Tuesday, April 1, 2014 10:33 am by George Fatula
With most of its rules implementing the swap regulatory provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in place, the Commodity Futures Trading Commission (“CFTC”) is seeking new public input on several aspects of its Dodd-Frank rules that directly affect energy markets participants who use swaps to hedge risk or who transact physical agreements containing options that are subject to the swap regulations. Entities that utilize swaps and options in this manner, but are not otherwise required to register with the CFTC as “swap dealers” or other regulated entities, are referred to as “end-users.”
In the first such initiative, on April 3, 2014 the CFTC’s staff will host a public roundtable to discuss issues concerning end-users with respect to Dodd-Frank regulations that have raised questions and requests for clarification with the CFTC and its staff. In particular, this roundtable will cover the scope of the CFTC’s definition of the term “swap,” which was defined in a lengthy interpretation issued in August 2012. (more…)
Category: CFTC, Natural Gas/LNG, Organized Markets, Power
Thursday, February 27, 2014 7:00 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…)
Category: Courts, Electric, FERC, Organized Markets, Power
Wednesday, 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…)
Category: Courts, Electric, FERC, Organized Markets, Power, Uncategorized
Monday, January 6, 2014 8:00 am by Robert E. Pease, David Perlman and Jennifer Lias
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…)
Category: CFTC, Courts, Electric, Enforcement, FERC, Natural Gas/LNG, Organized Markets, Power, Transmission
Friday, November 15, 2013 9:54 am by Stephen Hug
On November 13, 2013, the Federal Energy Regulatory Commission (“FERC”) issued an order instituting a proceeding pursuant to Section 206 of the Federal Power Act to determine whether Idaho Power Company’s (“Idaho Power”) market-based rate authority in its home balancing authority area remains just and reasonable. The order responded to Idaho Power’s June 28, 2013 triennial market power analysis for the Northwest region. That submittal indicated that Idaho Power failed FERC’s market share indicative screen when the additional 300 MW of capacity associated with Idaho Power’s recently constructed Langley Gulch power plant was taken into account. In its filing, Idaho Power noted that when preparing its triennial update this summer, it realized that in the summer of 2012, it had not filed a notice of change in status within 30 days of when the Langley Gulch power plant came on-line as required by FERC’s regulations. FERC permits sellers that fail the indicative screens to rebut the presumption of market power associated with failure of the screens through the submission of a delivered price test (“DPT”) analysis. However, Idaho Power explained in its filing that it did not have time to prepare a DPT analysis prior to the June 30, 2013 due date for its triennial filing. Idaho Power submitted the DPT analysis on November 7, 2013. (more…)
Category: Electric, FERC, Organized Markets, Power
Thursday, November 14, 2013 5:50 pm by Kaleb Lockwood
Adding to a recent spate of complaints filed at FERC seeking to reduce the return on equity (“ROE”) of various transmission owners, on November 12, 2013, several groups composed of large industrial and commercial electricity consumers together filed a complaint against Midcontinent Independent System Operator (“MISO”) transmission owners asking for a reduction in the MISO transmission owners’ ROE. With one exception, all MISO transmission owners currently have a base ROE of 12.38%. The complaint seeks to lower the transmission owners’ base ROE over 300 basis points below the current base ROE, to 9.15%.
The law is well settled that in regulated industries, ROEs must be set at levels sufficient to attract capital investment. Transmission owners have responded to the recent complaints seeking ROE reductions by expressing concerns that lower ROEs will result in lower levels of investment in transmission, contrary to FERC’s policy initiatives intended to encourage and sustain transmission investment. (more…)
Category: Electric, FERC, Organized Markets, Power, Transmission