On March 12, 2020, the U.S. Senate confirmed James Danly to fill a Republican seat on the Commission by a 52-40 vote. Mr. Danly, who currently serves as FERC’s General Counsel, will serve the remainder of a term that expires June 30, 2023.
Continue Reading Senate Confirms James Danly as New FERC Commissioner
FERC Denies Rehearing of Order Dismissing Cost Allocation Complaint for Bergen-Linden Corridor Project
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
FERC Rejects ISO-NE’s Proposed Early Sunsetting Revisions to Fuel Security Mechanism
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
FERC Grants SPS’s Application to Terminate PURPA’s Mandatory Purchase Obligation
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 Rehearing, FERC Authorizes PATH Project to Recover Abandoned Plant Costs; Directs Further Briefing on ROE
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:
- Upheld its prior determination that the project’s abandonment significantly reduced its risk profile;
- 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
- 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
FERC Issues Two Orders Approving Civil Penalties and Disgorgement of Profits for Violations of ISO New England Inc.’s Tariff
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
FERC Accepts CAISO’s Tariff Revisions Addressing Aliso Canyon Natural Gas Constraints
On December 30, 2019, FERC accepted tariff revisions by the California Independent System Operator Corporation (“CAISO”) to apply three previously accepted-interim provisions designed to address the Aliso Canyon natural gas storage facility’s (“Aliso Canyon”) continued operational limitations and impacts on CAISO’s system.
Continue Reading FERC Accepts CAISO’s Tariff Revisions Addressing Aliso Canyon Natural Gas Constraints
FERC Staff Issues 2019 Assessment of Demand Response and Advanced Metering
On December 2, 2019, FERC staff (“Staff”) issued its annual report (“Report”) on demand response and advanced metering, a high-level review of demand response potential in the retail and wholesale markets. In the Report, Staff highlights that: (i) advanced meters account for more than half of all meters in operation in the United States, (ii) multiple states have received approval for, or proposed, advanced meter deployment programs, (iii) many state regulators appear to support advanced meter investments, and (iv) from 2017 to 2018, there was an almost 8% increase in the overall demand response participation in wholesale markets.
Continue Reading FERC Staff Issues 2019 Assessment of Demand Response and Advanced Metering
FERC: Transmission Formula Rates Must Account for Excess/Deficient ADIT following Tax Rate Change
On November 21, 2019, FERC announced that public utilities with transmission formula rates must revise those rates to account for changes in accumulated deferred income taxes (“ADIT”) resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”). Utilities with transmission formula rates under an Open Access Transmission Tariff, a transmission owner tariff, or a rate schedule must:
- include a mechanism to deduct any excess ADIT from, or add any deficient ADIT to, their rate base in order to ensure rate base neutrality (the “Rate Base Adjustment Mechanism”);
- return to, or recover from, customers any excess or deficient ADIT through an adjustment to the formula rate’s income tax allowance (“Income Tax Allowance Adjustment Mechanism”); and
- incorporate a new permanent worksheet into the formula rate to annually track ADIT amounts.
FERC declined to adopt any compliance requirements for transmission stated rates, finding that the utility’s next rate case would be the most appropriate place to address excess or deficient ADIT resulting from the TCJA. Compliance filings are due the later of: (1) 30 days from the effective date of the final rule; or (2) the utility’s next informational filing following the final rule.
Continue Reading FERC: Transmission Formula Rates Must Account for Excess/Deficient ADIT following Tax Rate Change
RTOs Weigh In on Decarbonization
On October 30, 2019, the House Committee on Energy & Commerce held a hearing in furtherance of its development of comprehensive climate legislation focused on reaching a 100 percent clean energy economy by 2050. John Bear, the Chief Executive Officer of the Midcontinent Independent System Operator, Inc. (“MISO”) testified at the hearing while Southwest Power Pool, Inc. (“SPP”) and PJM Interconnection, L.L.C. (“PJM”) provided input in response to an earlier request from the Committee. The three Regional Transmission Organizations (“RTOs”) generally reported increases in both renewable and distributed generation in their regions over the past several years, highlighting the operational and reliability challenges that can come along with the growing prevalence of both. The RTOs also recognized the widely divergent state decarbonization policies and the associated impacts to the regional wholesale markets.
Continue Reading RTOs Weigh In on Decarbonization