Thomas DeVita

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On September 20, 2018, FERC dismissed Nevada Hydro Company, Inc.’s (“Nevada Hydro”) request that (1) the Lake Elsinore Advanced Pumped Storage (“LEAPS”) facility is a transmission facility and (2) LEAPS is entitled to cost-based rate recovery under the California Independent System Operator Corporation’s (“CAISO”) Transmission Access Charge.  FERC found that Nevada Hydro’s request is premature because LEAPS has not been studied in the CAISO Transmission Planning Process (“TPP”) to determine whether it addresses a transmission need identified through that process, and, if such a need were met, how the facility would be operated.

On September 12, 2018, FERC announced the initiation of a joint inquiry with the North American Electric Reliability Corporation (“NERC”) into a cold weather event that occurred in the Midwest and part of the South Central U.S. mid-January of this year.  Specifically, on January 17, 2018, regional operators in the midwest and south central United States issued emergency appeals for electricity conservation after an atypical forecast in electricity demand due to unusually cold temperatures.  As a result, there were reports of multiple forced generation outages, voltage deviations, and near-overloads during peak operations.

On September 4, 2018, the United States Court of Appeals for the Third Circuit (“Third Circuit”) declined to review Pennsylvania’s water permit approval of Transcontinental Gas Pipe Line Company’s (“Transco”) Atlantic Sunrise Project.  The Third Circuit ruled that it had jurisdiction to hear the state agency’s certificate decision on appeal even though the certificate decision was simultaneously being appealed to another Pennsylvania agency.

On September 5, 2018, the United States Court of Appeals for the Third Circuit (“Third Circuit” or “Court”) found that FERC did not violate federal law when approving Transcontinental Pipe Line Company, LLC’s (“Transco”) Garden State Expansion Project (“Project”).  The Third Circuit did, however, determine that the New Jersey Department of Environmental Protection (“NJDEP”) improperly denied requests for adjudicatory hearings on the issuance of various permits for the Project because the NJDEP misinterpreted the Natural Gas Act (“NGA”).  As such, the Third Circuit remanded back the permit issue so that NJDEP could reconsider those requests.

On August 31, 2018, the Federal Energy Regulatory Commission (“Commission”) issued an order (“August 31 Order”) in which it denied a complaint  (“Complaint”) by the California Public Utilities Commission, Northern California Power Agency, City and County of San Francisco, the State Water Contractors, and the Transmission Agency of Northern California (collectively, “Complainants”) against Pacific Gas and Electric Company (“PG&E”).  Complainants alleged that PG&E was in violation of its obligation under Order No. 890 to conduct an open, coordinated, and transparent transmission planning process because, according to Complainants, more than 80 percent of PG&E’s transmission planning is done on an internal basis without opportunity for stakeholder input or review.  In Order No. 890, the Commission found, among other things, that in order for a Regional Transmission Organization or Independent System Operator’s transmission planning processes to be open and transparent, transmission customers and stakeholders must be able to participate in each underlying transmission owner’s transmission planning process. 

On July 26, 2018, FERC approved AEP Energy Partners, Inc.’s (“AEP Energy”) request that Sharyland Utilities, L.P., AEP Texas, Inc., and Electric Transmission Texas, LLC (collectively, “Tie Owners”) provide AEP Energy with transmission service across interconnections between the Electric Reliability Council of Texas (“ERCOT”) and the Mexican Comisión Federal de Electricidad (“CFE”) transmission system.  In issuing that ruling, FERC seemingly went out of its way to suggest that if two proposed transmission projects – unrelated to AEP Energy’s request – are completed, the interconnections between ERCOT and the CFE system could result in interstate power flows in ERCOT.  While the Commission did not go any further other than to point out this fact, if FERC finds that such interstate power flows exist, FERC could potentially subject utilities in ERCOT to FERC’s plenary Federal Power Act (“FPA”) jurisdiction.

On July 25, 2018, the U.S. Court of Appeals for the Fourth Circuit (“Fourth Circuit”) affirmed the U.S. District Court for the Western District of Virginia’s (“District Court”) opinion rejecting landowners’ constitutional challenge provisions of the Natural Gas Act (“NGA”) regarding the natural gas pipeline certificate process.  Specifically, the Fourth Circuit agreed that the District Court lacked jurisdiction to review the complaint, finding that Congress intended the complaint to be brought before FERC instead.

On July 18, 2018, FERC affirmed its Revised Policy Statement on Treatment of Income Taxes (“Revised Policy Statement”), where FERC stated that it will generally not permit master-limited partnerships (“MLPs”) to recover income tax allowance in their cost of service.  In doing so, FERC dismissed requests for clarification and rehearing of its Revised Policy Statement, reiterating that tax pass-through entities (including MLPs) that recover an income tax allowance in addition to a return on equity (“ROE”) based on the discounted cash flow (“DCF”) methodology double recover investors’ tax costs.  FERC did however explain that while pass-through entities may eliminate previously-accumulated sums of accumulated deferred income tax (“ADIT”) from their cost of service, they did not need to refund those ADIT balances to ratepayers. 

On July 19, 2018, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued a Notice of Proposed Rulemaking (“NOPR”) that would update FERC’s regulations regarding interlocking positions.  According to the NOPR, the proposed revisions to parts 45 and 46 of the Commission’s regulations aim to “reflect statutory changes to the circumstances in which an applicant who would otherwise require Commission authorization to hold an interlocking position need not do so.”

On July 10, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) rejected the Delaware Riverkeeper Network’s and its director Maya van Rossum’s (collectively, “Appellants”) claim that FERC is incentivized to approve new natural-gas pipeline certificates in order to secure itself future funding sources.  The D.C. Circuit also rejected Appellants’ challenge to FERC’s use of tolling orders to meet its statutory deadlines for taking action on rehearing applications.