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Kelsey’s practice focuses on representing natural gas, oil and electric utility industries in regulatory and rate case litigation proceedings before the Federal Energy Regulatory Commission.

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

On March 20, 2020, FERC denied rehearing of a February 2018 order accepting the Midcontinent Independent System Operator, Inc.’s (“MISO”) resource adequacy Tariff provisions (see March 5, 2018 edition of the WER). FERC noted that many of the arguments raised on rehearing sought to impose on MISO the rules and requirements used in the centralized capacity markets in the eastern Regional Transmission Organizations/Independent System Operators (“RTOs/ISOs”). FERC rejected those arguments, concluding that unlike the centralized capacity constructs used in the eastern RTOs/ISOs, MISO’s capacity auction is not, and never has been, the primary mechanism for Load-Serving Entities (“LSEs”) to procure capacity.
Continue Reading FERC Denies Rehearing, Affirming MISO Resource Adequacy Program

On March 4, 2020, FERC denied rehearing of its prior order rejecting the New Jersey Board of Public Utilities’ (“NJBPU”) complaint alleging unjust and unreasonable cost allocations for the Bergen-Linden Corridor transmission project (“BLC Project”). FERC found that it had already fully addressed the issues raised in the original complaint and that there was no need for an evidentiary hearing to evaluate disputed facts related to the BLC Project.
Continue Reading FERC Denies Rehearing of Order Dismissing Cost Allocation Complaint for Bergen-Linden Corridor Project

On February 14, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) and the New England Power Pool Participants Committee’s (together with ISO-NE, the “Filing Parties”) proposed revisions to the ISO-NE tariff intended to allow for the termination of ISO-NE’s Fuel Security Reliability Retention Mechanism (“Fuel Security Mechanism”) at the end of Forward Capacity Auction (“FCA”) 14 – one year earlier than currently provided in the tariff. The Fuel Security Mechanism allows ISO-NE to retain resources for fuel security that seek to retire in FCAs 13, 14, or 15 and was initially implemented following ISO-NE’s 2018 petition for waiver seeking to retain two retiring Mystic Units through FCA 15 (“Mystic Units”). FERC rejected the filing because ISO-NE had not yet submitted its proposed long-term solutions to address fuel security concerns and because it found that that ISO-NE’s proposed interim solutions were inadequate. FERC Commissioner Richard Glick dissented from the order, arguing the majority lacked a reasoned basis to find that ISO-NE’s filing was not just and reasonable.
Continue Reading FERC Rejects ISO-NE’s Proposed Early Sunsetting Revisions to Fuel Security Mechanism

On January 31, 2020, FERC granted Xcel Energy Services Inc.’s application to terminate Southwestern Public Service Company’s (“SPS”) mandatory purchase obligation under Public Utility Regulatory Policies Act of 1978 (“PURPA”). In its order, FERC specifically found that (i) SPS, as a member of Southwest Power Pool, Inc. (“SPP”), is entitled to the presumption that qualifying cogeneration or small power production facilities (“QFs”) within SPS’s footprint have nondiscriminatory access to markets, and (ii) the protestors failed to adequately rebut this presumption. Accordingly, SPS is relieved of its obligation to enter into new contracts to purchase QF electric energy. FERC granted the application effective September 5, 2019.
Continue Reading FERC Grants SPS’s Application to Terminate PURPA’s Mandatory Purchase Obligation

On January 24, 2020, FERC issued its rehearing order on several different issues regarding the recovery of costs associated with the abandoned Potomac-Appalachian Transmission Highline Project (“PATH”). Previously, in January 2017, FERC reduced PATH’s return on equity (“ROE”) during its abandonment phase from 10.4 to 8.11 percent, and denied PATH’s recovery of expenditures related to certain public relations activities. On rehearing, FERC:

  1. Upheld its prior determination that the project’s abandonment significantly reduced its risk profile;
  2. Declined to address PATH’s arguments that FERC erred in reducing its ROE to 8.11 percent, and instead established a paper hearing addressing whether and how FERC’s proposed revised base ROE methodology should apply; and
  3. Reversed its prior denial for PATH to recover expenditures related to public information campaigns about the benefits and licensing of the project.
    Continue Reading On Rehearing, FERC Authorizes PATH Project to Recover Abandoned Plant Costs; Directs Further Briefing on ROE

On January 10, 2020, FERC issued two separate orders approving Stipulation and Consent Agreements (“Agreements”) between the Office of Enforcement (“Enforcement”) and Emera Energy Incorporated (“Emera Energy”) and Exelon Generation Company, LLC (“Exelon”), respectively. Both Agreements relate to alleged violations of ISO New England Inc.’s (“ISO-NE”) Tariff. Specifically, with respect to Emera Energy, FERC alleged that Emera Energy violated the Tariff’s requirement that evidence supporting Fuel Price Adjustment Requests (“FPA Requests”) must reflect an arm’s length transaction. With respect to Exelon, FERC alleged that Exelon misreported the type and quantity of start-up fuel used by its Mystic 7 generating unit (“Mystic 7”). In both cases, FERC found that the Agreements were in the public interest and the Enforcement investigations were resolved on fair and equitable terms.

Continue Reading FERC Issues Two Orders Approving Civil Penalties and Disgorgement of Profits for Violations of ISO New England Inc.’s Tariff