Energy Legal Blog

The US Court of Appeals for the Seventh Circuit has issued an opinion relating to the allocation of costs for new transmission facilities among regional utilities in the PJM Interconnection, L.L.C. (“PJM”).    In Illinois Commerce Commission et al., v. FERC et al., issued August 6, the Court considered petitions for review of the Federal Energy Regulatory Commission’s (“Commission”) decision regarding the allocation of transmission costs in PJM.  While the Court affirmed the Commission’s decision to price transmission for certain existing facilities on a marginal cost basis, it granted the petitions for review of the Commission’s decision on pricing new facilities of 500 kV or greater.  Historically, such new facilities in PJM were financed by regional utilities based upon the expected benefit the utility would receive from the new investment.  PJM sought, and the Commission approved, a new allocation methodology, whereby the costs for 500 kV and above transmission facilities would be funded by utilities on a pro rata basis, regardless of the benefit to be received by the utility.  (more…)

In a move that would have a wide effect on energy industry facilities, the EPA is said to be nearing a decision to propose limiting carbon dioxide emissions from stationary sources.  While EPA, under a memorandum issued under the Bush Administration in December 2008, has stated that carbon dioxide is not a regulated pollutant under the Clean Air Act (CAA), the pending proposal would reverse that position by creating a 25,000-ton emissions threshold, under which small emissions sources would be exempted, but major source emissions would be targeted. (more…)

The CFTC has taken the first steps toward possibly regulating carbon credits traded on the voluntary Chicago Climate Exchange (CCX). The CFTC’s action is being closely watched because it comes at a time when Congress is still working on the details of a mandatory national cap-and-trade program — including its choice as to whether the CFTC or FERC should oversee carbon markets. (more…)

A relicensing proceeding that began in 1991 will continue for a few more years as the Second Circuit, in Green Island v FERC, sends the case back to the agency because FERC, in an apparently futile effort to speed up its process, closed the court house door on an intervenor in violation of its own procedural rules.  FERC rules require FERC to solicit interventions whenever there is a material amendment to the license application.  For initial licenses, there is an exception for a material amendment resulting from the applicant complying with the requests of resource environmental agencies.  But, citing FERC’s own regulations and rulemaking analysis, the Second Circuit ruled that this exception does not apply in relicensing.  Hence, when, as was the case in this relicensing proceeding, the applicant and the various resource agencies reach a settlement, FERC must determine whether that settlement results in a material amendment; if so, then the agency must solicit interventions.  FERC still has the option of determining that the settlement does not constitute a material amendment, but will have to make a finding to that effect before it can close the court house door a second time.  (more…)

The Federal Trade Commission (FTC) voted 3-1 on August 6, 2009 to approve a rule prohibiting manipulation in wholesale petroleum markets.  The rule applies to crude oil, gasoline, and petroleum distillates, including jet fuel, diesel, and fuel oils.

The FTC’s new rule prohibits any person from (1) engaging, directly or indirectly, in “fraudulent or deceptive conduct” that could harm wholesale petroleum markets or (2) making intentional omissions of material facts that are likely to distort petroleum markets.  Such “fraudulent or deceptive conduct” could include entering into wash sales or matched orders (buy-sell transactions), or publishing misleading or false data or information about crude oil stockpiles and prices or crude and fuel output.  The FTC has authority to assess violators civil penalties of up to $1 million per violation per day.  Enacted pursuant to the Energy Independence and Security Act of 2007 (EISA), the rule will go into effect November 4, 2009. (more…)