Bracewell & Giuliani

Powered by the attorneys of Bracewell & Giuliani, Energy Legal Blog® is your resource for updates and analysis on national and global energy issues.
  1. FERC Confirms the Long Reach of Open Access Requirements

    Monday, March 3, 2014 10:45 am by and

    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…)

  2. Third Circuit Asks U.S. Attorney General for Opinion on Federal Power Act Pre-emption of State Law

    Thursday, February 27, 2014 3:40 pm by

    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…)

  3. Paper Company, Arguing that FERC Lacks Jurisdiction over Demand Response, Files Motion to Dismiss FERC Manipulation Action

    7:00 am by and

    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”).[1] 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.[2]  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…)

  4. 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 Markets

    Wednesday, February 26, 2014 2:14 pm by , and

    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.[1]  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.[2]  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.[3]  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…)

  5. FERC Took Historic Emergency Action to Address Propane Shortages

    Wednesday, February 12, 2014 10:55 am by

    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…)

  6. Barclays Motion to Dismiss Raises Significant Issues About FERC Jurisdiction

    Monday, January 6, 2014 8:00 am by , and

    After an investigation of actions in the western electricity markets by Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith (collectively, the “Traders” and together with Barclays, “Defendants”), the Federal Energy Regulatory Commission (“FERC”) issued an order finding the Defendants in violation of FERC’s anti-manipulation regulations and assessing Barclays a $435 million civil penalty, assessing each Trader an individual civil penalty, and requiring disgorgement of $34.9 million plus interest in unjust profits.[i] In accordance with the Defendants’ election of a trial de novo in federal district court, on October 9, 2013 FERC filed a petition in the United States District Court for the Eastern District of California requesting an order affirming its assessment of penalties.

    In response to FERC’s petition, on December 16, 2013, the Defendants filed a motion to dismiss the complaint.[ii]  The Defendants moved to dismiss the complaint, as a matter of law, on the grounds that venue is not proper and that FERC has failed to state a claim upon which relief can be granted. (more…)

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