The Federal Energy Regulatory Commission issued show cause orders to two natural pipelines—Rover Pipeline and Midship Pipeline Company—following its December 2021 open meeting, and sent a related dispute involving Midship for an administrative hearing. Chairman Richard Glick has signaled in the last year his desire for a more active enforcement program.
Power & Pipes
FERC, CFTC, and State Energy Law Developments
The US District Court for the Southern District of Ohio held on November 29, 2021, that in actions commenced under 16 USC Section 823b, district courts have the power to decide whether FERC can enforce civil penalties but do not have the ability to consider challenges to FERC orders that pursue joint and several liability and disgorgement. The court held that those challenges generally fall within the exclusive jurisdiction of federal appeals courts.
US congressional Democrats released the latest version of H.R. 5376—better known as the Build Back Better Act—late last week, hoping to advance a $1.85 trillion spending package after months of deadlock.
FERC recently issued a notice of extension of time further extending, by three months, the compliance dates for FERC’s new market-based rate (MBR) relationship database filing requirements under Order No. 860. This extension follows multiple prior extensions. Meeting these new deadlines is required of all public utilities who either currently hold MBR authority or will request MBR authorization to engage in sales for resale of electric energy, capacity, or ancillary services at marked-based or negotiated rates. Given the complexity of the new reporting requirements, the deadlines extension will provide valuable additional time to entities to prepare their baseline submission.
FERC recently issued an order to show cause and notice of proposed penalty to Ampersand Cranberry Lake Hydro LLC for a violation of Ampersand’s hydro license for the Cranberry Lake Project No. 9658 (Cranberry Lake Project). FERC ordered Ampersand to show cause as to why it should not be found to have violated Article 5 of the project license by failing to retain possession of all project property covered by the license, and to show cause as to why it should not be assessed a civil penalty of $600,000 for that violation.
In a notice issued on September 29, 2021, FERC stated that it did not act on PJM Interconnection LLC’s (PJM’s) proposed reforms to the application of the Minimum Offer Price Rule (MOPR) because the Commissioners are divided two against two as to the lawfulness of the change (Notice). Because FERC did not act within 60 days of PJM’s filing under Section 205 of the Federal Power Act, PJM’s proposal became effective by operation of law. PJM’s revisions “focus” the applicability of the MOPR and will allow certain resources that receive state support to participate in PJM’s capacity auction without being subject to the MOPR, significantly narrowing the scope of the prior rule.
The US Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corp. (NERC) jointly authored a report regarding the February 2021 power outages in Texas and the US Midwest caused by extreme cold weather. The report identifies the causes of the outages and outlines a series of recommendations focusing on enhanced protection against cold weather for critical generation as well as the natural gas assets supplying gas-fired generation so that this infrastructure remains operational even in extreme cold weather.
The National Association of Regulatory Utility Commissioners (NARUC) has submitted 10 nominees to FERC to serve on the newly formed Joint Federal-State Task Force on Electric Transmission. Last month in Docket No. AD21-15, FERC issued an order establishing a joint federal-state task force with NARUC to evaluate barriers and solutions to transmission development. The task force will conduct joint hearings on transmission-related issues with a focus on developing ways to plan and pay for new transmission facilities that are best for the public interest.
FERC issued an advance notice of proposed rulemaking (ANOPR) in Docket No. RM21-17, seeking comment on the potential need for reform of Commission regulations necessary to improve regional transmission planning and cost allocation and generator interconnection processes. Comments and reply comments are due 75 days and 105 days, respectively, after publication in the Federal Register.
Since January, FERC-regulated market participants and practitioners alike have anticipated how FERC may approach its enforcement mission under the stewardship of Chairman Richard Glick following his appointment as chair by President Biden. Although most market participants and practitioners have expected FERC to take an aggressive approach in investigating and penalizing instances of misconduct, FERC confirmed those expectations in its May 20 open meeting.