On September 17, 2020, at FERC’s Virtual Open Meeting, FERC Staff presented an overview of changes to its rehearing practices following the United States Court of Appeals for the District of Columbia Circuit’s (“D.C. Circuit”) recent decision in Allegheny Defense Project v. FERC, 963 F.3d 1 (D.C. Cir. 2020) (en banc) (“Allegheny”), which rejected FERC’s practice of issuing “tolling orders” to grant itself more time to consider requests for rehearing (see July 1, 2020 issue of the WER). Staff explained that the changes to FERC’s rehearing practices are intended to allow appeals of FERC orders to proceed in a timely manner and on a complete administrative record. While the D.C. Circuit granted FERC’s motion to stay the court’s mandate in July (see July 29, 2020 edition of the WER), Staff explained in response to questions from FERC Chairman Neil Chatterjee that Staff expects the D.C. Circuit to issue its mandate in early October. Continue Reading FERC Staff Clarifies Changes to Rehearing Practices Following <em>Allegheny</em> Decision

On September 17, 2020, FERC issued a final rule (“Order No. 2222”) amending its regulations to require Regional Transmission Organizations and Independent System Operators (“RTO/ISO”) to revise their tariffs to facilitate the participation of distributed energy resource (“DER”) aggregations in organized wholesale electric markets. In the order, FERC found current RTO/ISO DER aggregation market rules to be unjust and unreasonable, established new definitions for DERs and DER aggregations, and detailed RTO/ISO tariff revisions that will allow DER aggregations to participate in RTO/ISO markets. Commissioner Danly dissented from the order, contending that FERC was overextending its jurisdictional authority and that, through the order, FERC was imprudently encouraging “resource development by fiat.” RTO/ISOs are required to file the tariff changes needed to comply with Order No. 2222 within two hundred seventy (270) days of publication of the order in the Federal Register. Continue Reading FERC Opens Door for Participation of Distributed Energy Resource Aggregations in Wholesale Electric Markets

On September 17, 2020, FERC issued a Notice of Inquiry (“NOI”) seeking comments on strategies to mitigate any potential risks to the bulk electric system posed by telecommunications equipment and services produced or provided by entities identified as risks to national security. Huawei Technologies Company (“Huawei”) and ZTE Corporation (“ZTE”) have been identified as examples of such entities because they provide communication systems and other equipment and services that are critical to bulk electric system reliability. Continue Reading FERC Opens Inquiry into Foreign Adversary-Provided Bulk Power System Telecommunications Equipment, Focusing on Huawei and ZTE Equipment Threat

On September 16, 2020, the United States Senate Committee on Energy and Natural Resources (“Committee”) held a hearing to consider Allison Clements’ and Mark C. Christies’ pending FERC nominations as FERC Commissioners. Ms. Clements is slated to join the Commission for a term expiring June 24, 2024, and Mr. Christie is set to join for a term expiring June 30, 2025.

Continue Reading Senate Committee Holds Hearing to Consider Pending FERC Nominations

On September 9, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing updated regulations that will establish a one-year period for state agencies or other certifying authorities (“Certifying Agencies”) to act on requests for water quality certifications related to sections 3 and 7 of the Natural Gas Act (“NGA”). Under the Clean Water Act (“CWA”), should a Certifying Agency fail to act on such a request within one year, they are deemed to have waived the certification requirements. Continue Reading FERC Proposes to Modify Water Quality Certification Waiver Period for Natural Gas Projects

On September 4, 2020, FERC rejected the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to its buyer-side mitigation (“BSM”) rules that sought to prioritize storage, wind, solar, and other zero-emitting resources (“Public Policy Resources”) in NYISO’s Installed Capacity (“ICAP”) Market, rather than prioritizing new resources purely on a least-cost basis. While NYISO argued the state’s carbon and nitrogen oxide emissions reduction goals mean that a resource’s cost structure is no longer the best predictor of whether it will ultimately be developed, FERC held that NYISO’s proposal was unduly discriminatory because it prioritized Public Policy Resources over other non-Public Policy Resources. The decision sparked a dissent from Commissioner Richard Glick, who characterized FERC’s order as appearing to stake out the “radical” position that it is improper for NYISO to design its Tariff in a way that acknowledges state public policies, and a departure from FERC precedent focused on balancing the effects of state policies with measures to address how those policies affect capacity market prices. Continue Reading FERC Rejects NYISO Buyer-Side Mitigation Proposal Aimed at Clean Energy Transition

On September 9, 2020, the United States Court of Appeals for the First Circuit (“First Circuit”) affirmed the United States District Court for the District of Massachusetts (“District Court”)  dismissal of a lawsuit alleging Eversource Energy and Avangrid (“Defendants”) manipulated Algonquin Gas Transmission, LLC (“Algonquin”) pipeline capacity and violated federal and state antitrust laws. The First Circuit followed its previous decision addressing a lawsuit challenging the same conduct by Defendants, but brought by different plaintiffs (see September 25, 2019 edition of the WER), which held that because the Defendants’ actions were permitted under a tariff filed with and accepted by FERC, the filed rate doctrine barred any attempt to challenge or change those rates or terms in federal court. Notably, the First Circuit also admonished FERC for being “slow to recognize market defects that create opportunities to exploit market power.”

Continue Reading First Circuit Affirms that Complaints About Gas Pipeline Capacity Hoarding in New England Are Barred by Filed Rate Doctrine, Criticizes FERC for not Policing Markets

On September 1, 2020, FERC issued an order overturning 40 years of Public Utility Regulatory Policies Act of 1978 (“PURPA”) precedent and revoking the qualifying facility (“QF”) status of Broadview Solar, LLC (“Broadview Solar”) after finding that it could not rely on inverters to meet PURPA’s statutory size limit. In a separate QF matter, the Supreme Court of the State of Montana (“Montana Supreme Court”) issued an opinion on August 24, 2020 finding the Montana Public Service Commission (“Montana Commission”) unlawfully set solar QF standard-offer rates by failing to consider carbon offsets and undervaluing solar QFs’ capacity contribution. Both cases will have substantial impacts for QF developers.    Continue Reading FERC and Montana Supreme Court Issuances Bring Big Regulatory Shakeups to the PURPA Regulatory Landscape

On August 28, 2020, FERC issued a supplemental Notice of a Commission-led Technical Conference on state pricing for carbon dioxide emissions, commonly referred to as carbon pricing, in FERC-jurisdictional wholesale electric markets (“Conference”). The Conference is free and will take place online on Wednesday, September 30, 2020 from 9:00 a.m. to 5:30 p.m. EST.

The Conference will address the specifics for state-adoption mechanisms for carbon pricing in regions that have Commission-jurisdictional organized wholesale electricity markets. The Conference will also address carbon pricing approaches where states set explicit carbon prices, and how those carbon prices intersect with RTO/ISO administered markets.

The Conference will include three panels. The first panel entitled, “Legal Considerations for State-Adopted Carbon Pricing and RTO/ISO Markets” will discuss potential legal issues that may arise when balancing the mandates of the Federal Power Act with a state’s proposal to integrate state-established carbon pricing into an RTO/ISO market design. The second panel entitled, “Overview of Carbon Pricing Mechanism and Interactions with RTO/ISO Markets” will cover: (1) how RTO/ISO markets incorporate state and regional carbon pricing initiatives; and (2) carbon pricing mechanisms that contemplate a greater role for RTOs/ISOs in administering state or regional carbon pricing, and how such mechanisms intersect with RTO/ISO markets. The third panel entitled, “Considerations for Market Design,” explores operational and market design issues that arise when RTOs/ISOs integrate carbon pricing in their energy and ancillary services markets.  The Conference will conclude with a roundtable discussion on the topics and issues explored throughout the Conference.

Additional information about this technical conference, including a link to the webcast and transcription information, may be found on the Conference’s event page.

Click here to read the Notice.

On August 27, 2020, FERC directed further briefing and established a technical conference in the proceedings arising from two complaints in which American Electric Power Service Corporation (“AEP”) and the City of Prescott, Arkansas each alleged that they were subject to overlapping or duplicative congestion charges on load that is pseudo-tied out of the Midcontinent Independent System Operator, Inc. (“MISO”) into Southwest Power Pool, Inc. (“SPP”). FERC’s August 27 order responded to additional briefing by the parties ordered in September 2019, and held that even after the additional briefing, the record was inadequate to determine whether: (1) mechanisms including virtual transactions, Financial Transmission Rights, and firm flow entitlements are sufficient to remedy any potential for overlapping congestion charges; or (2) the Regional Transmission Organizations (“RTOs”) must make changes to their Joint Operating Agreement (“JOA”) and/or their individual tariffs to remedy the causes of overlapping or duplicative congestion charges. The August 27 order therefore required additional briefing, and directed Commission staff to hold a technical conference after further briefs are filed. Continue Reading FERC Directs Further Briefing and Establishes Technical Conference on Overlapping Congestion Charges for MISO/SPP Pseudo-Tie Transactions