FERC, CFTC, and State Energy Law Developments

On January 21, 2010, the Federal Energy Regulatory Commission (FERC) approved Technical Feasibility Exception (TFE) rules proposed By the North American Electric Reliability Corporation (NERC) applicable to certain Critical Infrastructure Protection (CIP) mandatory Reliability Standards. However, reiterating its prior conclusions from Order No. 706, FERC directed NERC to revise the rules to clarify that the TFE rules will apply to the compensating or alternative measures implemented By Responsible Entities under CIP-006-1 R1.1 and CIP-007-1 R3.  Read more…

On January 13, 2010, the U.S. Supreme Court determined, in an 8-1 decision, that energy rates challenged by non-contracting parties are presumed to be just and reasonable, and may only be set aside if the rates seriously harm the public interest. In NRG Power Marketing v. Maine Public Utilities Commission, the Supreme Court reversed the U.S. Court of Appeals for the District of Columbia Circuit, which held that non-contracting parties challenging rates set forth in energy contracts need not establish that the rates upset the public interest in order to invalidate the challenged rates. The Supreme Court’s decision resolves an issue of first impression By reaffirming the Court’s Mobile-Sierra doctrine and its 2008 ruling in Morgan Stanley Capital Group, Inc. v. Public Utility District No. 1Read more…

In Order No. 714, FERC mandated that all entities begin submitting tariffs and related agreements electronically. This directive departs from a long-established policy of submitting hard copies of tariffs and related agreements for Commission approval. FERC's new eTariff program will take effect on April 1, 2010.

During this January webcast, presenters explained FERC's eTariff mandate and addressed issues such as who will be subject to the eTariff requirement, what will be required, how FERC will implement its eTariff program, and what are the important dates for implementation.

A recording of the webcast is available.

On January 11, the Nuclear Regulatory Commission (NRC) and the North American Electric Reliability Corporation (NERC) published a Memorandum of Understanding (MOU) regarding the enforcement of NRC cyber security regulations and NERC Critical Infrastructure Protection (CIP) Reliability Standards at commercial nuclear power plants. This MOU provides further detail on what the NRC and NERC view as their separate responsibilities regarding cyber security at nuclear power plants, and explains how they will coordinate execution of these responsibilities going forward.  Read more…

Earlier today, the Federal Energy Regulatory Commission (FERC) approved a stipulation and consent agreement with Florida Power and Light Company (FPL) that included a $25 million penalty to be paid By FPL to resolve potential violations of mandatory Reliability Standards related to the February 26, 2008 Florida Blackout. That event resulted in the loss of 3,650 MW of customer load, and left some noninterruptible customers without power for more than two hours.

The agreement, which contains one of the largest civil penalties ever approved By FERC, is also the first settlement resulting from a reliability investigation headed By FERC enforcement staff, and follows FERC’s public announcement that it—rather than the North American Electric Reliability Corporation (NERC) or the Florida Reliability Coordinating Council, the two entities usually responsible for the enforcement of Reliability Standards in Florida—would investigate the blackout.

Read more…

On September 30, the U.S. Environmental Protection Agency (EPA) issued a proposal describing how it intends to regulate greenhouse gas (GHG) emissions under the Clean Air Act’s (CAA) Title V and Prevention of Significant Deterioration (PSD) permitting programs. EPA’s proposal, if adopted, would establish specially tailored emission thresholds for the application of the Title V and PSD programs to sources that emit GHGs. EPA estimates that the proposed thresholds would apply to sources with nearly 70% of the national GHG emissions from stationary sources and result in GHG-related permit requirements for approximately 14,000 facilities, including approximately 3,000 sources that previously have not been subject to the Title V program.  Read more…

On September 22, the Administrator of the U.S. Environmental Protection Agency (EPA) issued the Mandatory Reporting of Greenhouse Gases (GHGs) Rule. EPA had proposed this rule on March 10 of this year and solicited comments from interested parties. The final rule imposes substantial requirements on various entities to measure and then report to EPA their greenhouse gas emissions. Facilities subject to the new regulations are required to begin collecting data on their GHG emissions in January 2010, with first reports due to be submitted to EPA By March 31, 2011. Two significant changes in the final rule include a mechanism for covered facilities to remove themselves from the program and a reduction in the number of industries immediately subject to the rule.  Read more…

In June 2009, FERC issued Order No. 697-C, an order on rehearing of its orders issuing regulations applicable to public utilities authorized to sell electric capacity, energy, and ancillary services at market-based rates.

Order No. 697-C imposes significant new reporting requirements on public utilities with market-based rate authority. Our Energy Practice presented a webcast on this topic and provided a detailed overview of Order No. 697-C’s reporting requirements.

Topics included:

  • Quarterly reporting of generating capacity site acquisition, to begin October 30, 2009
  • Annual reporting of land acquisition for generation development, to begin January 1, 2010
  • Other reporting requirements

The audio to the webcast may be heard here, and the presentation may be viewed here.

Last week, the North American Electric Reliability Corporation (NERC) released a revised draft of the proposed procedures that Responsible Entities would use to request a Technical Feasibility Exception (TFE) for Critical Infrastructure Protection (CIP) Reliability Standards. The revised procedures make several significant revisions to the draft TFE procedures released for comment this spring.

Under the revised TFE procedures, the responsibility for reviewing and approving TFE requests has been shifted back to the Regional Entities. Any Responsible Entity seeking a TFE must submit an electronic form to the appropriate Regional Entity containing the basic information regarding the TFE, including the relevant CIP Reliability Standard Requirement eligible for a TFE, the basis and justification for the request, the proposed mitigating measures, and the schedule for achieving Strict Compliance. The templates on which Responsible Entities will submit this information should be available from the Regional Entities beginning on September 17, 2009.  Read more…

On August 6, the Federal Trade Commission (FTC) issued a Final Rule prohibiting market manipulation in the petroleum industry. Under the terms of the Final Rule, persons that engage in fraud or deceit in wholesale petroleum markets or omit material information that is likely to distort petroleum markets are subject to significant civil penalties. In issuing the Final Rule, the FTC joins the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission in regulating market manipulation in the energy industry.

The issuance of the Final Rule concludes a two-year process that was authorized By Title VIII of the Energy Independence and Security Act (EISA) of 2007. Under EISA, the FTC is authorized to issue any rule or regulation that prohibits any person from engaging in manipulative or deceptive behavior in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale. Accordingly, the FTC’s Final Order prohibits any person from (a) knowingly engaging in any act that operates as a fraud or deceit upon any person; and (b) intentionally failing to state a material fact that renders a statement made By that person misleading if the omission distorts or is likely to distort market conditions. In practice, paragraph (i) of the Final Rule prohibits fraudulent or deceptive overt conduct while paragraph (ii) of the Final Rule prohibits material omissions that are likely to distort market conditions.  Read more…