On August 30, 2010, FERC issued an order clarifying the state netting policies for station power. The order was on remand from two orders from the United States Court of Appeals for the DC Circuit (“DC Circuit”). In the FERC order on remand, the Commission said it will not encroach upon a state’s right to establish netting periods for station power; thus, for retail calculations, states do not have to adopt the same methodology that FERC uses for calculating station power sold in interstate commerce.
Station power is the electricity used by a generator for heating, lighting, air conditioning, and office equipment, and when generation and transmission services were bundled, the station power was “netted” against the power produced on-site. Once transmission and generation were separated, many contended that station power is outside FERC’s jurisdiction because station power is retail power governed by the states.
In 2004, Duke Energy Moss Landing LLC (“Duke Energy”) filed a complaint with FERC claiming that the California Independent System Operator’s (“CAISO”) tariff for their transmission system at the time did not comport with FERC’s netting policies. FERC implemented a system where a station could net station power for a month interval, and if the generator nets positive over that month, the station has self-supplied power. Netting power over a month, instead of by the hour, is cheaper for generators.
CAISO and FERC both agreed with Duke Energy, but Southern California Edison (“SCE”) argued FERC was intruding on state jurisdiction. FERC ordered CAISO to revise their tariffs to switch to a monthly netting policy, and that was the first set of orders remanded. SCE requested rehearing, and FERC denied that request.
The second set of orders on remand came out of FERC conditional acceptance of CAISO’s tariff revisions in 2005. On rehearing, FERC’s jurisdiction was challenged again, and the Commission again asserted their authority over station power. SCE appealed to the DC Circuit, and the DC Circuit agreed that FERC exceeded its authority because FERC did not have the power to determine a retail power sale was not completed. (See May 7, 2010 edition of the WER.)