On March 29, 2013, the Commission rejected a proposal by the California Independent System Operator Corporation (“CAISO”) that would provide financial assistance to resources that are either at risk for retirement or are uneconomic, but are still needed for flexible capacity and local reliability (“FLRR mechanism”).  Instead, the Commission encouraged CAISO and its stakeholders to develop a market-based mechanism that offers incentives for resources that address adequacy and operational needs in CAISO.   The Commission further ordered FERC staff to convene a technical conference with CAISO, the California Public Utilities Commission (“CPUC”), and industry participants within 120 days of its order to identify new solutions.

On March 21, 2013, FERC issued an order disagreeing with the North American Electric Reliability Corporation’s (“NERC”) proposed interpretation of the Critical Infrastructure Protection (“CIP”) Reliability Standard dealing with identification of Critical Cyber Assets, CIP-002.  FERC found that NERC’s proposed interpretation and petition did not provide “adequate justification” for leaving unprotected certain cyber assets that are “essential to the operation of associated Critical Assets.”  The Commission’s order remands the interpretation to NERC for further consideration to address the Commission’s concern.

On March 25, 2013, FERC rejected a rate complaint brought by an individual, Gordon Gooch, against oil pipeline Colonial Pipeline Company (“Colonial”).  FERC dismissed the complaint because Mr. Gooch failed to show he was adversely affected by Colonial’s rates for pipeline service.  Notably, while the Commission unanimously dismissed the complaint, Commissioners Phillip Moeller and John Norris issued separate statements expressing concern with the lack of guidance in the order for future individual complainants.

On March 21, 2013, FERC reversed its policy of assessing annual charges to hydropower licensees for use of their own land that is subject to a power site reservation.

On March 15, 2013, FERC granted a petition for enforcement by petitioners Grouse Creek Wind Park, LLC and Grouse Creek Wind Park II, LLC (together “Grouse Creek”) and announced FERC would again go to court to enforce the Public Utility Regulatory Policies Act of 1978 (“PURPA”) against the Idaho Public Utilities Commission (“Idaho PUC”).  FERC’s enforcement action concerning Grouse Creek will take place in conjunction with its enforcement action in a similar proceeding, Murphy Flat (see December 3, 2012 edition of the WER).

On March 22, 2013, FERC approved a Stipulation and Consent Agreement (“Agreement”) between the Office of Enforcement (“Enforcement”) and Rumford Paper Company (“Rumford”) regarding Rumford’s alleged fraudulent conduct in ISO-New England (“ISO-NE”).  Enforcement concluded that Rumford violated FERC’s Anti-Manipulation Rule by adopting and implementing a “scheme” proposed by energy consultant Dr. Richard Silkman of Competitive Energy Services, LLC (“CES”) that defrauded ISO-NE of demand response payments.

On March 21, 2013, FERC issued a final rule approving the North American Electric Reliability Corporation’s (“NERC”) modified reliability standard for vegetation management along transmission right-of-ways.  The modified reliability standard, FAC-003-2, makes several revisions to the current standard, FAC-003-1, by (1) expanding the applicability of the standard; (2) requiring a minimum vegetation clearance distance (“MVCD”) regardless of whether an outage occurs or not; and (3) implementing a new annual vegetation inspection and work requirement.