Archive for the ‘Federal Power Act’ Category

Angry Wind Facilities Owners in the Northwest Get Their Way

Photo by Tim Wang. Some rights reserved.

A December 7th Order from FERC directed the Bonneville Power Administration (BPA) to file a revised open access transmission tariff (OATT) to address “comparability concerns.”

The order came in response to a petition from five owners of wind facilities in the Pacific Northwest alleging that Bonneville is “using its transmission market power to curtail wind generators in an unduly discriminatory manner in order to protect its preferred power customer base from costs it does not consider socially optimal.”

According to the order, Bonneville must submit a revised OATT that “addresses the comparability concerns raised in this proceeding in a manner that provides comparable transmission service that is not unduly discriminatory or preferential within 90 days from the date of this order.”

This request of Bonneville – a federal agency not within FERC’s plenary rate jurisdiction – represented the first time FERC has exercised its authority under 211A of the Federal Power Act (16 USC 824j-1).

The action has been discussed in much greater detail by law firms with an active energy practice: Van Ness Feldman, Stoel Rives, and Davis Wright Tremaine all have more.

FERC (presumably) Smug after Ninth Circuit Upholds Market-Based Rate Policy

Photo by Waldo Jaquith. Some rights reserved.

Late last week, folks at FERC probably popped some bottles of champagne when the U.S. Court of Appeals for the Ninth Circuit issued an opinion denying a petition challenging FERC’s Order No. 697, “Market-Based Rates For Wholesale Sales Of Electric Energy, Capacity And Ancillary Services By Public Utilities.”

Order No. 697, which became effective September 18, 2007, codified FERC’s standards for market-based rates by “providing a rigorous up-front analysis of whether market-based rates should be granted, including protective conditions and ongoing filing requirements in all market-based rate authorizations, and reinforcing its ongoing oversight of market-based rates.” The components of the rule were designed, according to FERC, “to ensure that market-based rates charged by public utilities are just and reasonable.”

However, not everyone thought Order No. 697 was the bee’s knees. Less than a year after the original rules were published, FERC filed Order No. 697-A, which responded to “a number of requests for rehearing and clarification of Order No. 697.” Mostly, FERC denied rehearing of the issues, though it did provide some clarifications.

Still unsatisfied, several petitioners filed a petition for review in federal appellate courts. The petitioners contended that “(1) that FERC, by relying solely on the market to regulate rates, has violated its statutory obligation to ensure that rates are just and reasonable; and (2) that the market-based rates policy, which allows sellers to file a market-based rate and does not require sellers to give sixty days advance notice of changes in market prices, violates the express terms of the FPA.”

The Court denied the petition, but not without a tip of the hat to the petitioners themselves in this rather touching conclusion:

The parties to this dispute raise policy issues of exceptional importance. We recognize that the questions here considered impact real-world energy markets, industries, and consumers. Plainly the well-being of consumers, and not regulatory inertia, should be the touchstone. But we emphasize that our role is limited by statute and the holdings of the Supreme Court. Our review is that of a federal appellate court, not a policy analyst. The question before us here is not whether we think market-based rates are a good idea; instead, it is whether the market-based rate policy embodied in Order 697 exceeds FERC’s authority as conferred by the FPA. Taking into account Chevron deference, the law of our circuit, other relevant precedent, and the direction of the Supreme Court as to how we should approach such administrative law issues concerning federal agencies, we conclude that Order 697, as presented to us in this petition, does not per se violate the FPA.

As law firm Van Ness Feldman put it (in a recent alert), “The case, Montana Consumer Counsel v. FERC, No. 08-71827, is a clear vindication of FERC’s market-based rate policy, from a court that has viewed market-based rates with suspicion.”

Akin Gump and King & Spalding have also recently published memos on the opinion. Future legal analysis of the decision can be found on knowlegemosaic’s Law Firm Memos search page.

California Wants Billions of Dollars, FERC Says “Sorry, but no.”

Photo by smlp.co.uk. Some rights reserved.

On May 24, 2011, FERC issued an Order dismissing a complaint filed by the California Attorney General (representing “the People of the State of California”) seeking refunds for “unjust” short-term bilateral sales made to the California Energy Resources Scheduling Division (CERS) of the California Department of Water Resources during the California Energy Crisis.

The Complaint, filed May 22, 2009, alleged that the named respondents – various power marketers – had exercised “undue market power” in their sales to CERS and committed numerous tariff violations, all with the help of FERC’s market monitoring – a system so “fatally deficient” that it failed to detect this bad behavior for an extended period of time.

The complainants requested that FERC order the sellers named in the suit to pay refunds, plus interest, on the sales made to CERS “at unjust and unreasonable rates from January 18, 2001 to June 20, 2001.” During that time period, the California Attorney General claims that CERS was overcharged approximately $1.9 billion.

But FERC was unsympathetic: “[W]e are compelled to dismiss the Complaint as it seeks an unavailable remedy, advances inadequate legal theories and, to the extent it raises an appropriate legal theory, to wit, Federal Power Act (FPA) section 309, the claims are not sufficiently supported.” For an analysis of this decision, I recommend reading Winston & Strawn’s recent Alert on the topic.

You can see more documents related to this case by searching for Docket Number EL09-56 in FERC’s eLibrary.

FERC’s Proposed Data Improvements Aim to Enhance Market Monitoring and Transparency

Late last month, FERC concurrently released two Notices of Proposed Rulemaking (NOPRs) related to electronic tag (e-Tag) data associated with transactions in wholesale power markets.

The first NOPR (Docket No. RM10-12-000) proposes changes to “facilitate price transparency in markets for the sale and transmission of electric energy in interstate commerce” by requiring market participants that are currently excluded from the Commission’s jurisdiction under section 205 of the Federal Power Act (16 USC 824d) to file Electric Quarterly Reports (EQR) with the Commission. The proposal also requires such reports to include e-Tag ID data.

The second NOPR (Docket No. RM11-12-000) would require the North American Electric Reliability Corporation (NERC) to provide FERC with access to “complete electronic tagging data used to schedule the transmission of electric power in wholesale markets.” FERC claims that this information – which would not be made publicly available – would “aid the Commission in market monitoring and preventing market manipulation, help assure just and reasonable rates, and aid in monitoring compliance with certain business practice standards.”

Law firms Van Ness Feldman and Hogan Lovells have published legal alerts summarizing the proposals here and here, respectively. Hogan Lovells predicts that the proposed changes, if passed, will “significantly enhance FERC’s market oversight and enforcement capabilities.”

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