On September 9, 2020, the United States Court of Appeals for the First Circuit (“First Circuit”) affirmed the United States District Court for the District of Massachusetts (“District Court”)  dismissal of a lawsuit alleging Eversource Energy and Avangrid (“Defendants”) manipulated Algonquin Gas Transmission, LLC (“Algonquin”) pipeline capacity and violated federal and state antitrust laws. The First Circuit followed its previous decision addressing a lawsuit challenging the same conduct by Defendants, but brought by different plaintiffs (see September 25, 2019 edition of the WER), which held that because the Defendants’ actions were permitted under a tariff filed with and accepted by FERC, the filed rate doctrine barred any attempt to challenge or change those rates or terms in federal court. Notably, the First Circuit also admonished FERC for being “slow to recognize market defects that create opportunities to exploit market power.”

On September 1, 2020, FERC issued an order overturning 40 years of Public Utility Regulatory Policies Act of 1978 (“PURPA”) precedent and revoking the qualifying facility (“QF”) status of Broadview Solar, LLC (“Broadview Solar”) after finding that it could not rely on inverters to meet PURPA’s statutory size limit. In a separate QF matter, the Supreme Court of the State of Montana (“Montana Supreme Court”) issued an opinion on August 24, 2020 finding the Montana Public Service Commission (“Montana Commission”) unlawfully set solar QF standard-offer rates by failing to consider carbon offsets and undervaluing solar QFs’ capacity contribution. Both cases will have substantial impacts for QF developers.   

On August 28, 2020, FERC issued a supplemental Notice of a Commission-led Technical Conference on state pricing for carbon dioxide emissions, commonly referred to as carbon pricing, in FERC-jurisdictional wholesale electric markets (“Conference”). The Conference is free and will take place online on Wednesday, September 30, 2020 from 9:00 a.m.…

On August 27, 2020, FERC directed further briefing and established a technical conference in the proceedings arising from two complaints in which American Electric Power Service Corporation (“AEP”) and the City of Prescott, Arkansas each alleged that they were subject to overlapping or duplicative congestion charges on load that is pseudo-tied out of the Midcontinent Independent System Operator, Inc. (“MISO”) into Southwest Power Pool, Inc. (“SPP”). FERC’s August 27 order responded to additional briefing by the parties ordered in September 2019, and held that even after the additional briefing, the record was inadequate to determine whether: (1) mechanisms including virtual transactions, Financial Transmission Rights, and firm flow entitlements are sufficient to remedy any potential for overlapping congestion charges; or (2) the Regional Transmission Organizations (“RTOs”) must make changes to their Joint Operating Agreement (“JOA”) and/or their individual tariffs to remedy the causes of overlapping or duplicative congestion charges. The August 27 order therefore required additional briefing, and directed Commission staff to hold a technical conference after further briefs are filed.

On July 17, 2020, FERC issued three orders relating to the executed cost-of-service agreement (“Mystic Agreement”) among Constellation Mystic Power, LLC (“Mystic”), Exelon Generation Company, LLC (“Exelon”), and ISO New England Inc. (“ISO-NE”).  The Mystic Agreement provides for cost-of-service compensation to Mystic for the continued operation of two gas-fired generating units.  In the first two orders, FERC addressed requests for rehearing of its 2018 orders accepting the Mystic Agreement (the “July 2018 Order” and the “December 2018 Order”), including its conclusion that Mystic should recover from ratepayers 91% of the operating costs of the Everett Marine Terminal (“Everett”), a non-jurisdictional liquified natural gas import terminal.  In its third order, FERC accepted in part a Mystic compliance filing submitted in response to the December 2018 Order.  Commissioner Glick issued dissents to each of the July 17 orders.  Commissioner Glick concluded that FERC was forcing consumers to pay the full cost of service for Mystic in order to “bail out” Everett, and that each of the orders exceeded FERC’s jurisdiction under the Federal Power Act (“FPA”).

On July 23, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) granted FERC’s motion for a ninety-day stay of the court’s mandate in Allegheny Defense Project v. FERC. In Allegheny, the D.C. Circuit rejected FERC’s long-used practice of issuing “tolling orders” to grant…

On July 22, 2020, FERC approved a mitigation proposal that Sun Jupiter Holdings, LLC (“Sun Jupiter”) and El Paso Electric Company (“El Paso”) (together, “Applicants”) submitted in response to FERC’s March 30, 2020 order (“March 2020 Order”) conditioning approval of Sun Jupiter’s merger with and into El Paso and requiring the Applicants to address the transaction’s adverse impact on competition in certain circumstances. FERC also dismissed, on procedural grounds, United States Senators Jeffrey A. Merkley (D-OR), Edward J. Markey (D-MA), and Bernard Sanders (D-VT) (collectively, “Senators”) request for rehearing, and denied Public Citizen, Inc.’s  (“Public Citizen”) request for rehearing of FERC’s March 2020 Order.

On July 27, 2020, President Trump announced his intent to nominate Mark Christie (Republican) and Allison Clements (Democrat) to fill the vacant Commissioner seats at FERC. Mr. Christie would replace the departing Commissioner Bernard McNamee—whose term expired on June 30, 2020 but who stayed at FERC past the expiration of his term to maintain a quorum (see January 28, 2020 edition of the WER)—while Ms. Clements would fill the remaining vacant seat. If both nominees are sworn in, the Commission would consist of three Republicans (Chairman Neil Chatterjee, Commissioner James Danly, and Mr. Christie) and two Democrats (Commission Richard Glick and Ms. Clements).

On July 16, 2020, FERC dismissed a petition for declaratory order by the New England Ratepayers Association (“NERA”) that asked FERC to assert jurisdiction over net metering, finding that the petition failed to identify a specific controversy or harm that warranted a generic response from FERC. NERA’s petition had requested that FERC declare: (1) that all flows of electricity from behind-the-meter generators under state net metering programs back to the interconnected utility are wholesale sales subject to FERC’s exclusive jurisdiction, and (2) such sales should be priced in accordance with the requirements of the Federal Power Act (“FPA”) or the Public Utility Regulatory Policies Act (“PURPA”). Commissioners Bernard L. McNamee and James Danly issued separate concurring opinions, noting that though NERA’s petition was procedurally unsound, the issues raised could be addressed on the merits in a different proceeding.

On July 16, 2020, FERC responded to a petition for declaratory order filed by a group of merchant generators (“Petitioners”) requesting that the Commission provide guidance and clarification on six areas of its cost-based reactive power ratemaking policy. While FERC declined to address five of Petitioners’ specific requests, explaining that it would address them in another ongoing reactive rate proceeding, FERC established paper hearing procedures on a single question: “what proxies, if any, may be used by merchant generators for reactive power service ratemaking purposes other than the use of the capital structure and the cost of capital of the interconnected utility.”