On May 21, 2020, FERC issued three orders denying, or denying in part, complaints against PJM Interconnection, L.L.C. (“PJM”), finding that the complainants failed to demonstrate that PJM’s pseudo-tie rules are unjust, unreasonable, or unduly discriminatory or that such rules had been applied in a manner inconsistent with the PJM Tariff. With respect to PJM’s market-to-market flowgate test and its electrical distance requirement, however, FERC granted the complaints in part, finding that PJM’s Tariff fails to provide an open and transparent process regarding PJM’s administration of those requirements.
Continue Reading FERC Finds PJM Tariff Lacks Transparency for Pseudo-Tied Resources

On May 21, 2020, FERC issued a proposed policy statement setting forth a revised approach to addressing requests for waiver, including: waiver of rates; non-rate terms and conditions; market rules; and procedural deadlines that are set forth in tariffs, rate schedules, service agreements, and contracts on file with FERC (“Proposed Policy Statement”). FERC specifically proposes to:

  1. discontinue granting retroactive waivers of tariff provisions, with a few specified exceptions; and
  2. grant requests for “remedial relief” only when applicants demonstrate that (a) such a request does not violate the filed rate doctrine or rule against retroactive ratemaking, or (b) the requested relief is within FERC’s remedial authority under section 309 of the Federal Power Act (“FPA”) or section 16 of the Natural Gas Act (“NGA”).


Continue Reading FERC Proposes and Seeks Comment on Changes to its Policies on Retroactive Waivers

Due to the unprecedented and rapidly changing landscape caused by the COVID-19 pandemic, FERC has provided multiple resources and notices over the last two weeks. Three of those relevant releases include an Epidemic/Pandemic Response Plan Resource, a policy statement providing guidance to oil pipelines impacted by the pandemic, and a notice that FERC is temporarily delaying the processing of all hardcopy submissions.
Continue Reading Update on FERC’s COVID-19 Response

On May 1, 2020, FERC accepted two agreements—an unexecuted Network Integration Transmission Service Agreement (“NITSA”) and a Network Operating Agreement (“NOA”) (together, “Agreements”)—filed by Southwest Power Pool Inc. (“SPP”) to be effective February 1, 2020, subject to the outcome of pending rehearing proceedings. Consistent with FERC’s prior notice policies, SPP had requested waiver of the 60-day prior notice requirement to permit the Agreements to become effective February 1, 2020. While Commissioner Danly concurred with the decision to grant an effective date prior to the filing date, he noted that this practice appears to run afoul of the rule against retroactive ratemaking and urged FERC to reexamine its practice.
Continue Reading Short Danly Concurrence May Signal Big Changes to FERC Waiver Policies

On May 1, 2020, President Trump issued Executive Order No. 13920 (“Executive Order”) prohibiting Federal agencies and U.S. persons from engaging in certain “transactions” defined thereunder—specifically, acquiring, importing, transferring, or installing certain items defined in the Executive Order as “bulk-power system electric equipment”—with “foreign adversaries.” Such equipment classifications and types are specified in the order and include “items used in bulk-power substations, control rooms, or power generating stations.” The prohibitions apply to transactions involving such equipment if such items are (i) designed, developed, manufactured, or supplied by a foreign adversary, or by persons under the control, direction, or jurisdiction of such adversaries and where (ii) such equipment pose an unacceptable risk to national security and America’s safety.
Continue Reading Executive Summary of Executive Order 13920 — Securing the U.S. Bulk-Power System

On April 21, 2020, the National Rural Electric Cooperative Association (“NRECA”), an organization that represents the interests of over 900 electric cooperatives nationally, issued a fact sheet projecting that COVID-19’s economic impact on electric cooperatives will total an estimated $10 billion through 2022. This fact sheet follows an April 6, 2020 letter from the CEO of NRECA to congressional leaders requesting legislative remedies to help address the challenges currently facing electric cooperatives as a result of COVID-19. Among other things, NRECA explains that, absent federal assistance in the form of federal funding and repricing of the United States Department of Agriculture (“USDA”) Rural Utilities Services (“RUS”) debt, co-ops may face severe financial distress due to prohibitions against utility disconnections, increasing electric bill nonpayment, and loss of load.

Continue Reading COVID-19 Projected to Cause a Multi-Billion Dollar Hit to Electric Cooperatives

On April 16, 2020, FERC addressed the American Public Power Association (“APPA”) and Exelon Corporation and its public utility subsidiaries (collectively, “Exelon Companies”) requests for rehearing and clarification of Order No. 864.  Specifically, FERC:

  • granted in part APPA’s request, clarifying that public utilities with stated transmission rates are required to use some ratemaking method to appropriately account for excess or deficient accumulated deferred income taxes (“ADIT”) resulting from the Tax Cuts and Jobs Act (“TCJA”), which will be subject to review in the utility’s next rate case;
  • confirmed that, consistent with prior precedent, any excess or deficient ADIT will not result in a windfall to either shareholders or ratepayers of public utilities with stated transmission rates; and
  • denied Exelon Companies’ request for rehearing, reaffirming Order No. 864’s requirement that public utilities with transmission formula rates return to customers the full amount of excess ADIT resulting from TCJA.


Continue Reading FERC Reaffirms Obligations Requiring Public Utilities to Address Excess and Deficient Income Taxes Resulting from Tax Act Changes

On April 7, 2020, FERC and the National Association of Regulatory Utility Commissioners (“NARUC”), the national organization representing state public service commissions, sent a letter to the Federal Reserve supporting a request from the Edison Electric Institute (“EEI”), the American Gas Association and the National Association of Water Companies (together, the “Trade Groups”) to expand access to short-term debt available to the utility industry during the COVID-19 pandemic, as utilities are facing decreasing load and increasing bill nonpayment.
Continue Reading FERC and NARUC Join EEI and Other Trade Groups’ Request to the Federal Reserve to Expand Access to Short-Term Debt During the COVID-19 Crisis

On March 27, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied a petition for review filed by Baltimore Gas and Electric Company (“BG&E) arguing, among other things, that FERC’s application of its long-standing tax normalization policy to BG&E was arbitrary and capricious. The D.C. Circuit ultimately held that FERC reasonably explained its decision; however, the majority opinion also concluded that FERC cannot avoid its obligation to provide a reasoned explanation of contrary treatment of “similarly situated” parties merely because (i) prior orders were issued pursuant to delegated authority, or (ii) the prior orders were unopposed.   
Continue Reading Divided D.C. Circuit Weighs Precedential Value of FERC Staff Delegated Letter Orders in Rate Dispute

On March 25, 2020, the United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) upheld a Minnesota law granting a right of first refusal (“ROFR”) to incumbent electric transmission owners to construct, own, and maintain electric transmission lines connecting to their existing facilities. In its complaint brought before the United States District Court for the District of Minnesota (“District Court”), LSP Transmission Holdings, LLC (“LSP”) argued that Minnesota’s ROFR statute discriminates against out-of-state transmission developers and places an undue burden on interstate commerce in violation of the dormant Commerce Clause. The Eight Circuit affirmed the District Court’s dismissal of LSP’s complaint finding, de novo, that Minnesota’s ROFR provision does not violate the dormant Commerce Clause.
Continue Reading Eighth Circuit Upholds Minnesota’s Right of First Refusal Law