On March 2, 2021, the United States Court of Appeals of the District of Columbia Circuit (“D.C. Circuit”) denied petitions for review of three FERC orders addressing cost allocation by PJM Interconnection, L.L.C. (“PJM”) for a high-voltage transmission line connecting three nuclear power plants on Artificial Island in New Jersey to the Delmarva transmission zone (“Artificial Island Project”). In a 2016 order, FERC upheld PJM’s use of a hybrid cost allocation method including the “Solution Based DFAX” method to assign 90 percent of the costs of the Artificial Island Project to PJM’s Delmarva transmission zone; FERC reversed its position in a 2018 rehearing order. In dismissing the petitions for review filed by certain PJM transmission owners including Public Service Electric and Gas Company (“PSE&G”), the New Jersey Board of Public Utilities, and the New Jersey Division of Rate Counsel, the D.C. Circuit’s March 2 opinion held that FERC reasonably concluded that assigning nearly 90 percent of the Artificial Island Project costs to the Delmarva transmission zone would not be commensurate with the benefits that zone received, and that FERC’s change in position was adequately explained and supported by substantial evidence.
Continue Reading D.C. Circuit Upholds FERC Cost Allocation Orders for PJM Artificial Island Transmission Project

On January 22, 2021, two Washington state irrigation districts, Quincy-Columbia Basin Irrigation District and East Columbia Basin Irrigation District (the “Districts”), filed a Petition for Declaratory Order (“Petition”) requesting that FERC find that Federal Power Act (“FPA”) section 211A does not grant FERC jurisdiction over an unregulated transmitting utility solely as a result of the utility establishing different transmission rates by customer class or by contract.
Continue Reading Two Northwest Irrigation Districts Request Declaratory Order on FERC’s Jurisdiction Under FPA Section 211A

On November 19, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to reform its regulations and pro forma OATT to improve the accuracy and transparency of transmission line ratings. According to FERC, more accurate line ratings will reduce congestion costs and result in substantial cost savings for consumers, whereas inaccurate line ratings may result in unjust and unreasonable rates.
Continue Reading FERC Issues Proposed Rulemaking on Transmission Line Ratings

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 October 30, FERC (under then-Chairman Neil Chatterjee) announced that it planned to convene a roundtable discussion (“Roundtable”) on the increased deployment of electric vehicles (“EVs”) and EV charging infrastructure nationwide, as well as their corresponding impact on the FERC-jurisdictional transmission system and wholesale electric markets (see November 10, 2020 issue of the WER

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 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 6, 2020, the California Independent System Operator (“CAISO”), California Public Utilities Commission (“CPUC”), and the California Energy Commission (“CEC”) (collectively, “Joint Entities”) announced that their preliminary analysis pointed to a number of factors that caused two mid-August electricity outages in CAISO. Specifically, the group’s Preliminary Root Cause Analysis report (“Preliminary Analysis”) concluded that the outages resulted from a convergence of factors, including (i) the extreme west-wide heat storm, (ii) shortfall in system planning, and (iii) certain day-ahead energy market practices.  As directed by Governor Newsom, the Preliminary Analysis includes immediate, near, and longer-term actions that can be taken to minimize future power outages.

Continue Reading CAISO, CEC, and CPUC Conclude Several Factors Caused Mid-August Outages in California

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

On September 17, 2020, FERC addressed the American Wind Energy Association’s (“AWEA”) request for rehearing of a December 2019 order finding that Generator Interconnection Agreements (“GIAs”), Facilities Construction Agreements (“FCAs”) and Multi-Party Facilities Construction Agreements (“MPFCAs”) entered into between June 24, 2015 and August 31, 2018 (“the interim period”) should be revised to allow Midcontinent Independent System Operator, Inc. (“MISO”) transmission owners and affected system operators to unilaterally elect to provide the initial funding for interconnection-related network upgrades. FERC’s September 17 order modified the discussion in the December 2019 order but continued to reach the same result. The order also accepted MISO’s proposed tariff sheets allowing transmission owners and affected system operators to elect transmission owner initial funding for network upgrades for GIAs, FCAs, and MPFCAs that became effective during the interim period. Commissioner Richard Glick issued a dissenting opinion in which he concluded that FERC’s order failed to meaningfully address concerns of undue discrimination and ignored evidence that allowing transmission owners and affected system operators to retroactively elect to self-fund network upgrades would result in substantial harm to interconnection customers and could lead to project terminations.
Continue Reading FERC Upholds Orders on Transmission Owner Funding for Network Upgrades in MISO