Energy Legal Blog

On February 22, 2010, the United States District Court for the Southern District of New York issued a Final Judgment relating to a settlement reached of a Department of Justice (“DOJ”) Complaint against KeySpan Corporation (“KeySpan”) regarding certain activity allegedly engaged in by KeySpan in the electric generating capacity markets in New York City (the “Settlement“).  The civil antitrust action alleged violations of Section 1 of the Sherman Act.  KeySpan agreed to pay $12 million to resolve the matter.  Interestingly, nearly two years to the day prior to the announcement of the Settlement, the Enforcement Staff of the Federal Energy Regulatory Commission (“FERC”) released a report of its investigation of KeySpan’s activities (“Enforcement Report“).  The FERC investigation was closed without a finding of violation of fraudulent behavior or other violations of the FERC regulations.  The Enforcement Report had reported KeySpan’s 2007 receipt of a DOJ Civil Investigative Demand.  FERC did, however, approve various changes designed to improve the market mitigation measures in the New York City capacity market in an initial order and an order on rehearing.  Further rehearing remains pending. (more…)

FERC proposes to revisit credit practices and risk management for organized wholesale market in a January 21 rulemaking proposal.  The seven proposed revisions across the board would reign in credit and reduce the default exposure of market operators beginning before the 2010-2011 winter-heating season.  Public comment on the proposed revisions must be filed with the FERC by March 29, 2010. (more…)

Wending its way to FERC on exception (appeal) is Administrative Judge Carmen Cintron’s January 22 initial decision finding that lead natural gas trader for hedge fund Amaranth Advisors, Brian Hunter, manipulated the price of New York Mercantile Exchange (NYMEX) natural gas futures contracts in order increase earnings on futures look-alike contracts (primarily swaps) that Amaranth concurrently held on the largely unregulated exchanges, Intercontinental Exchange (ICE) and Clearport, or over-the-counter (OTC).  How FERC rules on legal issues on appeal should be instructive of how the agency will define market manipulation in both natural gas and electric power markets going forward. (more…)

The Federal Energy Regulatory Commission (“Commission”) issued on January 21, 2010 a Notice of Proposed Rulemaking (“NOPR”) in Docket No. RM09-16 that would permit a new class of transactions to proceed without the need for a Federal Power Act Section 203 order.  Comments on the proposal are solicited and will be due 60 days after its publication in the Federal Register.  (more…)

PR News announced that Bracewell & Giuliani’s Energy Legal Blog will be recognized as the best “Legal PR Blog” at its annual Corporate Social Responsibility & Legal Awards Luncheon on February 24, 2010 at the National Press Club in Washington, D.C. This award recognizes an outstanding and influential law-related weblog or online journal written by a representative of the organization with the goal of espousing the brand or a certain message and written with flair and personality.

“Managing a crisis and working with legal counsel are two areas of communication that will always be a part of a PR professional’s responsibilities,” notes Diane Schwartz, vice president of PR News. “The Legal PR Awards shines a light both on how law firms are communicating to their stakeholders and to how the PR industry is in the driver’s seat when a crisis hits.”

More information on the award program and this year’s winners is available at http://www.prnewsonline.com/awards/csr2009_event-finalists.html.

In response to a request from EnergyConnect, Inc. — an aggregator of retail power customers — FERC in a January 19 order disclaimed Federal Power Act regulatory jurisdiction over retail aggregators that provide service only from demand response resources ” because they [deal only in] agreements to reduce demand, i.e., agreements not to purchase electric energy under certain circumstances, rather than agreements to sell electric energy at wholesale.” Previously FERC had asserted jurisdiction to regulate all aggregators as “public utilities” under the FPA because they hold wholesale contracts that involve the sale for resale of energy that would ordinarily be consumed by an end-use customer. Nevertheless, FERC held that EnergyConnect, Inc. was a “public utility”, with attendant market-based rate filing obligations, because, in addition to aggregating demand response, it was also engaged in sales of ancillary services, which “involve the injection of electric energy onto the grid and a sale for resale in wholesale electric markets.”

The January 19 order further clarifies that, although not required to obtain market-based rate authority, demand response providers remain subject to various other regulatory requirements including rules for doing business with regional transmission organizations, the prohibition against market manipulation, and market transparency rules.