Adrienne Thompson

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In an order issued February 15, 2018 (“February 15 Order”), FERC found that several transmission owners participating in the PJM Interconnection, L.L.C. (“PJM”) market have been acting inconsistently with FERC Order No. 890, and that certain terms and conditions in PJM’s Open Access Transmission Tariff (“OATT”) are unjust and unreasonable.  In particular, FERC concluded that the PJM transmission owners’ planning processes ran afoul of the coordination and transparency principles in Order No. 890 by allowing the incumbent transmission owners to bypass input and, effectively, competition, from other transmission planning stakeholders.  FERC ordered the transmission owners to revise the OATT and Operating Agreement in compliance with Order No. 890.

On February 5, 2018, FERC conditionally accepted a proposal by the PJM Interconnection, L.L.C. (“PJM”) to amend its Open Access Transmission Tariff (“OATT”) and Amended and Restated Operating Agreement (“Operating Agreement”) to accommodate additional pseudo-tied and dynamically scheduled resources into the PJM region.  FERC accepted the proposal and provided an effective date of November 9, 2017, provided that PJM submits a compliance filing addressing FERC’s limited concerns in the order.

On January 31, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied requests for an en banc rehearing of an August 2017 decision (Sierra Club v. FERC) vacating FERC’s approval of the Southeast Market Pipelines Project (“SMP Project”), a natural gas pipeline currently under construction in the southeastern United States.  In its August decision, the D.C. Circuit held that FERC failed to analyze the greenhouse gas emissions that would result from the SMP Project, as required by the National Environmental Policy Act (“NEPA”).  On February 2, 2018, the developers for the SMP Project filed a request at FERC for expedited reissued construction approval certificates, or in the alternative, temporary emergency certificates, arguing that halting work on the SMP Project will cause “irreparable harm.”

On January 26, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rejected a challenge to FERC’s approval of tariff revisions from the PJM Interconnection, L.L.C. (“PJM”) regarding the so-called cost-of-new-entry (“CONE”), or the anticipated revenues required to recover costs in PJM’s wholesale capacity market.  A coalition of generators challenged PJM’s CONE as too low, which they argued undercut their own recovery in the capacity market.  In a brief opinion, the D.C. Circuit held that petitioners’ claims failed to overcome the deferential standard of review applied to factual challenges to agency orders.

On January 22, 2018, a New York state trial court largely rejected motions to dismiss various challenges to the state’s zero emission credit (“ZEC”) program established in 2016 by the New York Public Service Commission (“NYPSC”).  The ZEC program, which is also being challenged in federal court, provides subsidies to financially struggling in-state nuclear energy generators.  Although the court allowed five of the six claims against the program to proceed to trial, the court dismissed 56 of the 61 petitioners for failing to timely raise their challenges.

On January 12, 2018, FERC denied authorization to transfer a 1,159 MW coal-fired generation facility (“Pleasants Facility”) owned by Allegheny Energy Supply Company, LLC (“AE Supply”) to its affiliate, Monongahela Power Company (“Mon Power”).  After considering the applicable tests for affiliate transfers under the Federal Power Act (“FPA”), FERC determined that the parties’ proposed transaction was not in the public interest because it presented potential concerns of captive ratepayers cross-subsidizing non-regulated entities and because certain solicitation criteria were not met.  The denial is without prejudice, so Mon Power and AE Supply may resubmit an application that corrects the shortcomings identified by FERC.

On January 11, 2018, FERC denied Constitution Pipeline Company, LLC’s (“Constitution”) request asking FERC to conclude that the New York State Department of Environmental Conservation (“New York DEC”) waived its authority to issue a water quality certification under Section 401 of the Clean Water Act (“CWA”).  In so doing, FERC reiterated its authority to address such issues, as they relate to “setting and enforcing” Natural Gas Act (“NGA”)-imposed deadlines, and reaffirmed FERC’s long-standing position that state certifying agencies have up to one year to act on a CWA Section 401 application.

On January 2, 2018, the California Independent System Operator Corp. (“CAISO”) announced plans to become its own reliability coordinator by spring 2019.  The plan will require CAISO to withdraw from Peak Reliability, the current reliability coordinator for the Western Interconnection. Although the full suite of reliability services to be offered remains unclear, CAISO stated that it will offer outage coordination, day-ahead planning, and real-time monitoring reliability services.

On December 21, 2017, FERC issued an order accepting a proposal from the Midcontinent Independent System Operator, Inc. (“MISO”) to revise its Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”) and establish Dynamic Narrow Constrained Areas (“Dynamic NCAs”).  FERC found that MISO’s proposal would strengthen existing market power mitigation measures in MISO and help ensure that the potential exercise of market power during such transitory conditions would be properly mitigated.

On December 7, 2017, the U.S. Government Accountability Office (“GAO”) issued a report summarizing its review of FERC’s oversight of the nation’s four regional capacity markets.  The GAO found generally that “FERC has not fully assessed the overall performance of capacity markets,” and the agency recommends that FERC improve data quality, use consistent metrics reported through standardized definitions, and establish goals, performance metrics, and risk tolerance levels for capacity markets.  The report comes at a time when FERC is considering significant capacity market-related issues, including the Department of Energy-initiated “Grid Reliability and Resilience Pricing” docket (see October 2, 2017 Edition of the WER), and reliability-focused pricing reforms from the PJM Interconnection, L.L.C. (see November 21, 2017 edition of the WER).