While the Federal Energy Regulatory Commission (“FERC” or the “Commission”) has never required a uniform structure for reactive power compensation, in light of the growing number of new technologies, particularly wind and solar photovoltaic generation facilities, the changing landscape of the electricity industry and emerging reliability concerns, the Commission held a workshop on April 22, 2014 to examine the third-party provision of reactive supply and voltage control and regulation and frequency response services. The Commission is seeking more information on the technical, economic and market issues concerning the provision of these particular ancillary services before it determines if, and how, it will revise its regulations to increase transparency around payment for these services. The roundtable discussion led by FERC Staff involved various stakeholders including representatives for independent system operators, electric associations, and electric generators. (more…)
WE KNOW ENERGY®
David Perlman and Jessica Miller
This week the Federal Energy Regulatory Commission (FERC) put to rest any doubt that transmission rights pursuant to a pre-Order No. 888 transmission service agreement are subject to the FERC’s open access regime when the agreement is modified or becomes obsolete. In the same order, FERC found that a so-called “resale tariff” is only permissible where a jurisdictional transmission provider seeks to resell transmission rights on a non-jurisdictional transmission provider’s facilities—where the resale could not be facilitated under a FERC-approved Open Access Transmission Tariff (OATT).
FERC’s February 27, 2014 order rejected a December 30, 2013 filing by SoCal Edison Company (SCE). SCE’s filing attempted to modify transmission rights it has held since 1966 under a transmission services agreement with Arizona Public Service Company (APS). The 1966 agreement arose in connection with SCE and APS’s joint ownership interests in two generating units at Four Corners in New Mexico. Pursuant to the agreement, APS constructed and operated a 500 kV transmission line from Four Corners to the Arizona-Nevada border, and SCE paid APS cost-based transmission service charges for rights to all of that line’s transmission capacity, for purposes of transmitting SCE’s portion of the units’ output to California. In 2013, SCE transferred to APS its ownership interests in the Four Corners units, so SCE no longer needed the transmission capacity it had held for more than four decades for purposes of transmitting its Four Corners capacity. (more…)
In an unusual move, on February 21, 2014 the Court of Appeals for the Third Circuit (“Third Circuit”) asked the U.S. Attorney General for his opinion as to whether the Federal Power Act (“FPA”) preempts New Jersey’s Long Term Capacity Pilot Program (“LCAPP”), a finding made by the United States District Court for the District of New Jersey (“District Court”) in PPL EnergyPlus, LLC v. Hanna, which is now pending on appeal before the Third Circuit.
In recent years, states including New Jersey and Maryland, through different mechanisms, have instituted requirements that the state utilities serving retail customers must purchase power from “new generation” to be located within each respective state’s borders. In New Jersey, such generation would be guaranteed a long-term contractual payment so long as the generation cleared the PJM capacity market. Bidding as low as possible would best guarantee the units would clear. Because generators are not paid what they bid, but the payments are based on the clearing price of the most expensive unit to clear, having units bid at levels that do not reflect their cost recovery needs was perceived by the generation community as an effort to reduce payments made for capacity. (more…)
Paper Company, Arguing that FERC Lacks Jurisdiction over Demand Response, Files Motion to Dismiss FERC Manipulation Action7:00 am by David Perlman and Jennifer Lias
On December 2, 2013, FERC filed a Petition for an order affirming its assessment of a civil penalty in the District of Massachusetts against Lincoln Paper and Tissue, LLC (“Defendant”), alleging that the Defendant engaged in a manipulative scheme as a retail customer in the electricity market in order to receive additional profits in a “demand response” program run by ISO New England, Inc (“ISO-NE”). As in FERC v. Barclays, the court’s resolution of this case may significantly affect the scope of FERC’s anti-manipulation enforcement authority going forward.
On February 14, 2014, the Defendant filed a Motion to Dismiss the case arguing that FERC lacks jurisdiction over its participation in the “demand response” program. The “demand response” program initiated by ISO-NE was a FERC authorized program with the purpose of reducing energy prices by reducing overall consumption of (i.e. demand for) electricity. Therefore, to participate in the “demand response” program, the Defendant had to reduce its retail consumption—i.e. to forego retail purchases of electric energy. (more…)
FERC Responds to Barclays Motion to Dismiss as Without Merit and so Aggressive That if Granted it Could “Eviscerate” FERC’s Ability to Regulate Wholesale Power MarketsWednesday, February 26, 2014 2:14 pm by David Perlman, Jennifer Lias and Robert E. Pease
On July 16, 2013, the Federal Energy Regulatory Commission (“FERC”) issued an order finding Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith (together with Barclays, “Defendants”) in violation of FERC’s anti-manipulation regulations and assessed significant penalties. The Defendants chose to have the validity of the order tried de novo in federal district court, and on December 16, 2013, filed a Motion to Dismiss the FERC action. On February 14, 2014, FERC filed an Opposition to the Motion to Dismiss previously filed by the Defendants.
This case represents the first time a FERC electric market manipulation claim is being adjudicated in a federal district court. The court’s ruling could have significant implications for FERC’s jurisdiction in a manipulation action that involves financial transactions and its authority with regard to wholesale power markets. (more…)
In a historic move, the Federal Energy Regulatory Commission (FERC) for the first time on Friday, February 7, exercised its emergency authority under Section 1(15) of the Interstate Commerce Act. Using that authority, FERC directed Enterprise TE Products Pipeline Company LLC (TEPPCO) to provide priority to shipments of propane to help address propane shortages in the Midwest and Northeast. FERC extended its emergency order on Tuesday, February 11. In doing so, FERC resolved issues raised in an emergency request filed by the National Propane Gas Association (NPGA), which requested that propane shipments get priority over other products shipped by TEPPCO.
On Thursday, February 6, NPGA asked FERC to use its emergency powers to permit or direct TEPPCO to temporarily provide up to 75,000 bbls/day of capacity to propane shipments on a priority basis, through at least the first week in March, in light of current propane supply shortages. (more…)