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On February 7, 2014, FERC approved a Stipulation and Consent Agreement (“Agreement”) between the Office of Enforcement (“Enforcement”) and Louis Dreyfus Energy Services L.P. (“LDES”) regarding LDES’ virtual trading in the markets operated by the Midcontinent Independent System Operator, Inc. (“MISO”).  LDES agreed to (1) pay MISO a disgorgement of $3,340,000 plus interest; (2) pay a civil penalty of $4,072,257; and (3) institute a new compliance program.  Additionally, one of LDES’ traders, Xu Cheng, agreed to pay a civil penalty of $310,000.

On February 11, 2014, FERC issued a final rule delegating authority to the Director of the Office of Electric Reliability (“OER”) to review and process Notices of Penalty (“Notices”) filed at FERC by the North American Electric Reliability Corporation.  In particular, the OER Director will now have the authority to extend the period of time to consider such Notices for purposes of obtaining additional information.

On February 7, 2014, FERC invoked its emergency authority under the Interstate Commerce Act in an effort to alleviate a severe shortage of propane in the Midwest and Northeast.  Specifically, FERC’s order directed Enterprise TE Products Pipeline Company, LLC (“Enterprise”) to temporarily provide priority treatment to propane shipments from Texas to the Midwest and Northeast regions.

On February 3, 2014, FERC accepted an agreement for firming service and energy exchange (“Agreement”) between Arizona Public Service Company (“APS”) and the City of Azusa, California (“Azusa”).  In doing so, FERC found that the transaction under the Agreement was indeed a simultaneous exchange that required prior FERC authorization based on FERC precedent established in Puget Sound Energy (see February 17, 2012 edition of the WER), but that the transaction did not raise open access transmission service concerns.

On January 24, 2014, the United States Court of Appeals for the Fourth Circuit (“Fourth Circuit”) published an opinion upholding FERC’s decision to grant incentive-based rate treatment to Virginia Electric Power Company (“VEPCO”) to spur investment in transmission infrastructure.  The North Carolina Utilities Commission (“NCUC”) argued that FERC violated section 219 of the Federal Power Act (“FPA”) and abused its discretion by granting incentives to five of VEPCO’s facilities and by denying NCUC’s petition for rehearing.

On January 28, 2014, FERC announced that it will hold a technical conference to discuss local deliverability zones within the New York Independent System Operator, Inc.’s (“NYISO”) installed capacity market.  Specifically, the Commission will explore how the Long Island area (referred to as “Load Zone K”) should be modeled in future capacity (“ICAP”) auctions.

On January 22, 2014, FERC held a technical conference addressing revisions to its electronic quarterly report (“EQR”) process.  During the conference, a FERC staff member commented that the filing window for third quarter (“Q3”) 2013 EQRs, which had been indefinitely delayed from October 31, 2013, could open March 1, with a deadline of March 31, although the date must be approved by the Commission.

On January 17, 2014, FERC granted PJM Interconnection, L.L.C (“PJM”) a temporary waiver of certain provisions of PJM’s Amended and Restated Operating Agreement (“Operating Agreement”) to share non-public, operational information with natural gas pipelines in the PJM region.  The temporary waiver of information sharing provisions of PJM’s Operating Agreement is effective until the earlier of PJM’s effective date of implementing FERC’s Order No. 787 tariff revisions or March 31, 2014.