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On February 20, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) held that FERC had the authority to approve a cost pooling agreement among the carriers of the Trans Alaska Pipeline System (“TAPS”) that allocates certain fixed costs on the basis of each carrier’s share of combined interstate and intrastate utilization of TAPS.  In upholding this determination by FERC, the D.C. Circuit found that FERC could indirectly regulate intrastate oil prices as a result of its regulation of interstate prices.

On February 19, 2015, the Commission approved the North American Electric Reliability Corporation’s (“NERC”) proposed implementation of the Reliability Assurance Initiative (“RAI”)—an initiative aimed at creating a “Risk-Based” approach for compliance monitoring and enforcement of mandatory Reliability Standards.  Going forward, NERC believes that RAI will have Electric Reliability Organization (“ERO”) and industry resources more focused on higher-risk issues that significantly impact the reliability of the Bulk Electric System (“BES”).

On February 19, 2015, FERC directed the New York Independent System Operator, Inc. (“NYISO”) to propose new tariff provisions and a pro forma agreement for its reliability-must-run (“RMR”) service.  FERC stated that the RMR provisions are necessary because of the uncertainty and potential for reliability issues created by the lack of such RMR provisions within NYISO.

On February 19, 2014, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing the sale of primary frequency response service at market-based rates by sellers with market-based rate authority for energy and capacity.  FERC also explained that the NOPR serves as an extension of the policy reforms set out in Order No. 784, the final rule on third-party provision of ancillary services and the accounting and financial reporting for new electric storage facilities (see July 29, 2013 edition of the WER).  In the NOPR, FERC concluded that companies that are able to pass “the existing market-based screens for sales of energy and capacity can adequately demonstrate a lack of market power for sales of primary frequency response service.” 

On February 2, 2015, the Commission directed Maxim Power Corporation, Maxim Power (USA), Inc., Maxim Power (USA) Holding Company Inc., Pawtucket Power Holding Co., LLC, Pittsfield Generating Company, LP (collectively “Maxim”), and Kyle Mitton, a Maxim executive (together “Respondents”) to show cause why they should not be found to have violated the Federal Power Act and the Commission’s regulations “through a scheme to obtain payments for reliability dispatches based on the price of expensive fuel oil when Maxim in fact burned much less costly natural gas.”  The Commission further directed the Respondents to show cause why they should not be assessed civil penalties of: (i) $50,000 (against Mr. Mitton); and (ii) $5,000,000 (against Maxim).

On February 9, 2015, FERC approved the Midcontinent Independent System Operator, Inc.’s (“MISO”) request for a temporary waiver of its $1,000/MWh energy offer price cap.  FERC’s approval will now allow generators with actual, verifiable costs above the $1,000/MWh energy offer price cap to receive make-whole payments by increasing the “No Load” component of their offer after consultation with MISO’s Independent Market Monitor (“IMM”).  The waiver of the energy offer price cap runs from December 20, 2014 to April 30, 2015.

On February 6, 2015, FERC ruled, in its Order on Rehearing regarding certain reporting requirements of Order No. 768, that Electronic Quarterly Reports (“EQR”) filers will no longer need to submit an electronic tag (“e-Tag”) ID for each transaction reported in their EQRs if an e-Tag was used to schedule the transaction.

On January 30, 2015, the Commission denied a complaint filed by the New England Power Generators Association, Inc. (“NEPGA”) in which NEPGA sought either modification or elimination of the Peak Energy Rent (“PER”) Adjustment mechanism in ISO New England Inc.’s (“ISO-NE”) Forward Capacity Market (“FCM”).

On February 4, 2015, the Department of Energy’s (“DOE”) Office of the Inspector General released a report on the Federal Energy Regulatory Commission’s (“Commission”) treatment of nonpublic information within the Commission (“Inspection Report”).  The “Inspection Report: Review of Controls for Protecting Nonpublic Information at the Federal Energy Regulatory Commission” concluded that the “Commission’s controls, processes and procedures for protecting nonpublic information were severely lacking.”

On February 2, 2015, FERC submitted its Fiscal Year (“FY”) 2016 Budget Request for $319,800,000.  This amount is approximately five percent above the FY 2015 Budget Request.  In requesting its budget, FERC sets out its three primary goals: (1) supporting just and reasonable rates, terms, and conditions (“Goal 1”); (2) promoting safe, reliable, secure and efficient infrastructure (“Goal 2”); and (3) mission support through organizational excellence (“Goal 3”).