By Gregory Lawrence, Joseph Williams and Ryan Norfolk
By order issued July 12, 2013, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) denied requests for rehearing of its March 9, 2012 order denying the complaint of DC Energy, LLC (“DCE”) and DC Energy Mid-Atlantic, LLC (“DCE Mid-Atlantic” and, together with DCE, “Complainants”) against PJM Interconnection, L.L.C. (“PJM”). Complainants and Scylla Energy Inc. (“Scylla”) filed requests for rehearing. In denying rehearing, the Commission affirmed its finding that the Complainants’ internal bilateral transactions (“IBTs”) did not display the characteristics of transactions contemplating the physical transfer of energy, and were thus not properly reported to PJM through its eSchedule tool for purposes of offsetting deviation charges.
The Rehearing Order resolves much of the uncertainty the Complaint Order created concerning the nature of the “physicality” requirement for reportable, Tariff-compliant IBTs in PJM. However, the Commission did little to address the argument that its general holding, now affirmed on rehearing, leads to the conclusion that FERC lacks jurisdiction over the transactions because they could not be physically delivered, were intended to be financially settled, and thus as non-reportable IBTs would be swaps regulated by the Commodity Futures Trading Commission. read more