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In a case that highlights some of the regulatory challenges presented by shifts in the nation’s generation mix, on October 20, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) accepted Puget Sound Energy, Inc.’s (“Puget”) proposed Schedules 3 and 13 concerning rates for Regulation and Frequency Response Service, but suspended them for a five-month period, to become effective January 5, 2012, subject to refund, and set them for hearing and settlement judge procedures.

On October 24, 2011, the United States Court of Appeals for the Fifth Circuit (“5th Circuit” or the “court”) issued a decision granting the Texas Pipeline Association and the Railroad Commission’s (“Petitioners”) petition for review and vacating FERC’s Order Nos. 720 and 720-A.  In its order, the 5th Circuit held that Order Nos. 720 and 720-A exceeded the scope of FERC’ authority under the Natural Gas Act (“NGA”) of 1938.

On October 20, 2011, FERC approved a new two-part compensation method for frequency regulation in wholesale power markets that would provide higher compensation for faster ramping technologies.  The Commission found that the old form of regulation service payment from regional transmission organizations (“RTOs”) and independent system operators (“ISOs”) were unjust, unreasonable, and unduly discriminatory because it failed to acknowledge the speed of different ramping resources, and in some cases this led to inefficient economic dispatch.

On October 20, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) denied the bulk of the rehearing requests pertaining to the Midwest Independent Transmission System Operator, Inc.’s (“MISO”) cost allocation methodology for new transmission multi value projects (“MVP”), and the Commission denied all rehearing requests on the Southwest Power Pool, Inc.’s (“SPP”) Highway/Byway cost allocation plan.

On October 7, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) announced that it will hold a Commissioner-led Technical Conference to address the reliability of the Bulk-Power System and emerging issues, including reliability concerns which may arise in complying with Environmental Protection Agency (“EPA”) regulations, along with tools to address these issues.

On September 30, 2011, Martha Coakley, Attorney General of the Commonwealth of Massachusetts, and various state officials and commissions from the other New England states (collectively, the “Complainants”) filed a Complaint against Bangor Hydro-Electric Company and the other ISO-New England transmission owners (collectively, “TOs”) and ISO New England Inc  (“ISO-NE”).