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On February 21, 2023, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed tariff revisions governing the Locational Deliverability Area Reliability Requirement (“LDA Reliability Requirement”) calculation, effective December 24, 2022, and applicable to the 2024/2025 Base Residual Auction (“BRA”), which was in progress at the time that PJM submitted its filing. Specifically, FERC accepted tariff changes that would allow PJM, during the BRA process, to exclude Planned Generation Capacity Resources from the LDA Reliability Requirement calculation if the addition of such resources materially increases the reliability requirement and such resources do not participate in the capacity auction. The February 21 Order also dismissed as moot a complaint filed by PJM challenging the justness and reasonableness of the existing LDA Reliability Requirement. Finally, the February 21 Order stated that FERC would soon convene a forum to examine the functioning of the PJM capacity market. Commissioner Danly issued a separate dissenting statement.…

Continue Reading FERC Accepts PJM Capacity Market Revisions to Locational Deliverability Area Reliability Requirement, Sparks Strong Dissent from Commissioner Danly

On January 31, 2023, the Federal Energy Regulatory Commission (“Commission” or “FERC”) granted Great River Energy’s (“GRE”) requested incentive rate treatment for GRE’s investment in the Iron Range Project and Big Stone Project (collectively, “Projects”). Notwithstanding FERC’s approval, Commissioner Christie’s separate concurrence highlighted persistent concerns over the Commission’s incentive rate treatment policy.…

Continue Reading FERC Commissioner Christie Renews Concerns Over Transmission Rate Incentives in MISO Transmission Expansion Plan Order

On January 27, 2023, FERC approved the Midcontinent Independent System Operator, Inc. (“MISO”) Transmission Owners’ (“TOs”) proposal to terminate reactive power charges and compensation under MISO’s Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”), effective December 1, 2022.  As a result, MISO will no longer charge transmission customers for reactive power service within the standard power range, and no generators, whether affiliated with the MISO TOs or not, will receive compensation for providing reactive power service within the standard power factor range.  Nevertheless, FERC’s determination does not affect MISO generators’ ongoing obligation to provide reactive power.  If MISO directs a generator to provide reactive power outside of the standard power factor range, the generator will be compensated based on existing mechanisms already included in MISO’s Tariff.  …

Continue Reading FERC Allows MISO Transmission Owners to Retroactively Terminate Reactive Power Compensation Back to December 2022

On December 16, 2022, FERC again rejected the Midcontinent Independent System Operator Inc. (“MISO”) proposal for Transmission Owners to self-fund Necessary Upgrades to connect Merchant High Voltage Direct Current (“HVDC”) transmission lines into MISO and addressed arguments on rehearing. Commissioner Danly dissented and Commissioner Christie concurred in separate statements. Chairman Glick did not participate.…

Continue Reading On Rehearing FERC Again Rejects MISO Proposal for Transmission Owners to Self-Fund Necessary Upgrades to Connect Merchant HVDC Lines

On December 15, 2022, FERC issued an order accepting Arizona Public Service Company’s (“APS”) revisions to its Open Access Transmission Tariff (“Tariff”) that would allow APS to begin using the Flowgate Methodology for calculating Available Transfer Capability (“ATC”) instead of its current Rated System Path Methodology. In addition, FERC denied APS’s request to waive the requirement to post its Total Transfer Capability (“TTC”) values on the Open Access Same Time Information System (“OASIS”).…

Continue Reading FERC Accepts Arizona Public Service Company’s Proposal to Adopt Flowgate ATC Methodology and Denies Its Request to Waive TTC Posting Requirements

On November 17, 2022, FERC issued three orders intended to address the reliability impacts of the rapid integration of inverter-based resources (“IBRs”), including solar, wind, fuel cell, and battery storage resources, on the Bulk-Power System (“BPS”). Specifically, in the first proceeding, FERC directed the North American Electric Reliability Corporation (“NERC”) to develop a plan to register the entities that own and operate IBRs so that NERC may monitor their compliance with NERC’s Reliability Standards. In the second proceeding, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to direct NERC to develop new or modified Reliability Standards that address reliability gaps related to IBRs. Lastly, in the final proceeding, FERC approved revisions to two of NERC’s Reliability Standards.…

Continue Reading FERC Issues Proposals Regarding Inverter-Based Resources to Improve Grid Reliability

On October 28, 2022, FERC conditionally accepted Southwest Power Pool, Inc.’s (“SPP”) region-wide transmission cost allocation proposal. The revisions alter Attachment J of SPP’s Open Access Transmission Tariff (“Tariff”) and establish a waiver process through which, on a case-by-case basis, entities may request the costs of a specific transmission facility with a voltage level between 100 kV and 300 kV (“Byway Facility”) to be fully allocated to the SPP region on a postage-stamp basis—i.e., pursuant to a uniform regional rate. Commissioners James Danly and Mark Christie each dissented, respectively arguing that the revisions provide SPP too much discretion to allocate Byway Facilities on a regionwide basis and that the record did not show strong consensus among SPP states for the change in cost allocation.…

Continue Reading FERC Accepts SPP Region-Wide Transmission Cost Allocation Proposal

On September 16, 2022, a panel of three judges on the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued a decision in United Power, Inc. v. FERC affirming FERC’s exclusive jurisdiction over exit fees charged by Tri-State Generation and Transmission Association, Inc. (“Tri-State”), a Colorado generation and transmission cooperative.…

Continue Reading D.C. Circuit Holds that FERC Has Exclusive Jurisdiction Over Exit Fees Charged by a Colorado Electric Cooperative

Introduction

On September 22, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Proposed Rulemaking to establish rules providing incentive-based rate treatment for utilities making certain voluntary cybersecurity investments (“Cybersecurity NOPR” or “NOPR”).[1] According to FERC, the Cybersecurity NOPR seeks to benefit consumers and national security by encouraging investments in advanced cybersecurity technology and participation by utilities in cybersecurity threat information sharing programs, as directed by Congress in the Infrastructure Investment and Jobs Act of 2021 (“Infrastructure and Jobs Act” or “Act”).[2] While the Cybersecurity NOPR supersedes FERC’s December 2020 cybersecurity NOPR (whose docket is being terminated), the instant Cybersecurity NOPR generally retains the incentive provisions outlined in the December 2020 NOPR. Under the Cybersecurity NOPR, FERC proposes that:…

Continue Reading FERC Proposes to Offer Rate Incentives for Voluntary Cybersecurity Investment

On August 30, 2022, the U.S. Court of Appeals for the Fifth Circuit issued an order in NextEra Energy Capital Holdings, Inc. v. Lake, a case raising dormant Commerce Clause challenges to a 2019 Texas law that bans new entrants from building transmission lines that are part of a multistate electricity grid.  The majority reversed the lower court’s Rule 12(b)(6) dismissal of NextEra’s petition, thereby allowing the case to proceed to trial in district court.
Continue Reading 5th Circuit Holds that Texas Law Permitting Blocking of Competitive Transmission Owners from Building New Lines Violates the Commerce Clause