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Russell Kooistra counsels an array of energy companies on various issues related to natural gas and electricity markets. Russell uses his in-depth knowledge of Federal Energy Regulatory Commission (FERC) policy and regulations to advise clients on complex regulatory matters.

On November 3, 2020, FERC upheld its May 2020 order finding PJM Interconnection, L.L.C.’s (“PJM”) reserve market design to be unjust and unreasonable, and establishing a replacement market design including, among other elements, a downward-sloping Operating Reserve Demand Cure (“ORDC”) and a $2,000/MWh price ceiling (see May 28, 2020 edition of the WER). FERC also upheld its prior finding that PJM should implement a new, forward looking energy and ancillary services offset (“E&AS Offset”). FERC’s November 3 order addressed rehearing requests filed by PJM’s Independent Market Monitor (“IMM”), the Maryland Public Service Commission, and Old Dominion Electric Cooperative and the PJM Load/Customer Coalition. Commissioner Richard Glick issued a separate dissenting statement in which he concluded that FERC failed to show that PJM’s existing reserve market design is unjust and unreasonable, and that FERC “rubber stamp[ed]” PJM’s proposed replacement ORDC. Commissioner Glick echoed his dissent in the May 2020 order, explaining that the downward-sloping ORDC will force customers to pay billons of dollars in scarcity pricing when no shortage exists and will produce a windfall for generators.

Importantly, the November 3 order was limited to addressing arguments raised on rehearing of the May 2020 order. PJM’s August 5, 2020 filing, proposing tariff revisions to implement a forward-looking E&AS offset in compliance with the May 2020 order (“August 2020 Compliance Filing”), remains pending before FERC. In the proceeding addressing PJM’s revisions to its Minimum Offer Price Rule (“MOPR Proceeding”), FERC recently stated that the revisions proposed in the August 2020 Compliance Filing will have an impact on the default offer price floors and E&AS Offsets that will be used in the Base Residual Auctions (“BRAs”) and Incremental Auctions for Delivery Year 2022-23 and going forward. FERC therefore stated in the MOPR Proceeding that PJM cannot conduct the BRA for the 2022-23 Delivery Year until FERC has issued an order on PJM’s August 2020 Compliance Filing (see October 22, 2020 edition of the WER).
Continue Reading FERC Upholds Changes to PJM Reserve Market Design and E&AS Offset Calculation

On October 30, 2020, FERC announced that the FERC Chairman will convene a roundtable discussion on December 3, 2020 regarding the increased deployment of electric vehicles (“EVs”) and EV charging infrastructure nationwide and their impact on the FERC-jurisdictional transmission system and wholesale electric markets. Separately, on November 4, 2020, FERC announced that FERC staff will convene a technical conference on February 25 and 26, 2021 to discuss principles and best practices for credit risk management in organized wholesale electric markets.

Continue Reading FERC to Host Technical Conferences on Electric Vehicles and Credit Risk Management in Organized Wholesale Markets

On October 28, 2020, FERC declined to abrogate or modify firm natural gas transportation service agreements (“Gulfport TSAs”) between Gulfport Energy Corporation (“Gulfport”) and Rockies Express Pipeline LLC (“Rockies Express”) in response to a Rockies Express petition anticipating a potential Gulfport bankruptcy filing. After an expedited paper hearing, FERC concluded that the public interest does not presently require any modification, and thus, that the Gulfport TSAs on file remain just and reasonable. In doing so, FERC found that Gulfport failed to provide the evidence needed under Mobile-Sierra for FERC to find that abrogation of the Gulfport TSAs would be in the public interest. FERC’s order also follows its recent determination that it shares concurrent jurisdiction with the Bankruptcy Court over abrogation or modification of gas transportation agreements (see July 1, 2020 edition of the WER).
Continue Reading FERC Finds Abrogation of Gas TSAs Would Not Be in the Public Interest Ahead of Possible Bankruptcy Proceeding

On October 16, 2020, FERC issued a number of orders at its open meeting that addressed unrelated requests for retroactive waiver of various Regional Transmission Organization and utility tariff provisions. Commissioner James Danly issued a separate statement in each proceeding. Commissioner Danly dissented from many of the orders granting waiver and concurred in the result when the orders dismissed the requests for waiver or granted waiver in certain specific circumstances. In his dissent from an order granting Sunflower Electric Power Cooperative’s (“Sunflower’s”) petition for waiver of certain Southwest Power Pool, Inc. Tariff provisions, Commissioner Danly stated his belief that FERC has no legal discretion to grant retroactive waivers unless the waivers meet certain well-defined exceptions: first, if the parties had notice that tariff provision could be waived retroactively, or second, if the tariff provision is embodied in a private contract between parties who have agreed in the contract to make the rate effective prior to filing the contract with the Commission.
Continue Reading Commissioner Danly Objects to FERC’s Continued Practice of Granting Retroactive Waivers

On September 30, 2020, FERC accepted the California Independent System Operator Corporation’s (“CAISO”) proposals to: 1) permit electric vehicle charging stations to participate in CAISO’s demand response program separately from their host facilities (“EV Proposal”); and 2) incentivize behind-the-meter energy storage in CAISO’s demand response programs to “load shift” by consuming energy during over supply conditions and returning that energy to the system during times of need (“Load Shifting Proposal”). FERC held that CAISO’s proposals would enhance its demand response programs, which compensate load, storage, and generation resources for curtailing their demand in response to CAISO’s instructions. FERC also found that the proposals would ensure that CAISO’s policies keep pace with rapidly evolving electric vehicle and behind-the-meter storage technologies, and would permit these resources to participate in the CAISO market under rules that capture their unique characteristics and benefits.
Continue Reading FERC Accepts CAISO Rules Enhancing Demand Response Program for Electric Vehicle Charging Stations and Behind-the-Meter Energy Storage Resources

On September 17, 2020, at FERC’s Virtual Open Meeting, FERC Staff presented an overview of changes to its rehearing practices following the United States Court of Appeals for the District of Columbia Circuit’s (“D.C. Circuit”) recent decision in Allegheny Defense Project v. FERC, 963 F.3d 1 (D.C. Cir. 2020) (en banc) (“Allegheny”), which rejected FERC’s practice of issuing “tolling orders” to grant itself more time to consider requests for rehearing (see July 1, 2020 issue of the WER). Staff explained that the changes to FERC’s rehearing practices are intended to allow appeals of FERC orders to proceed in a timely manner and on a complete administrative record. While the D.C. Circuit granted FERC’s motion to stay the court’s mandate in July (see July 29, 2020 edition of the WER), Staff explained in response to questions from FERC Chairman Neil Chatterjee that Staff expects the D.C. Circuit to issue its mandate in early October.
Continue Reading FERC Staff Clarifies Changes to Rehearing Practices Following Allegheny Decision

On September 9, 2020, the United States Court of Appeals for the First Circuit (“First Circuit”) affirmed the United States District Court for the District of Massachusetts (“District Court”)  dismissal of a lawsuit alleging Eversource Energy and Avangrid (“Defendants”) manipulated Algonquin Gas Transmission, LLC (“Algonquin”) pipeline capacity and violated federal and state antitrust laws. The First Circuit followed its previous decision addressing a lawsuit challenging the same conduct by Defendants, but brought by different plaintiffs (see September 25, 2019 edition of the WER), which held that because the Defendants’ actions were permitted under a tariff filed with and accepted by FERC, the filed rate doctrine barred any attempt to challenge or change those rates or terms in federal court. Notably, the First Circuit also admonished FERC for being “slow to recognize market defects that create opportunities to exploit market power.”

Continue Reading First Circuit Affirms that Complaints About Gas Pipeline Capacity Hoarding in New England Are Barred by Filed Rate Doctrine, Criticizes FERC for not Policing Markets

On September 1, 2020, FERC issued an order overturning 40 years of Public Utility Regulatory Policies Act of 1978 (“PURPA”) precedent and revoking the qualifying facility (“QF”) status of Broadview Solar, LLC (“Broadview Solar”) after finding that it could not rely on inverters to meet PURPA’s statutory size limit. In a separate QF matter, the Supreme Court of the State of Montana (“Montana Supreme Court”) issued an opinion on August 24, 2020 finding the Montana Public Service Commission (“Montana Commission”) unlawfully set solar QF standard-offer rates by failing to consider carbon offsets and undervaluing solar QFs’ capacity contribution. Both cases will have substantial impacts for QF developers.   
Continue Reading FERC and Montana Supreme Court Issuances Bring Big Regulatory Shakeups to the PURPA Regulatory Landscape

On August 27, 2020, FERC directed further briefing and established a technical conference in the proceedings arising from two complaints in which American Electric Power Service Corporation (“AEP”) and the City of Prescott, Arkansas each alleged that they were subject to overlapping or duplicative congestion charges on load that is pseudo-tied out of the Midcontinent Independent System Operator, Inc. (“MISO”) into Southwest Power Pool, Inc. (“SPP”). FERC’s August 27 order responded to additional briefing by the parties ordered in September 2019, and held that even after the additional briefing, the record was inadequate to determine whether: (1) mechanisms including virtual transactions, Financial Transmission Rights, and firm flow entitlements are sufficient to remedy any potential for overlapping congestion charges; or (2) the Regional Transmission Organizations (“RTOs”) must make changes to their Joint Operating Agreement (“JOA”) and/or their individual tariffs to remedy the causes of overlapping or duplicative congestion charges. The August 27 order therefore required additional briefing, and directed Commission staff to hold a technical conference after further briefs are filed.
Continue Reading FERC Directs Further Briefing and Establishes Technical Conference on Overlapping Congestion Charges for MISO/SPP Pseudo-Tie Transactions

On July 27, 2020, President Trump announced his intent to nominate Mark Christie (Republican) and Allison Clements (Democrat) to fill the vacant Commissioner seats at FERC. Mr. Christie would replace the departing Commissioner Bernard McNamee—whose term expired on June 30, 2020 but who stayed at FERC past the expiration of his term to maintain a quorum (see January 28, 2020 edition of the WER)—while Ms. Clements would fill the remaining vacant seat. If both nominees are sworn in, the Commission would consist of three Republicans (Chairman Neil Chatterjee, Commissioner James Danly, and Mr. Christie) and two Democrats (Commission Richard Glick and Ms. Clements).
Continue Reading President Trump Nominates Mark Christie and Allison Clements as FERC Commissioners