled, “Reliability Considerations for Clean Power Plan Development.” Each document is aimed at assisting various industry stakeholders with the implementation of EPA’s Clean Power Plan while maintaining grid reliability.

On January 21, 2016, FERC Commissioner Tony Clark announced at FERC’s Open Meeting that he will not seek another term at the Commission after his current term expires June 30, 2016. Commissioner Clark is serving his first term with the Commission and was appointed by President Obama on June 15, 2012. Prior to joining FERC, Commissioner Clark served as a Commissioner and Chairman of the North Dakota Public Service Commission and as president of the National Association of Regulatory Utility Commissioners.

On January 21, 2016, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to revise the $1,000/MWh cap on supply offered in day-ahead and real-time markets run by regional transmission organizations (“RTOs”) and independent system operators (“ISOs”). Specifically, FERC proposes to revise the offer cap in RTO/ISO markets to the higher of $1,000/MWh or that resource’s verified cost-based offer.

On January 21, 2016, the Federal Energy Regulatory Commission (“FERC”) concurrently issued an order and a letter order related to a dispute between Southwest Power Pool, Inc. (“SPP”) and Midcontinent Independent System Operator, Inc. (“MISO”) stemming from MISO’s use of the SPP transmission system for real-time energy transfers between MISO Midwest and MISO South. In the order, FERC accepted MISO’s proposed revisions to its Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) to remove the “hurdle rate” mechanism (“Hurdle Rate”). In the letter order, FERC approved an offer of settlement (“Settlement Agreement”) whereby MISO will provide SPP compensation related to available system capacity usage and firm point-to-point transmission service between MISO Midwest and MISO South on SPP’s transmission system. Going forward, the Hurdle Rate will be superseded by the terms of the Settlement Agreement.

On January 21, 2016, FERC issued two separate orders largely approving the termination of the Public Utilities Regulatory Policies Act (“PURPA”) mandatory purchase obligation for the Entergy Operating Companies (“Entergy”) and Arkansas Electric Cooperative Corporation (“Arkansas Coop.”). Both orders were issued in response to applications submitted under Section 210(m) of PURPA, which provides utilities with a method for petitioning FERC to terminate the obligation of a utility to purchase a qualifying facility’s (“QF”) power under PURPA.

On January 21, 2016, the Commission approved revisions to seven Critical Infrastructure Protection (“CIP”) Reliability Standards developed and submitted by the North American Electric Reliability Corporation (“NERC”), all of which were previously proposed for approval in a July 16, 2015 FERC Notice of Proposed Rulemaking (“NOPR”). According to the Commission, the revised Reliability Standards are “designed to mitigate cybersecurity risks to bulk electric system facilities, systems, and equipment, which, if destroyed, degraded, or otherwise rendered unavailable as a result of a cybersecurity incident, would affect the reliable operation of the Bulk-Power System.”