FERC adds flexibility for gas, electric sector as US braces for pandemic peak

Citing "national emergency conditions" created by the coronavirus pandemic, US Federal Energy Regulatory Commission Chairman Neil Chatterjee extended further regulatory relief to the power and natural gas sectors.

In a series of statements and orders, Chatterjee filled out details of FERC's compliance posture, relaxed additional filing deadlines and waived in-person meeting and notarization requirements.

Chatterjee also spelled out new flexibility in FERC's enforcement stance during the emergency period, delayed in-person audits and curbed the reach of new investigations until July.

"We're doing all we can to lift regulatory burdens and uncertainty, so that the focus can remain on critical front-line efforts," Chatterjee said in a statement.

The actions come as the peak of the pandemic in the US is projected to hit in mid-April, and energy companies regulated by FERC are preparing their workforce through such steps as requiring staff to work remotely for an extended period, splitting control room staff into separate teams and requesting priority access to coronavirus testing kits.

Chatterjee in March signaled FERC's flexibility on reporting requirements and deadlines as power and gas companies faced the possibility of workforce and other struggles tied to the spread of the virus.

Michael Brooks, a partner at Bracewell, said the new slate of FERC actions make clear the commission appreciates the challenges presented by the response to the outbreak and is "geared up and ready to respond and expedite review of waivers and other relief for market participants."

When it comes to enforcement, Brooks cautioned that regulated entities should not consider the announcements to mean the "cop is not still on the beat," rather that FERC is "not going to burden companies with inquiries that can wait."

ENFORCEMENT DELAYS

On Thursday, Chatterjee said staff would take extenuating circumstances into account when evaluating compliance and enforcement matters including penalties and timeliness of self-reports.

FERC will "exercise appropriate enforcement discretion" as events arise during the emergency period, it said.

No new audits will begin until July 31 and new surveillance inquiries will only occur for "market behavior that could result in significant risk of harm to the market," according to a press release outlining the enforcement stance.

For ongoing enforcement cases, staff is expected to offer flexibility for discovery-related deadlines and other deadlines through July.

"I've said this before, but it bears repeating: The commission will not second-guess the good faith actions that regulated entities take in the face of this emergency," Chatterjee said.

FERC is also using the emergency designation to suspend certain standards of conduct posting requirements, although disruptions lasting more than a month will require waivers.

Regulated entities were also extended the opportunity to seek more formal "no-action" letters on enforcement issues as well as standard of conduct waivers.

Despite the flexibility, Chatterjee said FERC will continue protecting markets through uninterrupted surveillance of data feeds and screening processes.

Tyson Slocum of Public Citizen aired some concern about delays in surveillance inquiries, saying FERC needs to clarify what "significant risk of harm" is.

"It is my position that any action that results in unjust and unreasonable rates, or constitutes a violation of the anti-manipulation rule, is 'significant,'" Slocum said.

An aide to Commissioner Richard Glick said the sole Democrat on the panel "does not believe what is being proposed is problematic if FERC remains vigilant in continuing to go after market manipulation."

REORDERING PRIORITIES

The commission also released a broad policy statement (PL20-5) emphasizing that FERC will give highest priority to processing filings geared toward reliable operation of energy infrastructure during the emergency.

The commission "will expeditiously review and act on requests for relief, including but not limited to requests for cost recovery necessary to [ensure] business continuity of the regulated entities' energy infrastructure in response to the national emergency," it said.

In taking that approach, the commission said it recognized the entities it regulates are taking unprecedented steps that may alter their normal course of business and create questions about their ability to meet requirements or recover costs.

Adding to previously eased filing deadlines, FERC gave regulated entities until June 1 to file Forms 552, 60 and 61, along with Electric Quarterly Reports.

Other new relief includes:

Delegating authority until June to the director of the Office of Energy Market Regulation to act on uncontested waiver requests.
An instant final rule delegating authority to staff to ease deadlines for annual reports on natural gas transactions and reports on transmission investments — FERC Form 552 and Form 730, respectively.
Extended deadlines for uplift reports and operator initiated commitment reports for regional transmission organizations and independent system operators.
An extension to May 1 for a litany of non-statutory filings and forms and shortened answer periods for extension requests due to the pandemic.