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  Mogel & Sweet Newsletter   December 2014    
 
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SEASON'S GREETINGS FROM MOGEL & SWEET LLP  
 
As 2014 winds down and people across the nation gear up to celebrate the holidays, Mogel & Sweet LLP extends warm wishes to all during this special time of year and the best for 2015.

Mogel & Sweet is representing clients on many key energy topics arising from the current Congress, the new Congress and the Executive Branch by helping them to develop their legislative and regulatory strategies, advocating their positions and representing them before regulatory agencies, Congress and in court. If you are in need of assistance in the energy arena, please feel free to contact us via our individual email addresses listed in this newsletter and visit our website at www.mogelsweet.com. Below are a few of our current activities:
 
   
  • Israeli Natural Gas Finds - Bill Mogel, Partner, recently participated in the Council of Foreign Relations' prestigious New York conference on U.S. - Israel Trade with a focus on the new Mediterranean natural gas reserves. Mogel has written on the Israeli discoveries, Tamar and Leviathan, and was retained by an Israeli energy company in connection with the prospects for marketing natural gas. Nearly 100 others were in attendance.

    Energy Advice - Bill and law colleague David Muchow are providing expert advice to U.S. and international companies on financing, marketing, development, regulatory permitting and other issues with respect to Liquefied Natural Gas (LNG), oil, and renewable energy projects. Mogel & Sweet has over 30 years of experience in this arena.

    Expert Testimony - In addition to practicing energy law, Bill has served as an expert witness in several litigation cases involving both electric power and natural gas. He recently testified in California, Alaska and Pennsylvania. He has been qualified by courts to provide opinion evidence on energy policy, practice and procedure before the Federal Energy Regulatory Commission (FERC). (wamogel@mogelsweet.com)

 
 
  • Global Gas - On October 29, 2014, David Sweet, Partner, helped chair the Second Meeting of the Global Gas Council at the Main Building of the Organization of American States (OAS) in Washington, DC. The agenda focused primarily on natural gas and energy security in key regions and was co-chaired by His Excellency Dr. Neil Parsan, Ambassador of the Republic of Trinidad and Tobago to the United States. The Council focused on the overall theme of Natural Gas and Energy Security, with an emphasis on key regions. Presenters included the Ambassadors of Gabon and Botswana, officials from the World Bank and the Inter-American Development Bank and Commissioner Phil Moeller of FERC. Senator the Honourable Kevin Ramnarine, Minister of Energy and Energy Affairs of the Republic of Trinidad and Tobago delivered the keynote address via video-conference. The meeting included representatives from over thirty Embassies in addition to high level participants from the private and public sectors.

    International Energy Experience - David has extensive contacts overseas, working with and advising foreign entities on energy development. He also has expertise spanning natural gas matters to distributed generation, renewable energy and Combined Heat and Power (CHP). (dsweet@mogelsweet.com)

 
 
  • Energy Efficiency Financing - David Muchow, of counsel, is currently assisting an energy efficiency company to raise $50 million of financing to expand its commercial office building energy efficiency programs through acquisitions. There is a growing need for commercial office buildings, hospitals, and other facilities to cut energy costs. This includes auditing energy efficiency capabilities, retrofitting buildings with high efficiency lighting, HVAC systems, and installing cogeneration and fuel cell systems for baseload and backup uses. Mogel & Sweet helps energy and other companies analyze opportunities for growth and their needs for operating and capital funds. This ranges from preparing financial offerings to identifying potential investors and targets for acquisition.

    Startups and Acquisitions - Additionally, David recently mentored startup companies at MIT's Enterprise Forum in Washington, DC and Baltimore and with WEWORK, a leading startup incubator in the DC area. He has over 20 years of experience in corporate law and transactions and practical business advice for startups, non-profit organizations and other companies. He has raised millions of dollars for businesses and has been intimately involved in major acquisitions. (dmuchow@mogelsweet.com)

 
 
  • Exelon Pepco Merger - Channing Strother, of counsel, is representing The Alliance for Solar Choice (TASC) which includes SolarCity, SunRun, Demeter Power Group, Sungevity, Verengo, and Solar Universe, before the Maryland Public Service Commission in its consideration of the proposed Exelon/Pepco Holdings, Inc. merger. TASC is seeking to ensure that the benefits of roof top solar energy remain available to and viable for Maryland consumers, and filed testimony on December 8, 2014.

    Small Energy Facilities / PURPA - Channing is also assisting solar developers with respect to Dominion Virginia Power's application filed at FERC under Section 210(m) of the Public Utility Regulatory Policies Act (PURPA) and the associated regulations under FERC Order No. 688. Dominion's filing seeks to terminate its obligations to purchase at avoided cost the output of nine not yet on-line under-20 MW solar qualifying facilities (QFs) in its service area in North Carolina. PURPA Section 210(m), enacted as a part of EPAct 2005, provides that utilities may seek termination of their PURPA obligation—existing contractual and other rights are unaffected--to purchase the output of a QF, if it is shown that the QF has nondiscriminatory access to organized electricity markets in which to make sales. FERC Order No. 688 applies a presumption that QFs 20 MW and larger have such access and that smaller QFs do not. Given the Order No. 688 presumptions, utilities have been successful in terminating obligations to purchase from larger QFs. But until the City of Burlington, VT case, which involved a situation where an under 20 MW QF had actually made sales into an ISO, utilities had not been granted termination for under 20 MW. Dominion alleges that the nine QFs have nondiscriminatory access to PJM. Termination of smaller QFs assurance of being able to sell to their local utilities at avoided cost can be expected to have negative impacts on their development, for instance, on their ability to obtain financing. Even the threat of such termination may result in adverse effects from uncertainty. Dominion's application is presently subject to refilling under a FERC deficiency order, prior to due date for protests. (cstrother@mogelsweet.com)

 
 
  • Cost Recovery Mechanisms for Modernization of Natural Gas Facilities - Philip Bennett, of counsel, together with law colleague Channing Strother, are evaluating innovative ways for operators to modernize their pipeline systems consistent with the framework proposed by FERC in a recent policy statement. In this statement, the Commission is seeking to provide greater certainty concerning the ability of interstate natural gas pipelines to recover the costs of modernizing their facilities and infrastructure to enhance the efficient and safe operation of their systems. The proposed Policy Statement explains the standards the Commission would require interstate natural gas pipelines to satisfy in order to establish simplified mechanisms, such as trackers or surcharges, to recover costs associated with replacing old and inefficient compressors and leak-prone pipes and performing other infrastructure improvements and upgrades to enhance their pipelines. Initial Comments are due December 26, 2014, and Reply Comments are due January 15, 2015.

    Independent Legal Safety Reviews - In another area, Phil has been retained to review operating policies and procedures of utilities to ensure that they have been consistent with the Pipeline and Hazardous Materials Safety Administration's Safety Advisory Bulletin ADB-2012-10. This document is a guidance for strengthening pipeline safety through rigorous program evaluation and meaningful metrics, to address National Transportation Safety Board recommendations and the executive safety certification required for integrity management programs. Phil is reviewing utilities' efforts to comply with the intent of state and federal regulations, promote consistency within the company and minimize liabilities. (pbennett@mogelsweet.com)

 
 
International Energy: What's the Future?
   
Two nearly simultaneous events--Saudi Arabia's decision not to rein in its oil production and Russian's cancellation of its proposed South Stream natural gas pipeline to Europe--will have short and long term effects in world energy markets. Foremost, consumers of oil and refined products will benefit, in the short term, from Saudis' decision. In this category is everyone who buys gasoline at the pump, and consuming countries, such as India which are dependent on oil imports. Lower prices and greater supplies will make consumers winners, until supply and demand approach equilibrium. The downside from Saudi's decision adversely affects producers such as Venezuela, shale oil production and possibly the Keystone XL pipeline. As for Russia's decision, it will have no short term implications for Europe even if this winter is colder than normal, but may provide a shot in the arm to U.S. gas production (conventional and shale) and to U.S. LNG export projects seeking new markets. (wamogel@mogelsweet.com)
 
 
Congressional and Executive Outlook - Mogel & Sweet Stays on Top of the Issues
   
The focus of the lame duck session of the 113th Congress was on passing legislation to authorize the full construction of the Keystone XL oil pipeline, funding the U.S. government, extending tax breaks and addressing President Obama's Executive Order on immigration reform. Here are how these events unfolded:
  • Keystone Oil Pipeline - The U.S. House of Representatives passed the Keystone measure by an overwhelming majority but it lost in the U.S. Senate by one vote. Many political analysts attribute Senator Mary Landrieu's (D-LA) loss in Louisiana's December 6 general election runoff to this failed passage, as well as her ties to President Obama and her support for his health care reform package. Bets are that the new 114th Congress in which both chambers will be controlled by a Republican majority will consider the Keystone bill quickly and with resounding support.

  • U.S. Government Budget / Immigration - Funding for the U.S. Government at fiscal 2014 levels expired December 11. Both Houses crafted and passed, the Senate being the last chamber to act on December 13, a $1.1 trillion bipartisan compromise to finance the government through September 2015 with the exception of the Homeland Security Department which is only funded to the end of February 2015. This short-term Homeland Security agency measure is in response to outrage over President Obama's executive actions granting legal status to up to five million illegal immigrants. The congressional Republican leadership is aiming to develop long-term budget blueprints and comprehensive immigration reform in the next Congress.

  • Tax Extenders - The U.S. House of Representatives on December 3, 2014 passed a one-year renewal of more than 50 tax breaks that expired at the end of 2013, including a generous tax credit to promote wind farms and other renewable energy sources. The U.S. Senate preferred its two-year extension bill but bipartisan talks fell through and, with time running out for the lame duck session, the Senate had to settle for the House's one-year measure. Senate approval of the two-week tax extension occurred December 16 by a vote of 76-16. The last-minute bill would extend the expired tax breaks through the end of 2014, enabling taxpayers to claim them on their 2014 tax returns. President Obama is expected to sign it into law, adding nearly $42 billion to the budget deficit over the next decade. The 54 tax breaks benefit large corporations and small businesses, as well as low-income households and targeted special interests. Next year, it is clear that a key resolve of the Republican Congress is to tackle the burdensome and confusing tax code by proposing comprehensive tax reform. This effort would stabilize the business community by providing continuity for long-term investment.

***Mogel & Sweet will be closely following these future developments, paying particular attention to permanently extending the production tax credit (PTC) for electricity generated from renewable resources, the investment tax credit (ITC) for the construction of renewable energy facilities, the continued use of accelerated depreciation for solar, wind and other energy property, the promotion of distributed generation power such as CHP, and other energy tax incentives.

113th Congress - The U.S. House of Representatives adjourned for the year the week of December 8, 2014; the Senate, December 16, 2014. The 114th Congress will convene January 6, 2015 under Republican control.

FERC - Among the 69 presidential nominees considered by the U.S. Senate before the end of the 113th Congress was the confirmation of Colette Honorable as a FERC Commissioner to fill the remainder of a term that ends June 2017. Honorable is currently chair of the Arkansas Public Service Commission and former President of the National Association of Regulatory Utility Commissioners (NARUC). (cconnors@mogelsweet.com)

If you need assistance to promote your interests before the Congress or Executive Branch, please contact Carol Connors, Director of Government Relations at Mogel & Sweet. Carol has an intimate understanding of the current energy issues, extensive legislative experience working on energy and budget measures on Capitol Hill and many years spent at FERC. She has numerous contacts and has maintained a solid rapport with energy committee staff, FERC and U.S. Department of Energy (DOE) senior colleagues. You can reach her at cconnors@mogelsweet.com or carolconnors2009@gmail.com.

 
   
   © Mogel & Sweet 2014