On October 15, 2015, FERC issued an order to Algonquin Gas Transmission, LLC rejecting claims that FERC had failed to make specific factual findings to support its conclusion that the existing absence of reservation charge crediting provisions in Algonquin’s tariff was unjust and unreasonable, and rejecting the claim that FERC had improperly shifted the burden of proof to Algonquin in this Natural Gas Act (“NGA”) Section 5 proceeding.  Consequently, FERC ordered Algonquin to file tariff provisions conforming to FERC’s reservation charge crediting policy.  FERC also ordered Algonquin to remove from its tariff’s definition of force majeure a reference to outages caused by binding governmental orders, and to remove a reference to “curtailing” service for routine maintenance.

On October 15, 2015, FERC issued Opinion No. 538 denying ANR Storage Company’s (“ANRS”) application for market-based rates (“MBR”) for natural gas storage service.  FERC noted that the matter was the first fully-litigated proceeding where a gas storage provider has sought MBR, thus giving FERC the opportunity to announce its policies and procedures for MBR applications from gas storage providers.  In the order, FERC held that the analysis of whether a gas storage provider can exercise market power includes the three steps from FERC’s 1996 Policy Statement for natural gas pipelines: (1) define the relevant markets, (2) measure a firm’s market share and market concentration, and (3) evaluate other relevant factors.

On October 15, 2015, the Commission granted a June 30, 2015 petition for declaratory order filed by Bloom Energy Corporation (“Bloom”)—a maker of fuel cells—seeking confirmation that its current and future subsidiaries engaged in generating and selling electricity at negotiated rates to non-captive customers continue to be exempt from certain Commission regulations under the Public Utility Holding Company Act of 2005 (“PUHCA 2005”).

On October 15, 2015, FERC denied Champion Energy Marketing LLC’s (“CEM”) request for a $3.1 million refund of balancing operating reserve (“BOR”) costs assessed by PJM Interconnection, LLC and PJM Settlement, Inc. (collectively “PJM”) related to the polar vortex of January 2014.  In the order denying CEM’s request, FERC held that “PJM’s actions that caused real-time BOR costs in January 2014 benefited all real-time load, including [CEM], by ensuring the continued operation and reliability of the system.”

On October 19, 2015, the United States Supreme Court (“Supreme Court”) granted certiorari for a consolidated case involving the limits of FERC’s jurisdiction when regulating state capacity programs.  The cases—Hughes v. PPL EnergyPlus, LLC and CPV Maryland, LLC v. PPL EnergyPlus, LLC—seek a determination of whether FERC’s Federal Power Act (“FPA”) authority preempts a state program requiring public utilities to pay generators a fixed revenue stream when they were selected as the winning bid in PJM Interconnection, LLC’s (“PJM”) capacity market.  The Supreme Court’s decision to grant certiorari comes on the heels of arguments before the court on PJM’s Demand Response program (see October 26, 2015 edition of the WER).

On October 14, 2015, the U.S. Supreme Court heard oral arguments in Electric Power Supply Ass’n v. FERC regarding FERC Order No. 745, “Demand Response Compensation in Organized Wholesale Energy Markets.”  Order No. 745 previously had been vacated by the U.S. Court of Appeals for the D.C. Circuit (see May 27, 2014 edition of the WER).  The arguments largely focused on whether, by requiring regional transmission organizations (“RTOs”) and independent system operators (“ISOs”) to pay demand response resources the full locational marginal price, FERC was regulating conduct in non FERC-jurisdictional retail markets.

On October 15, 2015, in response to requests for clarification from several parties, FERC established default interpretations for capacity release transactions that specify that a releasing shipper may recall capacity at the first only, second only, or both existing intraday nominations, with such default interpretations to be applicable April 1, 2016 and thereafter when there will be three, rather than two, intraday nominations.  FERC also set filing deadlines of November 13, 2015 and December 14, 2015 for releasing and replacement shippers who disagree with the applicable default interpretation and do not agree on an alternative.

On October 15, 2015, in response to a request for declaratory order filed by Rice Energy Marketing, LLC, FERC issued an order holding that buy/sell transactions in which the releasing shipper in a supply Asset Management Agreement (“AMA”) sells its natural gas to its asset manager, the asset manager transports the gas over the released capacity, and then resells the natural gas to the releasing shipper are not buy/sell transactions prohibited by Order No. 636.