On January 8, 2019, FERC approved revisions to the PJM Interconnection, L.L.C. (“PJM”) Tariff and Operating Agreement regarding the use of transmission constraint penalty factors in its market operations. PJM’s filing responds to new market transparency requirements set out in Order No. 844, the result of FERC’s rulemaking addressing uplift cost allocation and transparency in Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”). In accepting PJM’s proposed revisions, FERC found the revisions would provide transparency regarding PJM’s transmission constraint penalty factor procedures and also produce more transparent and appropriate pricing and investment signals that correspond to an underlying transmission constraint.
Sidney Villanueva
FERC Addresses ADIT-Related Formula Rate Calculations for Certain Utilities
By Sidney Villanueva & Adrienne Thompson on
Posted in Transmission
On December 20, 2018, FERC issued a series of nine orders addressing how certain public utilities calculate accumulated deferred income tax (“ADIT”) balances in their transmission formula rates. The orders were the result of separate proceedings under Section 206 of the Federal Power Act (“FPA”), which FERC initiated after concluding in a June 21, 2018 order (“June Order”) that the use of its former “two-step” ADIT averaging methodology may be unjust and unreasonable.
States Chime in During D.C. Circuit Review of FERC Pipeline Permitting Policy
By Sidney Villanueva & Elizabeth McCormick on
Posted in Natural Gas
On December 3, 2018, several states filed an amicus brief urging the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) to vacate an order issued by FERC that announced a shift in policy limiting the Commission’s review of greenhouse gas impacts during pipeline permitting.
FERC Declines to Require New CAISO Capacity Market
By Sidney Villanueva & Elizabeth McCormick on
Posted in Market Policy
On November 19, 2018, FERC denied a complaint filed by CXA La Paloma, LLC (“La Paloma”) requesting that FERC use its jurisdiction over resource adequacy to direct the California Independent System Operator Corp. (“CAISO”) to implement centralized capacity procurement. FERC found that La Paloma failed to meet its burden to demonstrate that CAISO’s tariff was unjust, unreasonable, or unduly discriminatory or preferential under section 206 of the Federal Power Act.
FERC Proposes Rule, Provides Guidance on Treatment of Impact of Tax Reductions on ADIT
By Sidney Villanueva & Russell Kooistra on
Posted in Market Policy, Rulemakings
On November 15, 2018, FERC issued a Notice of Proposed Rulemaking (“NOPR”) addressing the effect of the Tax Cuts and Jobs Act of 2017 (“TCJA”), which lowered the federal corporate tax rate from 35 percent to 21 percent, on accumulated deferred income tax (“ADIT”) balances. Specifically, FERC proposed to require transmission companies to remove excess ADIT or add deficient ADIT to their rate bases. In addition, FERC issued a policy statement providing accounting and ratemaking guidance related to the treatment of ADIT (“Policy Statement”).
Voters Reject Some State Ballot Initiatives on Clean Power and Deregulation
By Sidney Villanueva & Russell Kooistra on
On November 6, 2018, clean energy ballot initiatives failed in several states. In particular, voters rejected Arizona’s 50 percent renewable energy mandate, Washington’s fee on carbon emissions, Colorado’s limits on oil and gas drilling and Nevada’s retail choice initiative. However, voters passed Nevada’s 50 percent renewable energy portfolio.