For the second time, PJM Interconnection, LLC (PJM) has suspended its 2019 Base Residual Auction (BRA) as directed by the Federal Energy Regulatory Commission (FERC). FERC found that delaying the auction until the Commission establishes a replacement rate would provide greater certainty to the market than conducting the auction under the existing rules.
Power & Pipes
FERC, CFTC, and State Energy Law Developments
Wholesale electricity sellers that are not government owned are subject to regulation by the Federal Energy Regulatory Commission. Obtaining FERC approval to sell wholesale electricity at “market-based rates” (which is nearly any sale regulated under the Federal Power Act that is not based on cost-of-service accounting) can be an intricate exercise, requiring the applicant to submit statistical horizontal market power screens.
On June 24, the US Supreme Court issued its opinion in Food Marketing Institute v. Argus Leader Media, expanding the scope of information protected under Exemption 4 of the Freedom of Information Act (FOIA).
FERC recently approved proposed Reliability Standard CIP-008-6, which expands the mandatory reporting requirements for Cyber Security Incidents that attempt to compromise the operation of the bulk power system.
When a business entity that is regulated by the Federal Energy Regulatory Commission (FERC) is closely related to another business entity, FERC takes the position that under some circumstances it may treat the two different legal entities as if they were one single entity. FERC ruled recently that it “may disregard the corporate form in the interest of public convenience, fairness, or equity” and “[t]his principle of allowing agencies to disregard corporate form is flexible and practical in nature.” As a result, a new power marketer could be barred by a Regional Transmission Organization (RTO) from participating in the market unless it paid off the debts to the RTO owed by another power marketer with the same business objectives and the same contacts and administrators as the bankrupt entity. This decision could make it difficult for public utilities to avoid the debts of their bankrupt affiliates, which could be attributed to the entire enterprise regardless of the final plan of bankruptcy, including the liquidation of the bankrupt entity.
On June 14, the US Court of Appeals for the DC Circuit vacated and remanded two challenged orders and directed FERC to explain or reconsider whether data made available after a challenged rate increase becomes effective (i.e., post–rate increase information) should be considered.
New Jersey advanced several of the Murphy administration’s clean energy goals during June 2019. Over the past month, the state released a draft of its revised Energy Master Plan (EMP), approved the Ocean Wind offshore wind project proposed by Ørsted, and released a detailed analysis on energy storage development in New Jersey.
The US Department of Energy (DOE) issued Order No. 486.1 on June 7 prohibiting DOE employees and contractors from participating in the foreign government “talent recruitment programs” of countries designated by the DOE as a “foreign country of risk,” which apparently include China and Russia.
The US Environmental Protection Agency (EPA) issued three rules on June 19 that may give utilities new reasons to consider investing in certain plant modifications and reassessing the projected lifespans of their facilities. The rules also affect each state’s resource planning process and may contribute to changes in a state’s projected energy resource mixes.
Consolidated Edison Company of New York, Inc. (Con Edison) and Orange and Rockland Utilities, Inc. (O&R) issued a draft joint Request for Proposals (RFP) on May 31 to competitively procure scheduling and dispatch rights from new energy storage projects.