The electric utility industry continues to confront a period of change. Competitive markets continue to evolve, restrictions on utility mergers and transactions have been eased, and the oversight and enforcement powers of federal regulators have been vastly enhanced. Our Electrical Energy Practice understands the changing electric industry and is uniquely positioned to develop commercial, regulatory, and litigation strategies that address the emerging demands, risks, and complexities of competition and accomplish the business objectives of our electric industry clients.
Morgan Lewis provides comprehensive regulatory, transactional, and litigation services to a wide array of electric industry participants. We work with our clients on federal and state regulation, compliance audits and investigations, power contracts, regional transmission structures, transmission access and pricing, and corporate restructuring alternatives. Our electric industry lawyers represent clients on energy-related regulatory matters before the Federal Energy Regulatory Commission (FERC), state public service commissions, and state and federal courts. Our two senior electric lawyers are listed as leading energy attorneys in both Best Lawyers and Chambers USA.
Market Monitoring and Investigations
Competitive wholesale and retail power markets, while more established in some areas, are in their infancy in others. In a number of regions, imbalances between supply and demand, combined with flaws in market structures have led many market participants to demand expanded regulatory oversight on issues of affiliate abuse, market power, and alleged manipulation of markets. Congress has given FERC expanded powers to monitor markets, enforce market rules, and sanction misbehavior, and federal and state regulatory authorities, including FERC through its Office of Enforcement, have responded by providing significant resources to support an increasing number of market investigations.
Our lawyers integrate the mechanics of energy transactions with the legal, regulatory, and litigation skills necessary to achieve a favorable resolution to these investigations. Our team includes the former director of FERC’s Office of Market Oversight and Investigations (now the Office of Enforcement), and a former senior attorney from FERC’s Office of General Counsel , who had responsibility for representing the enforcement group. Our lawyers have taken a leading role in representing clients in scores of energy market investigations and related inquiries. We have successfully represented utility clients in response to formal and informal audits and investigations by FERC and successfully concluded a state regulatory investigation into an electric utility’s participation in capacity markets. We have also assisted in successfully discharging a show cause orders relating to market manipulation allegations. We continue to represent the interests of clients in the ongoing investigations of the 2000 – 2001 market disruptions in California, the Northwest and the West, and in related litigation and refund proceedings, and are also participating in responding to challenges to the 2006 Illinois wholesale power auctions.
Federal Regulation
Our federal electric regulatory practice is skilled and experienced in the full range of regulatory issues, including market-based and cost-based ratemaking, tariff design and implementation, regulatory compliance, and administrative litigation. We represent an array of electric utilities, transmission entities, power marketers, and others in the electric power industry on a range of federal economic regulatory matters, including open access transmission tariffs, generator interconnection procedures, wholesale power purchase arrangements, corporate restructuring, and compliance with FERC’s securities issuance and interlock regulation authority.
Regional Transmission and Reliability Organizations
We represent clients in the development, formation, and implementation of regional transmission structures, centrally administered energy markets, reliability organizations, independent transmission companies, and other regional and industry-wide entities across the country. We have been very active in the development of the mandatory reliability regulatory regime enacted as part of EPAct 2005 and the resulting reliability standards.
Mergers, Transactions, and Corporate Restructuring
EPAct 2005’s repeal of the Public Utility Holding Company Act of 1935 changes the landscape of utility holding company regulation and will create significant new transactional opportunities for utilities. Our lawyers blend practical understanding of the regulated electric business with experience in business and finance, antitrust, employment, and other relevant specialties to advise clients as they evaluate existing business structures and explore the advantages of new mergers and transactions and new structures, including the divestiture or reorganization of assets. The firm represents clients in mergers, consolidations, and acquisitions involving novel issues of industry structure, and antitrust, labor relations, and related business and regulatory matters. We have successfully represented merging utilities in cases where transmission constraints required a hearing on market power issues, and where a hearing was avoided due to careful analysis and presentation of market power issues. We have also assisted international utilities acquisitions of interests in U.S. electric generating facilities.
Merchant Plants
We have assisted clients in the United States and abroad with the development and financing of projects fueled by natural gas, coal, waste coal, trash, wood, biomass, and synthetic gas, as well as geothermal, hydroelectric, and wind projects. We represented lenders, borrowers, equity investors, project sponsors, suppliers, financial intermediaries, and multilateral agencies. We also represent generators and power marketers in an array of activities including power sales, power exchanges, tolling agreements, power contract buydowns and buybacks, interconnection agreements, and transmission agreements.
State Regulation
In addition to assisting clients with market investigations by state regulatory authorities, our lawyers advise on market participation rules, codes of conduct including trading practices and affiliate relationships, and implementation of state restructuring plans. To deal with the issue of “stranded costs,” we developed some of the first securitization filings in the nation. Our lawyers also represent utilities in the more traditional regulatory areas, including rate- and fuel-adjustment cases, prudence proceedings involving the operation of nuclear and fossil fuel power plants, certificate proceedings, and investigations into the operation of retail markets. We also handle litigation involving transmission line siting and electromagnetic field issues.
State and Federal Legislation
Much of the evolution in the electric industry is driven by state and federal legislation. We maintain a real-time oversight of these legislative initiatives, counsel clients on their effects and practical business significance, and offer advice on the relative merits of legislative proposals. We assist utilities and energy industry trade associations in formulating regulatory, legislative, and commercial approaches to the restructuring of the electric business.