On November 5, 2020, FERC approved Southern California Edison Company’s (“SoCal Edison”) request to utilize a May 2020 formula rate sales forecast rather than its April 2020 sales forecast, as required by Appendix IX of SoCal Edison’s Transmission Owner Tariff (“Tariff”). The updated sales forecast, which informs SoCal Edison’s wholesale and retail transmission rate-recovery and true-up calculations, reflects a decrease in sales revenues due to the COVID-19 pandemic. In a dissenting opinion, then-Commissioner James Danly opposed the waiver, citing previous criticisms that such FERC action violates the filed rate doctrine and the rule against retroactive ratemaking (see October 28, 2020 edition of the WER).
Continue Reading FERC Grants Formula Rate Tariff Waiver; Then-Commissioner Danly Reiterates Criticisms of Retroactivity

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 15, 2020, FERC issued a notice of proposed policy statement on state-determined carbon pricing in wholesale markets that clarified the agency’s jurisdiction over wholesale market rules incorporating state-determined carbon prices and encouraged regional market operators to consider establishing such rules. FERC is seeking comment on the type of information it should consider when reviewing any such filings. While the Commissioners agree that FERC has jurisdiction to review these issues under 205 with respect to organized markets, they have signaled a divide with respect to the best course of action for addressing carbon pricing.
Continue Reading Commissioners Clash Over Proposed Policy Statement on Carbon Pricing

On September 30, 2020, FERC held a technical conference focusing on how state-adopted carbon pricing intersects with a Regional Transmission Organization/Independent System Operator (“RTO/ISO”) administered market, and specifically what considerations a carbon-pricing framework may raise for FERC and/or the markets it oversees. The conference included three panels focused on: (i) the legal considerations associated with the integration of state carbon prices in FERC-regulated markets, including FERC’s statutory authority to implement carbon pricing in RTO/ISO markets and prior FERC precedent on RTO/ISO proposals to incorporate costs associated with state cap-and-trade programs, (ii) carbon pricing mechanisms, including current RTO/ISO initiatives to consider the integration of state carbon pricing actions and challenges for carbon pricing in multi-state RTO/ISO markets, and (iii) market design considerations, such as methods to reduce leakage and the potential operational impacts arising from carbon pricing. Finally, the technical conference concluded with a roundtable discussion reflecting on key issues and insights raised during the conference (see September 10, 2020 edition of the WER).
Continue Reading FERC Holds a Technical Conference on Carbon Pricing in Organized Markets

On September 17, 2020, FERC issued a Notice of Inquiry (“NOI”) seeking comments on strategies to mitigate any potential risks to the bulk electric system posed by telecommunications equipment and services produced or provided by entities identified as risks to national security. Huawei Technologies Company (“Huawei”) and ZTE Corporation (“ZTE”) have been identified as examples of such entities because they provide communication systems and other equipment and services that are critical to bulk electric system reliability.
Continue Reading FERC Opens Inquiry into Foreign Adversary-Provided Bulk Power System Telecommunications Equipment, Focusing on Huawei and ZTE Equipment Threat

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

Executive Summary of FERC Order No. 872: Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978 [1]

I. Overview

On July 16, 2020, the Federal Energy Regulatory Commission (FERC or the Commission) issued Order No. 872, the Commission’s final order revising its regulations implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) [2]. This order, which follows a 2016 technical conference on PURPA issues and a September 2019 Notice of Proposed Rulemaking (NOPR) [3], is the first major set of revisions to FERC’s regulations implementing PURPA since they were established through Order No. 69 in 1980.

As FERC explained in the NOPR, the energy landscape has evolved in significant ways since the initial PURPA regulations were established, which includes increased supplies of natural gas, a more matured renewables industry, and the growing presence of non-Qualifying Facility (QF) independent power producers. These and other changes prompted FERC to revise its PURPA regulations, many of which are implemented by the states. These new changes provide additional guidance to state commissions regarding PURPA implementation and rests additional authority in state commissions regarding QF rates and contract terms.
Continue Reading Analyzing FERC’s Order Updating PURPA Regulations for First Time in Almost 40 Years

On July 7, 2020, the PJM Interconnection, L.L.C. (“PJM”) Planning Committee held an informational session on its State Agreement Approach, a transmission planning process that allows one or more states to request the studying and funding of new transmission projects within the PJM footprint to address identified public policy needs. The State Agreement Approach could help accommodate the anticipated growth in offshore wind generation by allowing states to submit transmission expansion or extension projects in the Regional Transmission Expansion Plan (“RTEP”) so long as the states agree to assume responsibility for project costs.
Continue Reading PJM Planning Committee Holds Stakeholder Meeting About Process for States to Fund New Transmission Projects

On June 22, 2020, FERC issued a declaratory order confirming its view that it shares jurisdiction with the United States Bankruptcy Court (“Bankruptcy Court”) over transportation agreements between ETC Tiger Pipeline, LLC (“ETC Tiger”) and Chesapeake Energy Marketing L.L.C. (“Chesapeake”). As a result, aside from obtaining approval from the Bankruptcy Court to reject its contracts with ETC Tiger, Chesapeake must seek a determination from FERC as to whether a filed rate may be modified or abrogated under the Natural Gas Act (“NGA”).
Continue Reading FERC Asserts Concurrent Jurisdiction with Bankruptcy Court over Natural Gas Transportation Service Agreements