FPA

The Energy Policy Act of 2005 was supposed to streamline the siting process and provide a federal “trump card” for projects delayed at the local level, but it is far from clear whether these goals have been, or will be, achieved.

John S. Ferguson: I concur with Mark Williams’ assessment that the proposed KKR/TPG acquisition of TXU through a leveraged buyout (LBO) may “have negative consequences for Texas customers,” which he indicates as being a consequence of the nature of an LBO. I think it is more likely a consequence of the nature of the restructuring imposed by the Texas Legislature.

Stephen L. Teichler and Ilia Levitine: We take it with good humor that Scott Strauss and Jeffrey Schwartz used our report on the 9th Circuit’s recent Mobile-Sierra decisions as a foil to the grand argument that courts should return to the “statutory roots” in their interpretation of Mobile-Sierra.

The 9th Circuit Court’s Snohomish and PUC decisions seek to rationalize what has been a confusing, conflicted area of law.

The D.C. Circuit once observed that the Mobile-Sierra doctrine is “refreshingly simple.” In fact, however, the doctrine has become incredibly nuanced and complex over time. In two concurrently issued decisions, the court has discovered new prerequisites to the initial application of the doctrine, changed the independent “public interest” review standard into a presumption, and has jettisoned that presumption entirely when contract prices are too high as opposed to too low.

Hold on to your hats. The vaunted and vilified “standard market design”, once thought dead and buried, has been resuscitated, with all attendant chaos and rhetoric, but this time in the guise of a new proposal under the code name “open dispatch.” This new construct, as remarkable in its way as Einstein’s theory of indeterminate space and time, declares that electric transmission, long seen as one of a triumvirate of unique and essential utility industry sectors (along with generation and distribution), is little more than a mirage.

The District of Columbia Public Service Commission successfully has used two little known provisions in the Federal Power Act (FPA) to prevent an aging generating plant crucial to the national capital region’s reliability from being abruptly shut down by Virginia’s environmental regulators. In the end, the immediate threat to the region’s reliability was obviated while the environmental concerns associated with the plant were not ignored. The action resulted in a model for how federal energy regulators and environmental regulators can address similar problems in the future.

FERC staff’s Preliminary Assessment of NERC’s proposed reliability standards identified a number of potential deficiencies, many of which NERC plans to address. What adjustments must be made by users, owners, and operators of the bulk power system in the new era of mandatory compliance?

Forget the mega merger as a means to acquire new power plants. FERC’s new rules may offer a better path.

New regulations from FERC to prevent energy industry market manipulation take deep root in securities industry law. Modeled in part on the Securities Exchange Act of 1934 (Exchange Act), the Energy Policy Act of 2005 (EPACT) outlaws direct or indirect use or employment of manipulative or deceptive devices or contrivances in energy industries FERC regulates under the Natural Gas Act (NGA), the Natural Gas Policy Act of 1978 (NGPA), and the Federal Power Act (FPA).

The high stakes turf battle over whether FERC or the federal bankruptcy courts have jurisdiction over rejecting wholesale power contracts is now in its third round. Round one was fought in 2003 in the NRG bankruptcy case and ended in a settlement among the parties. Round two followed with the Mirant Chapter 11 case. Now punches and counterpunches are flying in round three: the Calpine bankruptcy.