In our February update, we noted that ISO New England (ISO-NE) and New York Independent System Operator (NYISO) stakeholders continue to discuss carbon pricing as one potential solution to better align state and regional decarbonization goals with wholesale electricity markets. Since that update, carbon pricing remains on the agenda, though ISO-NE has shifted its focus to “near-term” solutions, and NYISO has halted a study on carbon pricing in anticipation of the Federal Energy Regulatory Commission’s (FERC) upcoming technical conference on state energy policies and the wholesale markets operated by the three eastern grid operators: ISO-NE, NYISO and PJM Interconnection, L.L.C. (PJM). Only the two former grid operators have initiated formal stakeholder discussions featuring carbon pricing thus far; however, as indicated in a recent statement by PJM President and CEO Andrew Ott prior to the conference, PJM is now in the beginning stages of discussing carbon pricing with its stakeholders and state policy-makers. With all three eastern grid operators now considering carbon pricing, FERC’s upcoming technical conference will likely serve as a forum to advance the conversation on carbon pricing as one potential solution to reconcile the wholesale markets with state energy policies.
On March 13, Sen. Jeff Flake (R-AZ) introduced the Ratepayer Fairness Act (RFA). The RFA would amend the Public Utility Regulatory Policies Act of 1978 (PURPA) to require that state public utility regulatory authorities and nonregulated retail electric utilities—such as municipally owned utilities and electric cooperatives—consider the “impact from cross-subsidization of customer-side technology.” In other words, the RFA would direct each state regulatory authority and nonregulated retail electric utility to examine what costs, if any, are imposed by the widespread use of customer-owned distributed generation on other customers and the system as a whole.
In remarks before the International Futures Industry Conference, Acting Chairman J. Christopher Giancarlo—who was just nominated by President Trump to be permanent Chairman—talked about the future of the Commodity Futures Trading Commission (CFTC) on a wide range of regulatory issues, priorities and reforms. Among them was enforcement. The CFTC, an independent rather than executive agency, aggressively pursued enforcement actions for violations of CFTC-enforced statutes and regulations—including the prohibitions against fraud, market manipulation and disruptive trading practices (e.g., “spoofing”)—throughout the Obama administration. See, for example, the CFTC’s most recent annual report. A question among energy industry participants (and other commodities-based industries regulated by the CFTC) has been whether a newly constituted Commission under the Trump administration will do the same. Acting Chairman Giancarlo’s remarks make it clear that the answer is “yes.” In the key passage, he states:
One of the typical activities for junior associates in performing due diligence for M&A and securities transactions involving public companies is going through the “exhibit list” filed by the public company on its recent registration statements and Securities Exchange Act of 1934 (the Exchange Act) filings and tracking down the material agreements listed. Today, that process usually entails reading that list and then scrolling through the public company’s EDGAR filings, trying to find the actual filing to which each such material agreement is attached. This process, often also performed by young associates in the investment banking and other investment fields, can be labor-intensive and not particularly intellectually challenging. Recently, however, the Securities and Exchange Commission (SEC) promulgated rules that will make this process much easier and faster for those hard-working young professionals.
On March 1, 2017, the SEC adopted amendments to various rules, including Item 601 of Regulation S-K, that will require most registrants to include a hyperlink to each exhibit listed in the exhibit index of these filings. To enable the inclusion of such hyperlinks, the amendments also require that registrants submit all such filings in HTML format.
On March 3, 2017, Federal Energy Regulatory Commission (FERC or the “Commission”) staff scheduled a technical conference to discuss the interaction between state energy policy priorities for generation resources and resource attributes and market design and development in the organized wholesale markets administered by the Regional Transmission Organizations and Independent System Operators (RTOs/ISOs) in the Eastern Interconnection.1 The announcement of the two-day conference on May 1 and 2 comes as states continue to enact or consider policy measures to provide subsidies to generating resources that are struggling to earn sufficient revenues in the wholesale markets and address carbon reduction and other environmental policy goals.
Since our December update, ISO New England (ISO-NE) and New York Independent System Operator (NYISO) stakeholders have convened additional meetings to assess potential reforms to their respective wholesale electricity markets to better align them with state and regional decarbonization goals. In both NEPOOL’s1 Integrating Markets and Public Policy (IMAPP) initiative and NYISO’s Integrating Public Policy Project (IPPP), carbon pricing remains a central discussion point as they look to advance their stakeholder efforts in 2017.
On February 3, 2017, the Federal Energy Regulatory Commission (FERC or the “Commission”) issued an order (the “Delegation Order”) delegating “further authority” to its staff—beyond the existing delegations of authority already set forth in its regulations1—to take action on matters that would normally require action by the Commission itself. The additional delegations are intended to address the impending, and potentially lengthy, lack of a three-commissioner quorum resulting from the resignation of Commissioner Norman Bay on January 26, 2017, effective February 3, 2017.2 Bay’s resignation leaves FERC with only two commissioners, one short of the quorum needed for Commission action under the statutes it administers. The relatively limited additional delegations will primarily maintain the “status quo” and ensure that rates and terms and conditions of service subject to FERC jurisdiction that are challenged cannot take final effect without Commission review.
Chrysoar, a little known oil company, backed by U.S. private equity (PE) firm EIG Partners, made headlines this week when it purchased $3.8 billion of North Sea assets from Shell. The sale comprises more than half of Shell’s North Sea asset base. It is part of a debt reduction program implemented after its acquisition of BG Group, with Shell targeting divestments totaling $30 billion by 2018. Rather than recycling proceeds into new capital projects (whether in the North Sea or elsewhere), the purchase price will be used to pay down existing loans.