On July 7, the Federal Energy Regulatory Commission (FERC) approved a stipulation and consent agreement between FERC’s Office of Enforcement, the North American Electric Reliability Corporation (NERC) and Arizona Public Service Company (APS) resolving FERC and NERC’s joint investigation into APS’s involvement in the September 8, 2011 Southwest Blackout. The Southwest Blackout was a system disturbance in the Pacific Southwest that affected transmission in Arizona, California and Mexico, and ultimately caused a complete blackout of San Diego. FERC and NERC found that APS violated certain of the Transmission Operations (TOP) group of NERC Reliability Standards, and that these violations resulted in cascading outages in which 2.7 million customers, or approximately 5 million people, lost power for several hours. FERC and NERC concluded that APS failed to prepare for this type of event by not performing a unique day-ahead study for September 8 and by not coordinating its day-ahead studies with neighboring transmission operators, including the Imperial Irrigation District and the California Independent System Operator. APS has neither admitted nor denied the violations in the stipulation and consent agreement. (more…)
WE KNOW ENERGY®
Robert E. Pease and Caitlin Tweed
Stephen Hug and Serena Rwejuna
On June 19, 2014, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Proposed Rulemaking (“NOPR”) proposing to revise its standards for evaluating applications to sell energy, capacity, and ancillary services at market-based rates, as set forth in Order No. 697 and subsequent orders. FERC’s revisions have two primary goals: (1) to streamline the horizontal and vertical market power analyses that public utilities are required to submit when filing an application for market-based rate authority or a triennial market power update; and (2) increase the transparency of information that sellers report to FERC as part of the market-based rate process, including the seller’s affiliates and corporate structure and its interest in generation and transmission assets. (more…)
On Friday, April 25, approximately two dozen intervenors filed comments regarding PacifiCorp’s proposed amendments to its Open Access Transmission Tariff (“OATT”) to permit its participation in the California Independent System Operator Corp.’s proposed Energy Imbalance Market (“EIM”).
The CAISO EIM is the first proposed organized market structure across a multi-state footprint in the West, which is otherwise largely OATT-defined. PacifiCorp has contracted with the CAISO to be the first EIM participating balancing authority. The design and implementation of the new market requires substantial amendments to both the CAISO and PacifiCorp tariffs, and all proposals must be approved by the Federal Energy Regulatory Commission (“FERC” or “Commission”) as just, reasonable, non-discriminatory and non-preferential under the Federal Power Act. CAISO filed its proposed tariff amendments on February 28, and PacifiCorp filed its proposed OATT amendments on March 25. (more…)
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…)
Paper Company, Arguing that FERC Lacks Jurisdiction over Demand Response, Files Motion to Dismiss FERC Manipulation ActionThursday, 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…)
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…)