On May 20, 2020, FERC issued a notice that it will convene a Commissioner-led technical conference on Wednesday and Thursday, July 8–9, 2020 from approximately 9:00 a.m. to 5:00 p.m. Eastern time each day “to consider the ongoing, serious impacts that the emergency conditions caused by COVID-19 are having on various segments of the United States’ energy industry.” The notice stated that the technical conference will explore potential long-term impacts on FERC-regulated entities to ensure the continued efficient functioning of energy markets, electric transmission, transportation of natural gas and oil, and reliable operation of energy infrastructure, while also protecting consumers.
Continue Reading FERC to Convene Technical Conference on Impacts of COVID-19 on the Energy Industry

On May 21, 2020, FERC issued three orders denying, or denying in part, complaints against PJM Interconnection, L.L.C. (“PJM”), finding that the complainants failed to demonstrate that PJM’s pseudo-tie rules are unjust, unreasonable, or unduly discriminatory or that such rules had been applied in a manner inconsistent with the PJM Tariff. With respect to PJM’s market-to-market flowgate test and its electrical distance requirement, however, FERC granted the complaints in part, finding that PJM’s Tariff fails to provide an open and transparent process regarding PJM’s administration of those requirements.
Continue Reading FERC Finds PJM Tariff Lacks Transparency for Pseudo-Tied Resources

On May 21, 2020, FERC reversed, on rehearing, an earlier determination from October 2017 that the Commission has the authority to require the Midcontinent Independent System Operator, Inc. (“MISO”) to revise its Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) to include refund commitments by non-public utility transmission owning members. FERC found that although it has authority to review non-public utility rates included in jurisdictional rates (such as MISO’s), it was neither necessary nor appropriate to impose the refund commitment contemplated on non-public transmission owners in MISO. FERC also dismissed, as moot, MISO’s compliance filing submitted in response to the October 2017 Order, and terminated various related proceedings.

Continue Reading On Rehearing, FERC Decides Not to Require Prospective Refund Commitment from Non-Public Utility Transmission Owners

On May 21, 2020, FERC issued Opinion No. 569-A, which revised the Commission’s methodology for determining whether an established rate of return on equity (“ROE”) is just and reasonable under section 206 of the Federal Power Act (“FPA”). Among other things, Opinion No. 569-A accepts the use of a third financial model for establishing just and reasonable ROE for Transmission Owners (“TOs”)—the “Risk Premium Model” (which was rejected in an earlier opinion)—in addition to the previously accepted two-step discount cash flow (“DCF”) model and capital asset pricing model (“CAPM”). Commissioner Richard Glick dissented in part, arguing that FERC was “once again changing course and revamping [its] ROE methodology” to the detriment of regulatory certainty among TOs and investors. In a related action, FERC contemporaneously issued a Policy Statement clarifying that the newly revised ROE methodology in Opinion No. 569-A applies to natural gas and oil pipelines, with certain exceptions.
Continue Reading FERC Revises Public Utility ROE Methodology; Sets Policy for Natural Gas, Oil Pipelines

On May 1, 2020, FERC accepted two agreements—an unexecuted Network Integration Transmission Service Agreement (“NITSA”) and a Network Operating Agreement (“NOA”) (together, “Agreements”)—filed by Southwest Power Pool Inc. (“SPP”) to be effective February 1, 2020, subject to the outcome of pending rehearing proceedings. Consistent with FERC’s prior notice policies, SPP had requested waiver of the 60-day prior notice requirement to permit the Agreements to become effective February 1, 2020. While Commissioner Danly concurred with the decision to grant an effective date prior to the filing date, he noted that this practice appears to run afoul of the rule against retroactive ratemaking and urged FERC to reexamine its practice.
Continue Reading Short Danly Concurrence May Signal Big Changes to FERC Waiver Policies

On April 30, 2020, the United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) denied Nebraska Public Power District’s (“NPPD”) petition for review of FERC’s approval of the Southwest Power Pool, Inc.’s (“SPP”) placement of Tri-State Generation & Transmission Association’s (“Tri-State”) transmission facilities in SPP Zone 17. NPPD challenged FERC’s approval on cost causation grounds, arguing that FERC’s ruling was arbitrary and capricious because it failed to find that the benefits accruing to NPPD are roughly commensurate with the costs. The Eighth Circuit denied NPPD’s petition, concluding that FERC provided plausible and articulable reasons for why the costs and benefits of placing Tri-State’s transmission facilities in Zone 17 were comparable, and that FERC’s cost-causation analysis was not arbitrary and capricious.

Continue Reading Eighth Circuit Denies Petition for Review of Tri-State’s Placement in SPP Zone 17

On April 16, 2020, FERC addressed the American Public Power Association (“APPA”) and Exelon Corporation and its public utility subsidiaries (collectively, “Exelon Companies”) requests for rehearing and clarification of Order No. 864.  Specifically, FERC:

  • granted in part APPA’s request, clarifying that public utilities with stated transmission rates are required to use some ratemaking method to appropriately account for excess or deficient accumulated deferred income taxes (“ADIT”) resulting from the Tax Cuts and Jobs Act (“TCJA”), which will be subject to review in the utility’s next rate case;
  • confirmed that, consistent with prior precedent, any excess or deficient ADIT will not result in a windfall to either shareholders or ratepayers of public utilities with stated transmission rates; and
  • denied Exelon Companies’ request for rehearing, reaffirming Order No. 864’s requirement that public utilities with transmission formula rates return to customers the full amount of excess ADIT resulting from TCJA.


Continue Reading FERC Reaffirms Obligations Requiring Public Utilities to Address Excess and Deficient Income Taxes Resulting from Tax Act Changes

On April 2, 2020, FERC issued several orders aimed at helping regulated entities manage compliance deadlines and related issues in the wake of COVID-19 response.  Chairman Neil Chatterjee also issued a press release confirming the pandemic qualifies as an emergency under the Commission’s rules and detailing additional steps in FERC’s plan to help regulated entities manage potential enforcement and compliance-related burdens during the pandemic, including two new task forces to expedite standards of conduct waiver requests and no-action letters.
Continue Reading FERC Relieves Regulatory Burdens and Creates New Task Forces Due to COVID-19 Pandemic

On March 25, 2020, the United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) upheld a Minnesota law granting a right of first refusal (“ROFR”) to incumbent electric transmission owners to construct, own, and maintain electric transmission lines connecting to their existing facilities. In its complaint brought before the United States District Court for the District of Minnesota (“District Court”), LSP Transmission Holdings, LLC (“LSP”) argued that Minnesota’s ROFR statute discriminates against out-of-state transmission developers and places an undue burden on interstate commerce in violation of the dormant Commerce Clause. The Eight Circuit affirmed the District Court’s dismissal of LSP’s complaint finding, de novo, that Minnesota’s ROFR provision does not violate the dormant Commerce Clause.
Continue Reading Eighth Circuit Upholds Minnesota’s Right of First Refusal Law

On March 20, 2020, FERC issued an order accepting PJM Interconnection, L.L.C.’s (“PJM”) proposal as part of its Regional Transmission Expansion Plan (“RTEP”) to allow project developers to submit binding cost commitments on a voluntary basis, and to undertake a comparative review and analysis of these commitments in selecting transmission projects. FERC accepted PJM’s proposal over the objections of certain PJM transmission owners, and concluded that the proposal would assist PJM in selecting the most efficient and cost-effective transmission solutions in its RTEP while providing greater transparency into PJM’s evaluation process.
Continue Reading FERC Accepts PJM Plan to Review and Analyze Binding Cost Commitments in its RTEP