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On Thursday, February 20, 2014, FERC issued a partial clarification of Order No. 784, the final rule on third-party provision of ancillary services and the accounting and financial reporting for new electric storage facilities (“Order No. 784-A”).  The clarification addressed concerns related to transmission scheduling practices required with regard to the provision of reserves, filing requirements, application to non-public utilities, deadlines for implementing data reporting, and how accounting requirements are applied.

On February 20, 2014, FERC proposed a policy statement regarding section 305(a) of the Federal Power Act (“FPA”) that would allow the payment of dividends from funds included in capital accounts by a public utility that (1) has a market-based rate tariff on file with FERC; (2) does not have captive customers; and (3) does not provide transmission or local distribution services.  Whereas such payments are generally prohibited under section 305(a), FERC reasoned that its proposed exception would not trigger the concerns underlying FPA section 305(a).  FERC is inviting comments on the proposed policy.

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.