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On June 6, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (“DC Circuit”) ruled that FERC’s environmental assessment of Tennessee Gas Pipeline Company, L.L.C.’s (“Tennessee Gas”) proposed “Northeast Project” violated the National Environmental Policy Act (“NEPA”).  Specifically, the DC Circuit held that FERC (1) failed to consider Tennessee Gas’ Northeast Project in conjunction with three other connected and interdependent Tennessee Gas pipeline projects, and (2) failed to provide a meaningful analysis of the cumulative impacts of all of the Tennessee Gas projects.

On June 4, 2014, the United States Court of Appeals for the Second Circuit denied an emergency motion requesting a stay of two FERC orders associated with the New York Independent System Operator, Inc.’s (“NYISO”) creation of a new capacity market local deliverability zone in the lower Hudson Valley.  The creation of the new zone requires that a certain amount of capacity serving that area be located within the zone, which could lead to higher capacity prices in that area.  The petitioners, Central Hudson Gas & Electric and the New York Public Service Commission (“NYPSC”), argued to the court that the implementation of the new capacity zone would unnecessarily expose consumers to considerably higher prices and that pending transmission developments would eventually make the zone unnecessary.

On May 19, 2014, FERC granted the California Independent System Operator Corporation’s (“CAISO”) petition for limited waiver of certain sections of its tariff that apply a minimum performance threshold to resources providing regulation services. CAISO had requested the waiver because a significant number of resources were failing to meet the minimum threshold.  FERC approved the requested waiver, finding that the waiver was limited in scope, resulted in no undesirable consequences, and benefited customers.

On May 23, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated FERC Order No. 745, “Demand Response Compensation in Organized Wholesale Energy Markets” in its entirety as an ultra vires agency action, explaining that FERC’s rule overstepped its authority, “encroaching on the states’ exclusive jurisdiction to regulate the retail market.”  While the court based its decision on jurisdictional grounds, it said it would have vacated the order on substance also, concluding it was arbitrary and capricious to promulgate rules that over-compensate demand response providers.  The panel was split two to one.

On May 9, 2014, FERC conditionally approved PJM Interconnection, L.L.C.’s (“PJM”) proposed tariff revisions to enable sharing of operational data with natural gas pipelines and local distribution companies (“LDCs”).  The tariff revisions are in accordance with FERC’s Order No. 787 regarding information sharing and allow PJM to share non-public information with pipelines for purposes of operational planning or reliability.

On Thursday, May 15, 2014, FERC issued a Notice of Proposed Rulemaking titled “Open Access and Priority Rights on Interconnection Customer’s Interconnection Facilities” (the “NOPR”).  The NOPR proposes to amend certain of FERC’s regulations as they relate to public utilities that are subject to such regulations solely due to owning, controlling or operating generator tie lines, now referred to by FERC as Interconnection Customer’s Interconnection Facilities or “ICIFs.” 

On May 2, 2014, FERC granted the Illinois Municipal Electric Agency (“IMEA”) a waiver from certain PJM Interconnection, L.L.C. (“PJM”) tariff requirements so it could utilize PJM’s Fixed Resource Requirement (“FRR”) Alternative for load delivery.  As a result, IMEA can self-supply its Naperville, Illinois load with generation located outside of the Commonwealth Edison (“ComEd”) Locational Deliverability Area (“LDA”) starting on June 1, 2017.