On December 17, 2020, FERC issued a Notice of Proposed Rulemaking proposing to revise its regulations to establish incentives for public utilities to make certain cybersecurity investments that go beyond the current requirements of the Critical Infrastructure Protection (“CIP”) Reliability Standards established by the North American Electric Reliability Corporation (“NERC”) (“Cybersecurity NOPR”). Specifically, FERC proposed rules to allow regulated entities to:

  1. receive incentive-based rate treatment for the voluntary implementation of: (i) certain NERC CIP Reliability Standards to facilities that are not currently subject to those requirements (“NERC CIP Incentives Approach”), and/or (ii) certain security controls included in the National Institute of Standards and Technology Framework (“NIST Framework Approach”);
  2. request a return-on-equity adder of two hundred (200) basis points for making eligible cybersecurity capital investments; and
  3. defer cost recovery of certain cybersecurity costs that are generally expensed as incurred, and treat such costs as regulatory assets that may be included in transmission rate base.


Continue Reading FERC Issues Notice of Proposed Rulemaking on Cybersecurity Investment Incentives

On December 7, 2020, FERC issued an order on rehearing sustaining its previous order in which it: found that PJM Interconnection, L.L.C.’s (“PJM”) uplift allocation rules were unjust, unreasonable, and unduly preferential as they did not allocate uplift to Up-to-Congestion (“UTC”) transactions; and directed PJM to update its rate. FERC disagreed with comments provided by XO Energy MA, LP (“XO Energy”) that FERC’s previous order was inconsistent with cost causation principles, since the record in the proceedings did not support a finding that UTCs are the cause of capacity-related costs that would be passed through as uplift.
Continue Reading FERC Affirms Previous Order Requiring PJM to Bill UTC Transactions for Uplift

On November 19, 2020, FERC issued Opinion No. 569-B, in which it made minor modifications to the discussion in, but largely reaffirmed, its previously-issued Opinion No. 569-A wherein FERC revised its return on equity (“ROE”) analysis and methodology. Specifically, FERC reaffirmed the three-model methodology it had established in Opinion 569-A, while clarifying that one of the models, the “Risk Premium Model”, would employ historical rather than forward-looking bond yields. FERC also updated the Risk Premium Model to both correct typographical errors and include an inadvertently omitted case.
Continue Reading FERC Issues Minor Revisions to Public Utility ROE Methodology

On November 12, 2020, FERC accepted two compliance filings submitted by PJM Interconnection, L.LC. (“PJM”) in which PJM proposed updates to its reserve market and forward-looking energy and ancillary services offset (“E&AS Offset”) used in PJM’s capacity market. Commissioner Glick filed a partial dissent, stating that, while he agreed with the implementation of the E&AS Offset, the order was otherwise implementing an unjust and unreasonable rate.
Continue Reading FERC Largely Accepts PJM Reserve Market Compliance Filings

On October 30, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) proposed revisions to the ISO-NE tariff to resolve long-term fuel security concerns in the New England region. FERC found that ISO-NE’s proposed solutions would substantially increase consumer costs without meaningfully improving fuel security in the region, and offered guidance on how ISO-NE might develop a just and reasonable approach to address its fuel security concerns.
Continue Reading FERC Rejects ISO-NE’s Long-Term Fuel Security Proposal

On October 26, 2020, FERC issued an order on rehearing sustaining its previous order in which it accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to the PJM Operating Agreement related to the Regional Transmission Expansion Plan (“RTEP”) that allow project developers to submit voluntary binding cost commitment proposals and that specify PJM’s methodology for considering the cost-effectiveness of such proposals. FERC disagreed with arguments raised by certain PJM transmission owners that the revisions would usurp FERC’s authority, that they lacked specificity, and that the revisions were not submitted in compliance with the procedural requirements of PJM’s Operating Agreement.
Continue Reading FERC Affirms PJM’s Voluntary Binding Cost Commitment Requirements Related to RTEP

On October 15, 2020, FERC issued a notice of proposed policy statement (“Proposed Policy Statement”) with proposed guidance for oil pipeline carriers to demonstrate through tariff filings or declaratory order petitions that the rates and terms in long-term contracts with affiliate shippers (“Affiliate Contracts”) are just, reasonable, and not unduly discriminatory under the Interstate Commerce Act (“ICA”).
Continue Reading FERC Proposes Guidance on Oil Pipeline Carrier Contracts with Affiliates

On October 15, 2020, FERC issued an order sustaining, with modifications, its previous denial of a complaint that claimed New York Independent System Operator, Inc.’s (“NYISO”) buyer-side market (“BSM”) power mitigation rules were unjust, unreasonable and unduly discriminatory. FERC upheld its previous determination that the application of BSM rules to electric storage resources (“ESRs”) does not inappropriately interfere with state policies and that the complainants failed to show that NYISO’s existing rate was unjust and unreasonable because it over-mitigates electric storage resources. FERC’s order sparked a dissent from Commissioner Glick who argued that the majority’s order was arbitrary and capricious, and that BSM power mitigation should only apply to buyers with market power.
Continue Reading FERC Upholds Prior Decision Applying NYISO Buyer-Side Market Power Mitigation Rules to Electric Storage Resources

On October 7, 2020, the United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”) vacated, as moot, two FERC orders asserting concurrent jurisdiction to review the disposition of certain Pacific Gas & Electric Corporation (“PG&E”) power purchase agreements (“PPAs”) that PG&E sought to reject through bankruptcy. In a brief memorandum decision, a three-judge Ninth Circuit panel explained that the orders had become moot when the bankruptcy court confirmed a reorganization plan that had PG&E assume, rather than reject, the PPAs. In the same decision, the Ninth Circuit vacated a related bankruptcy court order in which the bankruptcy court determined that FERC does not have concurrent jurisdiction with the bankruptcy courts over the rejection of such PPAs. In vacating the three orders, the Ninth Circuit expressed no opinion on the merits of the consolidated appeal, and left open the question of whether FERC and the bankruptcy courts have concurrent jurisdiction over wholesale power contracts in Chapter 11 bankruptcy proceedings.
Continue Reading Ninth Circuit Vacates FERC and Bankruptcy Court Orders, Avoiding Jurisdictional Dispute Over PPAs in Bankruptcy

On September 29, 2020, in response to a request for rehearing, FERC issued an order modifying the discussion in, while sustaining the result of, a prior order finding that PJM Interconnection, L.L.C. (“PJM”) was not in compliance with three of the five criteria of Order No. 1000’s immediate need reliability project exemption (“Immediate Need Exemption”). Concurrently, in a separate order, FERC modified, while sustaining the result of, an order where it found that ISO New England Inc.’s (“ISO-NE”) implementation of the Immediate Need Exemption was not unjust, unreasonable, or unduly discriminatory or preferential.
Continue Reading FERC Sustains PJM and ISO-NE Immediate Need Reliability Project Exemption Orders