LawFlash: FERC Denies Market-Based Rate Application
May 9, 2012
by Mark R. Haskell, Levi McAllister, Charles A. Moore, and Christina M. Vitale
On May 7, the Federal Energy Regulatory Commission (FERC or Commission) issued an order denying a request to charge market-based rates as initial rates for transportation service to be provided on the Seaway Crude Pipeline Company (Seaway) system.[1] The Commission’s order clarifies for oil pipelines seeking market-based authority in the future that detailed cost data is a necessary prerequisite in conducting a market-power analysis in the context of market-based rate applications filed under the Interstate Commerce Act.
FERC Rules on Several Core Reliability Compliance Issues: New Orders Address Cybersecurity, Registration, and Contingency Planning
April 23, 2012
by Steven M. Spina, J. Daniel Skees, and John D. McGrane
At FERC’s open meeting on April 19, 2012, FERC approved several orders addressing core aspects of Reliability Standards compliance, including cybersecurity Reliability Standards, compliance registration, and contingency planning issues. The newly approved cybsersecurity Reliability Standards significantly increase the scope of facilities subject to those requirements, the compliance registration decisions clarify the jurisdictional boundary between distribution and transmission facilities, and the planning orders represent a rejection of NERC’s approach to planning for firm load loss following a single contingency.
LawFlash: FERC Approves LNG Export Project
April 17, 2012
by Mark R. Haskell, Brett A. Snyder, and Pamela C. Tsang
On April 16, the Federal Energy Regulatory Commission (FERC) granted Sabine Pass Liquefaction and Sabine Pass LNG (collectively, Applicants) authorization to construct and operate facilities to liquefy and export domestically produced natural gas at the existing Sabine Pass Liquefied Natural Gas (LNG) terminal in Cameron Parish, Louisiana.[1] The project will be constructed in two stages, each with two LNG process trains containing gas treatment facilities, gas turbine-driven refrigerant compressors, cold boxes and heat exchangers for cooling and liquefying natural gas, waste heat recovery systems, and other facilities.
LawFlash: FERC Upholds Postage Stamp Cost Allocation Methodology
April 3, 2012
by Glen S. Bernstein, John D. McGrane, Stephen M. Spina
In an order issued on March 30,[1] the Federal Energy Regulatory Commission (FERC or Commission) issued an order requiring “postage stamp” pricing to allocate the costs of new 500 kV and above transmission projects in the PJM Regional Transmission Organization Region. PJM Interconnection, L.L.C., 138 FERC ¶ 61,230 (2012). The Commission acknowledged that other just and reasonable cost allocation methodologies may exist to allocate the costs of high-voltage transmission facilities. It concluded, however, that PJM Interconnection, L.L.C.’s (PJM’s) use of a static-flow-based model is unjust and unreasonable.
FERC Proposes Changes to EQR to Improve Accuracy in Reporting Simultaneous Exchanges
March 16, 2012
by Steven M. Spina, Pamela C. Tsang, and John D. McGrane
On March 15, FERC issued a Notice of Proposed Rulemaking to revise the Electric Quarterly Report (EQR) Data Dictionary so parties can more accurately report simultaneous exchanges.[1] FERC proposed adding “Simultaneous Exchange” to the list of available Product Names in the EQR to enable parties to differentiate simultaneous exchange transactions from transmission service. FERC recently expressed concerns that certain simultaneous exchange transactions could resemble transmission service without the reservation of service on the transmission system. In both situations, a party places power onto the power grid at a delivery point and simultaneously receives power at another point. However, a simultaneous exchange occurs when a pair of wholesale power transactions between the same counterparties are arranged as part of the same negotiations and involve overlapping delivery periods and volumes of power purchased and sold.
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LawFlash: FERC Grants NERC Enforcement Discretion over Low-Risk Violations
March 16, 2012
by John D. McGrane, Stephen M. Spina, and J. Daniel Skees
In a move intended to improve the efficiency of the Reliability Standard violation enforcement process, the Federal Energy Regulatory Commission (FERC or the Commission) yesterday approved the North American Electric Reliability Corporation’s (NERC’s) “Find, Fix & Track” (FFT) enforcement proposal. The FFT process should provide NERC and the Regional Entities with increased flexibility to address low-risk Reliability Standard violations, avoiding the need for a lengthy settlement process for minor violations that pose little risk to bulk-power system reliability. While NERC will continue to report all violations, this change will eliminate—for those low-risk violations selected for FFT treatment—the extensive mitigation and settlement paperwork that historically accompanied minor violations. Despite this increased flexibility for NERC and the Regional Entities, the Commission promised strict oversight of this process.
LawFlash: FERC and Constellation Energy Commodities Group Settle Investigation
March 12, 2012
by Mark R. Haskell, Stephen M. Spina, George D. Billinson, and Levi McAllister
On March 9, the Federal Energy Regulatory Commission (FERC or Commission) approved a Stipulation and Consent Agreement (Settlement) between FERC’s Office of Enforcement (OE) and Constellation Energy Commodities Group (CCG).[1] As set forth in the Settlement, CCG has agreed to pay a civil penalty of $135 million and to disgorge profits of $110 million, plus interest, to resolve an ongoing investigation into allegations that CCG violated FERC’s prohibition of electric energy market manipulation. Additionally, CCG agreed that four of its employees at issue in the investigation would not hold any position involving physical or financial energy trading at CCG or any successor company at any time in the future.