On January 13, 2026, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in FERC v. PJM Interconnection, LLC., et al., held that FERC erred in concluding that a prior decision of the United States Court of Appeals for the Third Circuit (Third Circuit) foreclosed its authority under Section 206 of the Federal Power Act (FPA) to review and potentially modify PJM’s 2024/2025 capacity auction results. The court ruled that the Third Circuit’s application of the filed‑rate doctrine to PJM’s tariff amendment under Section 205 did not decide whether FERC could, in a separate proceeding, determine that the re‑run auction’s outcome was unjust and unreasonable and grant relief under Section 206.

As discussed in the March 12, 2024 edition of the WER, the Third Circuit’s decision in PJM Power Providers Group v. FERC, 96 F.4th 390 (3d Cir. 2024), arose from PJM’s 2024/2025 capacity auction for the Delmarva Power & Light Company South Zone (DPL South). After the December 2022 offer window closed, PJM discovered that its Locational Deliverability Area (LDA) Reliability Requirement for DPL South was overstated because certain resources it assumed would participate did not submit bids, which would have driven clearing prices significantly higher. FERC approved a tariff amendment under Section 205 of the FPA so PJM could correct that requirement and complete the auction using the revised value. In PJM Power Providers Group, the Third Circuit held that applying that tariff amendment to the ongoing auction constituted impermissible retroactive ratemaking under the filed‑rate doctrine. The court allowed the rule change to take effect only prospectively and required PJM to treat the December 2022 auction as if the amendment had never applied. After the Third Circuit issued its mandate, PJM petitioned FERC for guidance. Over the protest of a coalition of state agencies, customers, and customer advocates from the DPL South area (the DPL Customers), FERC directed PJM to re‑run the 2024/2025 auction using the original, inflated LDA requirement. When PJM re‑ran the auction under the unamended tariff, the auction failed to clear at a market‑based price and instead cleared at a predetermined price cap, causing PJM to spend an additional $182.8 million for only 1.9% more capacity than in the first auction.

While protesting PJM’s petition to re‑run the auction, the DPL Customers filed a complaint under Section 206 of the FPA with FERC. They argued that the re‑run auction results were unjust and unreasonable in light of the inflated DPL South requirement and price‑cap outcome, and urged FERC to treat the results of the initial, corrected auction as the efficient benchmark and to replace the re‑run results with those earlier prices and allocations. They maintained that Section 206 of the FPA independently authorized FERC to examine and remedy unjust and unreasonable rates even after the Third Circuit’s decision in PJM Power Providers Group.

FERC denied the DPL Customers’ complaint in 2024, and later denied rehearing, reasoning that any relief altering the re‑run auction results would be retroactive and  “inconsistent with the Third Circuit’s ruling” in PJM Power Providers Group and therefore barred by the filed‑rate doctrine as interpreted there. On review in the D.C. Circuit, FERC and supporting intervenors argued that the Third Circuit’s reasoning effectively precluded any backward‑looking Section 206 remedy related to the 2024/2025 DPL South auction, while the DPL Customers contended that the Third Circuit had not addressed, much less foreclosed, FERC’s distinct Section 206 authority.
The D.C. Circuit held that the Third Circuit’s decision in PJM Power Providers Group resolved only whether FERC could approve and apply a mid‑auction tariff change under Section 205 of the FPA; it did not address FERC’s separate authority under Section 206 of the FPA to later review the resulting auction rate. Because the DPL Customers’ Section 206 complaint had not been filed when the Third Circuit ruled, that court could not have decided the issues now before FERC.

The D.C. Circuit further explained that the filed‑rate doctrine is rooted in the statute and must be read in harmony with specific provisions, such as Section 206(b) of the FPA, that expressly authorize certain backward‑looking remedies, including refunds for amounts paid above a later‑determined just and reasonable rate during the pendency of a complaint. The court explained that simply labeling relief “retroactive” does not make it unlawful where Congress has provided a mechanism for such relief. The D.C. Circuit also rejected the notion that granting Section 206 relief would improperly render the Third Circuit’s decision “economically meaningless,” noting that the Third Circuit is not an economic regulator and that nothing in its opinion barred FERC from using other lawful tools to address unjust and unreasonable rates. Concluding that PJM Power Providers Group “simply did not resolve” the availability of Section 206 relief in this context, the D.C. Circuit held that FERC committed legal error by treating that decision as dispositive, granted the petition for review, vacated FERC’s orders denying the DPL Customers’ complaint, and remanded for FERC to reconsider the complaint on the merits and determine, in the first instance, whether and what relief Section 206 of the FPA permits.

A copy of the D.C. Circuit’s opinion can be found here.