On October 1, 2018, FERC released its Strategic Plan for fiscal years 2018-2022. FERC affirmed its mission of maintaining reliable, efficient, and sustainable energy for consumers by setting three primary goals: (1) ensuring that rates, terms, and conditions are just, reasonable, and not unduly discriminatory or preferential; (2) promoting the development of safe, reliable, and efficient energy infrastructure that serves the public interest through the review of natural gas and hydropower infrastructure proposals; and (3) managing resourcing to support its mission through organizational excellence.
PJM Proposes New Fix to Capacity Market to Address State-Subsidized Resources
On October 2, 2018, PJM Interconnection, L.L.C. (“PJM”) submitted a filing at FERC (“October 2 Filing”) in response to a June 29, 2018 FERC order invalidating PJM’s capacity market rules (“June 29 Order”). FERC found PJM’s existing capacity market rules unjust and unreasonable because they do not consider the impacts state subsidies have on PJM’s capacity market. In the October 2 Filing, PJM proposes two alternative methods in response to the June 2018 Order: an expanded Minimum Offer Price Rule (“MOPR”) and Resource Carve-Out construct.
FERC Partially Accepts CAISO Tariff Amendments Aimed at Improving Efficiency of Congestion Revenue Rights Market Rules
On September 20, 2018, FERC partially accepted tariff amendments proposed by the California Independent System Operator Corporation (“CAISO”) aimed at improving the efficiency of its congestion revenue rights (“CRR”) market rules. Specifically, CAISO proposed to decrease the percentage of transmission system capacity available in the annual CRR allocation and auction processes from 75 percent to 65 percent (“Capacity Release Reduction Proposal”). FERC accepted the Capacity Release Reduction Proposal, finding it just and reasonable. CAISO also proposed to eliminate full funding of CRRs and instead scale CRR payouts, on a constraint-by-constraint basis, up to the extent that CAISO collects sufficient revenue through the day-ahead market congestion charges and charges to counterflow CRRs (“Scaling Proposal”). FERC, however, rejected the Scaling Proposal as not just and reasonable.
D.C. Circuit Overturns FERC Order Denying ANR Storage Market-Based Rate Authority
On September 21, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) ruled that FERC’s order to deny ANR Storage Company’s (“ANR”) request to charge market-based rates was arbitrary and capricious. The D.C. Circuit found that FERC provided no basis for treating ANR differently from another competitor, DTE Energy Company (“DTE”) in a prior decision, and that FERC’s explanation for why intrastate facilities could not restrain ANR’s exercise of market power was internally inconsistent. As such, the D.C. Circuit remanded the proceeding back to FERC.
FERC Denies Petition for Declaratory Order on Jurisdiction for Lake Powell Pipeline
On September 20, 2018, FERC denied the Utah Board of Water Resources (“Utah Board”) and the Washington County Water Conservancy District’s petition for a declaratory order, asking FERC to find that its licensing jurisdiction under the Federal Power Act (“FPA”) extends to all of the Lake Powell Pipeline Project facilities identified in the Board’s license application for the project, including 89 miles of water delivery pipeline.
FERC Denies Rehearing, Partially Grants Clarification on MVP Rate Pancaking Order
On September 20, 2018, FERC denied rehearing and partially granted clarification of its order regarding Multi-Value Project (“MVP”) rate pancaking charges between PJM Interconnection, L.L.C. (“PJM”) and the Midwest Independent Transmission System Operator, Inc. (“MISO”). In the underlying order, FERC determined that because MISO’s transmission projects benefited the existing MISO-PJM system, the limitation on rate pancaking imposed by FERC in 2003 and 2010 was no longer reasonable.
FERC Grants Partial Rehearing of PJM Uplift Allocation Order
On September 6, 2018, FERC denied the PJM Interconnection, L.L.C.’s (“PJM”) rehearing request of FERC’s prior order rejecting proposed revisions to PJM’s Amended and Restated Operating Agreement (“Operating Agreement”) and Open Access Transmission Tariff (“OATT”) that would allocate uplift charges to Up-to-Congest transactions (“UTCs”) similarly to other virtual transactions. However, FERC granted rehearing in part to accept PJM’s proposal to exclude internal bilateral transactions from the calculation of supply and demand deviations for the purpose of uplift allocation.
Third Circuit Rejects Multiple Challenges to Pennsylvania Water Permit for Atlantic Sunrise Project
On September 4, 2018, the United States Court of Appeals for the Third Circuit (“Third Circuit”) declined to review Pennsylvania’s water permit approval of Transcontinental Gas Pipe Line Company’s (“Transco”) Atlantic Sunrise Project. The Third Circuit ruled that it had jurisdiction to hear the state agency’s certificate decision on appeal even though the certificate decision was simultaneously being appealed to another Pennsylvania agency.
D.C. Circuit Affirms FERC Finding of No Manipulation in ISO-NE Capacity Market Auction
On July 24, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) affirmed FERC’s 2015 and 2016 orders denying challenges to ISO New England’s (“ISO-NE”) ninth and tenth Forward Capacity Auctions (“FCA 9” and “FCA 10”) and approving the results of those auctions. The D.C. Circuit found that petitioners, Utility Workers Union of America Local 464 and its President, Robert Clark, failed to establish standing to challenge the FERC orders approving the results of FCA 9 and FCA 10.
FERC Accepts and Sets for Hearing Cost-of-Service Compensation Agreement
On July 13, 2018, pursuant to section 205 of the Federal Power Act (“FPA”), FERC accepted and set for hearing a cost-of-service agreement between Constellation Mystic Power, LLC (“Mystic”), Exelon Generation Company, LLC (“Exelon”), and ISO New England Inc. (“ISO-NE”) providing cost-of-service compensation to Mystic for continued operation of two gas-fired generating units (“Mystic 8 and 9”) to ensure fuel security in New England. Commissioners Powelson and Glick dissented.