/sites/default/files/entity_pdf/Energy_Regulation_And_Litigation.pdf

Energy Regulation and Litigation

Our Energy Regulation and Litigation Group is consistently ranked among the leading practices by Chambers USA and Legal 500. The group has been described in Chambers USA as “Outstanding, the best of the best, the gold standard” … with a “very broad and deep bench of outstanding attorneys” “the gold standard” and, further, that “Skadden is an absolute powerhouse. … A true juggernaut practice.” Our leading role is due to the depth and breadth of our group’s experience in this area and the prominence of its practitioners, including former high-ranking government officials.

The group offers clients creative and effective solutions to complex legal problems in the following areas, among others:

Mergers and Acquisitions

Skadden is a recognized leader in handling regulatory approvals for complex M&A transactions, including, most recently, FERC and federal antitrust approval process for numerous transactions, including Exelon Corporation/Pepco Holdings, Inc.; Wisconsin Energy Corp./Integrys Energy Group, Inc.; Hawaiian Electric Industries, Inc./NextEra Energy, Inc.; SunEdison, Inc. and TerraForm Power, Inc./First Wind Holdings, Inc.; Dynegy Inc./Energy Capital Partners; and Enel Green Power S.p.A./GE Energy Financial Services. The volume of deals we handle gives us keen insights on how to manage the interaction of the multiple agency approvals needed for many utility M&A transactions, including FERC, DOJ/FTC and state approvals. This extensive experience also gives our attorneys familiarity with the business realities driving potential transactions, and we regularly advise the boards and senior management of our clients throughout the M&A process.

Complex Litigation

Skadden’s Energy Regulation and Litigation Group, in conjunction with the firm’s litigation practice, has the breadth and depth to handle virtually all forms of complex energy litigation. We have represented companies in high-profile enforcement cases in federal district court and before FERC and the CFTC. We have advised clients in federal preemption disputes in federal district court and the federal courts of appeal. Our attorneys have handled complex administrative trials before FERC on a range of issues, including breach of contract cases, rate cases, manipulation cases and the California refund litigation. We also have one of the leading energy appellate practices, representing companies seeking to overturn or defend FERC orders in the federal courts of appeals. Our group has handled complex energy litigation, including merger approvals and stranded cost claims, before state regulatory bodies.

Enforcement

We have combined our litigation skill and depth, our broad knowledge of the relevant legal criteria, and our intimate understanding of agency priorities to help companies navigate their most difficult enforcement cases. Given the increasingly common multi-agency and potential judicial nature of such cases, we also routinely collaborate with our white collar defense group, our civil litigation attorneys and our CFTC practitioners.

Our attorneys have defended a majority of the FERC enforcement cases involving market manipulation allegations that have become public, including for Barclays Bank PLC (the first case to go to federal district court), JP Morgan Ventures Energy Corp.; DB Energy Trading, LLC; Rumford Paper Company; Dr. Alan Chen; and Energy Transfer Partners. We also defended H.Q. (United States) in the first complaint case claiming market manipulation.

We have represented companies in some of the most significant reliability enforcement matters to date, including investigations into significant outages and major electrical disturbances. We also counseled companies involved in the southwestern and San Diego outages in 2011, and we advised the Edison Electric Institute in its successful bid to reform FERC’s Penalty Guidelines with respect to reliability enforcement.

Our representations in this field give us deep knowledge into effective strategies for dealing with regulatory agencies in this area — particularly, but not exclusively, FERC and the CFTC. We also employ state-of-the-art data retrieval and web-based litigation support systems to accommodate the needs of specific clients and matters. This sort of “knowledge bank,” the product of extensive and practical experience in a complex area, is a significant source of value for our clients.

Market Manipulation

FERC and the CFTC have aggressively pursued market manipulation claims against energy companies in recent years. FERC in particular has been active in prosecuting manipulation claims and has sought hundreds of millions in civil penalty fines and disgorgement. Our group has been a leader in defending companies in these cases, including defending the first major FERC manipulation case (Barclays) to be challenged in federal court. (See link to Experience section above.) Our representations in this field give us deep knowledge of the substantive law and have provided us with important insights into effective strategies and tactics for dealing with regulatory agencies.

Market Design

We have played a leading role in FERC and appellate proceedings regarding the design of organized power markets throughout the nation, including ISO New England, PJM, California ISO, Midwest ISO, New York ISO and other markets. Our attorneys have helped develop these market rules and have defended the rules and market outcomes against challenges. This area of regulation is becoming increasingly important given the significant challenges confronting organized electric markets, including changes in generation resource mix, the integration of large amounts of variable resources, and recurring interventions and subsidies by state and local entities. In representing companies in this area, we also utilize our longstanding relationships with the leading electricity market economists.

FERC Compliance

We have extensive experience in developing compliance programs for energy companies subject to FERC regulation. We authored the 2005 Compliance Handbook (first edition), which became a leading public reference work on FERC compliance, and released the second edition in late 2014. From 2008-09 we represented 27 companies from across the energy industry in creating a model FERC compliance program guide, which includes a comprehensive identification of FERC requirements; an assessment of actions that can trigger those requirements; and guidance on controls, training and documentation, as well as compliance policies and “culture of compliance” issues. We provide similar services to individual companies, assisting them in evaluating and, as appropriate, updating their compliance programs.

Electric Reliability

Skadden has been at the forefront in advising on FERC’s regulation of electric reliability matters. We have represented companies in virtually every region of the U.S. on reliability enforcement matters, including in major FERC investigations involving outages and electrical disturbances. We also have assisted companies in developing compliance programs that address reliability requirements and processes. Our attorneys have written extensively on FERC’s regulation of the standards development process and have counseled companies and industry groups on the participation in that process.

Electric Transmission

We have represented electric companies over the last two decades in a broad range of proceedings affecting their transmission businesses. Our attorneys played a leadership role in developing the first open access transmission tariffs and in the creation of regional transmission organizations to operate and plan the transmission grid. More recently, we have represented a range of transmission companies in responding to the changing nature of the industry, including integrating renewable resources, addressing the elimination of federal rights of first refusal, obtaining transmission incentives, preparing and prosecuting transmission rate cases, handling disputes over transmission cost allocation, representing merchant transmission developers and participating in regional transmission planning.

Affiliate Regulation

Our lawyers have been heavily involved in affiliate regulation issues on both a policy and practical level, from the inception of the first affiliate regulations imposed on energy companies through each step of their evolution. Because we advise numerous electric and gas companies in this area, there are few fact patterns we have not seen. We know how to anticipate problems, resolve issues and distinguish real problems from manufactured ones. Clients turn to us for creative solutions that achieve compliance with minimal regulatory impingement on business objectives (including, for example, obtaining Affiliate Restrictions and Standards of Conduct waivers and no-action letters, as well as sorting through difficult issues regarding permissible activities of employees and officers and permissible compensation for services that affiliated energy companies provide each other).

Nuclear Power

Skadden has long represented a variety of clients in the energy industry that own, operate and/or design nuclear generating facilities, and we have worked on many transactions that have involved nuclear issues. These transactions have included sales of individual nuclear plants, mergers of utilities that own nuclear plants, mergers of nuclear suppliers including reactor and fuel supply vendors, joint-ownership arrangements for new plants and the spin-off of a utility’s nuclear power business. We advise clients regarding the regulatory implications of their transactions, including assisting in obtaining the necessary regulatory approvals when required. Skadden also has counseled clients on potential new construction, government financial incentives, and loan guarantees and joint-ownership arrangements. We advise with respect to tenant-in-common arrangements historically used by traditional utilities as well as the creation of new joint ventures formed to pursue new merchant nuclear plant construction. This has included advising international companies regarding Atomic Energy Act restrictions on foreign ownership of nuclear reactors in the United States and the creation of ownership structures designed to comply with those restrictions.

Natural Gas

Skadden has been involved with natural gas pipeline and related issues for more than 35 years. In recent years, our natural gas practice has focused on:

  • issues arising in connection with complex transactions, including acquisition or divestiture of natural gas supply or pipeline capacity related to the acquisition or sale of gas-fired generation facilities;
  • regulatory issues arising from the construction and operation of LNG terminals, liquefaction facilities and cross-border natural gas facilities;
  • purchase or sale of natural gas pipeline facilities;
  • representing clients in FERC proceedings and investigations under the Natural Gas Act and Natural Gas Policy Act (including cases involving claims of market manipulation);
  • assisting companies with FERC compliance issues; and
  • pipeline rate cases at the FERC.

Yieldcos

Skadden has significant experience representing project sponsors in creating yieldco vehicles, including major solar and wind power companies. Yieldcos, with their low cost of capital and need for continued growth, will continue for some time to have a major impact on the renewable energy market, including the M&A market and as an “exit strategy” for developers. Whether or not a company’s transactions involve yieldcos, the firm’s experience representing developers in forming yieldcos, and our experience with yieldcos in the M&A market, will assist when formulating and implementing an acquisition strategy in today’s market.

Energy Tax

Members of Skadden’s Tax Group have significant experience planning and structuring transactions in the energy sector. Our tax-related energy experience also involves assisting energy-focused clients with industry-specific issues, both in the transactional and planning context, and in controversies and litigation, including matters before the IRS.

Many of our attorneys have extensive tax-related administrative and policy experience and formerly have held senior positions at the Treasury Department and IRS, and in key congressional tax writing committees. That experience, coupled with our unparalleled tax controversy capabilities, enables our Tax Group to react quickly in analyzing novel transaction structures and, where necessary, seek rulings or other government guidance to facilitate their prompt implementation.



  • Barclays Bank in U.S. district court defending against a FERC suit alleging market manipulation and seeking $435 million in civil penalties.


  • Edison Electric Institute, the trade association of the nation’s electric utilities, before the U.S. Supreme Court in a case challenging on federal preemption grounds state action that disallowed interstate transmission cost.


  • Energy Transfer Partners in the successful defense of multiple class action lawsuits in Texas state court alleging market manipulation and related state law claims, as well as in the successful resolution of FERC claims of manipulation in a settled FERC proceeding.


  • Entergy Corporation in multiple cases before the U.S. Court of Appeals for the D.C. Circuit and Second Circuit involving state challenges to interstate utility agreements and wholesale electricity markets and in U.S. district court concerning federal preemption of state law challenges to federal tariffs.


  • FirstEnergy Corporation before the U.S. Supreme Court in challenges to state regulation of transmission costs and challenges to the FERC’s cost allocation policies and before the federal courts of appeal in disputes regarding federal preemption and electricity market design.


  • NRG Energy in securing the summary denial of a California state court challenge to a state-approved settlement.


  • NRG Energy before the U.S. Supreme Court, which reversed the U.S. Court of Appeals for the District of Columbia and clarified the Mobile-Sierra doctrine.


  • PJM Power Providers (P3), a trade association of power suppliers, before the U.S. Court of Appeals for the Third Circuit in defending FERC orders protecting the integrity of wholesale market bids.


  • Public Service Electric and Gas Company before the U.S. Court of Appeals regarding the FERC’s transmission planning mandates in Order No. 1000.




  • Barclays Bank PLC in the first FERC enforcement action brought in Federal District Court regarding alleged violations arising from trading activity in Western U.S. energy markets.


  • Deutsche Bank (DB Energy Trading LLC) in a FERC enforcement action related to allegations of violations arising from trading activity in the California ISO market.


  • Dr. Houlian “Alan” Chen in a highly publicized FERC investigation regarding Up-To-Congestion transactions in the PJM Interconnection, LLC on behalf of his own funds, HEEP Fund Inc. and CU Fund, and on behalf of the owners and managers of Huntrise Energy Fund, LLC and Powhatan Energy Fund, LLC.


  • Energy Transfer Partners, L.P. in investigations and litigation involving FERC and CFTC with respect to allegations of market manipulation related to natural gas sales.


  • Entergy Corporation in a FERC enforcement investigation regarding alleged reliability violations associated with facility ratings and other issues.


  • J.P. Morgan in a FERC enforcement investigation of conduct in the California ISO and the Midwest ISO.


  • Rumford Paper Company regarding FERC allegations of market manipulation.


  • North American Electric Reliability Corp., the Nation’s Electric Reliability Organization (NERC), in contested enforcement audit of NERC’s management and financial practices.


  • New England Power Generators Association in a FERC complaint proceeding to clarify the obligations of capacity resources in ISO-NE to obtain gas when there is insufficient pipeline capacity.


  • PacifiCorp in a FERC investigation regarding alleged reliability violations associated with a disturbance involving the loss of certain generating plants.


  • Several companies in FERC inquiries and investigations into reliability issues associated with the San Diego outage in September 2011 and Southwest cold weather event of February 2011.


  • Ameren, Calpine, Dynegy, Exelon, FirstEnergy, NextEra and the Electric Power Supply Association in advocating reforms of the Midwest ISO resource adequacy market.
  • Dynegy and other generators in the multi-year refund proceedings arising out of the California power crisis.
  • Entergy Nuclear Power Marketing in litigation regarding the design of capacity markets in New York, including matters before the U.S. Court of Appeals for the Second Circuit
  • ISO-New England (ISO-NE):

    • NEPGA, a trade association of generation companies, in a complaint against ISO-NE regarding the obligations of gas-fired generators to procure gas during times of scarcity;
    • Coalitions of generators on capacity market design and reform, including buyer market power mitigation;
    • Footprint Power on the rules applicable to a new merchant power developer; and
    • Hydro Quebec on transmission development rules and import issues.
  • PJM Power Providers (P3) in advocating improvements to the capacity market rules and related federal preemption litigation.
  • The AES Corporation in:

    • a $1.6 billion investment by China Investment Corporation; and
    • its $3.5 billion acquisition of DPL Inc.
  • AIA Energy North America, an investment fund managed by Argo Infrastructure Partners, in its acquisition of entities that own and operate the Cross-Sound Cable System, a 24-mile high-voltage direct current submarine transmission line between New Haven, Connecticut, and Shoreham, New York.
  • Allegheny Energy, Inc. in its $4.7 billion acquisition by FirstEnergy Corp. The deal was structured as a stock-for-stock transaction.
  • Duke Energy Corporation and Progress Energy, Inc. in connection with the regulatory and antitrust aspects of their merger agreement in which Duke Energy acquired Progress Energy for $13.7 billion. The combined company is called Duke Energy and is the largest utility in the United States.
  • Dynegy Inc. in the regulatory aspects of its $825 million acquisition of Ameren Energy Resources Company, LLC and its subsidiaries from Ameren Corporation.
  • Dynegy Inc., a Houston-based independent power generator, in connection with the US$3.45 billion acquisition of coal and gas generation assets in New England and the Midwest from Energy Capital Partners, a private equity firm.
  • Enel Green Power S.p.A. (Italy) in the US$440 million sale of a 49 percent stake in its U.S. renewable energy unit to GE Energy Financial Services.
  • Entergy Corporation in the proposed, but terminated, $6 billion divestiture via a tax-free spin-off and subsequent merger of its electric transmission business into ITC Holdings Corp.
  • Exelon Corporation and Pepco Holdings, Inc. with the regulatory aspects of Exelon’s US$6.8 billion acquisition of Pepco to create the leading mid-Atlantic electric and gas utility.
  • Exelon Corporation in its $7.9 billion stock-for-stock merger with Constellation Energy Group, Inc.
  • First Solar, Inc. in connection with the formation and $420 million initial public offering of Class A shares representing limited partner interests of 8point3 Energy Partners LP, a new yieldco formed as a joint venture between First Solar and SunPower Corporation to own, operate and acquire solar energy generation projects. Skadden also represented 8point3 Energy Partners in connection with obtaining a $325 million term loan and a $200 million revolving credit facility.
  • GenOn Energy, Inc. in the regulatory aspects of its $6 billion stock-for-stock merger with NRG Energy Inc., which created one of the largest competitive generators in the United States.
  • Great Plains Energy Incorporated in:

    • its $940 million sale of Aquila, Inc.’s natural gas utilities in Colorado, Kansas, Nebraska and Iowa and Aquila’s electric utility assets in Colorado to Black Hills Corporation, a generator and distributor of electricity and a producer of natural gas, oil and coal; and
    • its $2.7 billion acquisition of Aquila, Inc., a distributor of natural gas and electricity.
  • Hawaiian Electric Industries, Inc. (HEI) in its US$4.3 billion acquisition by NextEra Energy, Inc. In connection with this transaction, HEI will spin off ASB Hawaii, Inc., the parent company of American Savings Bank, F.S.B., into a separate, publicly traded company.
  • InterGen N.V., a power generation company, in its acquisition of a 50 percent stake in the 155-megawatt initial phase of the Energía Sierra Juárez wind project in Mexico from Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) (Mexico), an affiliate of Sempra Energy. When completed, this will be the first cross-border wind project between Mexico and the U.S.
  • NextEra Energy, Inc. in regulatory structuring and approvals for the initial public offering of limited partnership interests in NextEra Energy Partners, a “YieldCo” sponsored by NextEra.
  • Northeast Utilities in its merger-of-equals with NSTAR, which created one of the nation’s largest electric utilities with an enterprise value of $17.5 billion.
  • NorthWestern Corporation in the energy regulatory aspects of its $900 million acquisition of 11 hydroelectric facilities and related assets from PPL Montana, LLC.
  • Pattern Energy Group Inc. in its $242 million acquisition of the 201-megawatt Post Rock Wind facility in Kansas and the 150-megawatt Lost Creek Wind facility in Missouri from Wind Capital Group, LLC and its affiliates.
  • SunEdison, Inc. and TerraForm Power, Inc. in the financing of their US$2.4 billion acquisition of First Wind Holdings, Inc., a developer of wind projects. The financing included a US$410 million margin loan, a US$405 million offering of Class A common stock, a US$800 million Rule 144A/Regulation S high-yield offering of 5.875% senior notes due 2023, and a US$460 million Rule 144A offering of 2.375% convertible senior notes due 2022. Skadden also represented SunEdison in the formation and debt and equity financing of an innovative warehouse joint venture which will be used to fund the development and construction of certain power projects being acquired.
  • The Vitol Group (the Netherlands) and Helios Investment Partners LLP (United Kingdom) in their joint venture with Oando plc (Nigeria) to acquire the Nigerian downstream businesses of Oando for $460 million.
  • Wisconsin Energy Corp. in its US$9.1 billion acquisition of Integrys Energy Group, Inc. The combined company is named WEC Energy Group, Inc.
  • Entergy Corporation in defense of several complaints with respect to its operation of the transmission system and in multiple proceedings associated with integration into the MISO Regional Transmission Organization.
  • Exelon Corporation in several transmission-related proceedings, including PJM rate design for existing and new transmission facilities.
  • FirstEnergy Corporation in multiple proceedings to effectuate an inter-RTO transfer from MISO to PJM and in proceedings related the allocation of transmission costs in those RTOs.
  • Geronimo, a wind developer, on interconnection and participation in the Midcontinent ISO markets.
  • Great Plains Energy in several transmission-related matters, including approval of formula rates for cost of transmission service.
  • National Grid in a complaint related to system resource planning on Long Island, New York.
  • Northwestern in proceedings to increase the rates for frequency regulation and in defense of certain complaints regarding its provision of open access transmission service.
  • NV Energy in several transmission rate case proceedings and other matters related to the provision of transmission service for Sierra Pacific Tower Company and Nevada Power Company.
  • Pacific Gas and Electric Company in several proceedings to increase base transmission rates.
  • Portland General Electric Company (PGEC) in obtaining waivers necessary to the planning of a 500 kV transmission project and in other matters related to the provision of open access transmission service.
  • Public Service Electric and Gas Company in:

    • several proceedings associated with utility rights of first refusal to build transmission within their own service territories;
    • a complaint against PJM Interconnect, LLC (PJM) challenging PJM’s actions in an ongoing competitive solicitation process for a transmission project. The complaint alleged that PJM violated its tariff rules adopted under Order No. 1000 in conducting the solicitation; and
    • a complaint against PJM Interconnection LLC regarding its application of the rules for competitive transmission solicitations to the Artificial Island project.
  • Xcel Energy in several proceedings related to establishing formula transmission rates and the provision of open access transmission service.