On February 10, 2020, FERC filed its Rehearing En Banc Brief (“Brief”) regarding opposition to FERC’s authorization of the construction of Transcontinental Gas Pipe Line Company, LLC’s (“Transco”) proposed Atlantic Sunrise Project (“Project”)—an interstate pipeline designed to supply enough natural gas to meet the daily needs of more than 7 million American homes. The United States Court of Appeals for the District of Columbia (“D.C. Circuit”) issued an opinion on August 2, 2019, upholding FERC’s decision to conditionally approve the Project. However, on September 16, 2019, Hilltop Hollow Limited Partnership, Hilltop Hollow Limited Partnership, LLC, and Stephen D. Hoffman (“Petitioners”) petitioned the court for rehearing of the court’s opinion en banc. The Petitioner’s main challenge was FERC’s usage of tolling orders, which allows FERC to delay rehearing after granting a pipeline certificate, as impermissible under the Natural Gas Act (“NGA”) and the Due Process Clause of the Fifth Amendment. The court granted that petition and vacated the underlying judgment in a December 5, 2019 order (see December 11, 2019 WER).

On February 11, 2020, the U.S. Court of Appeals for the Fourth Circuit (“Fourth Circuit”) held that FERC’s claim for civil penalties under the Federal Power Act (“FPA”) against Powhatan Energy Fund, LLC and certain of its traders and affiliates (“Powhatan”) was not barred by the statute of limitations. In doing so, the Fourth Circuit held that FERC’s claim in federal district court did not accrue for statute of limitation purposes until all of the legal prerequisites for filing the suit had been met, including failure by Powhatan to pay its assessed penalties.  

On February 5, 2020, FERC denied a request from demand-side energy management company Enerwise Global Technologies, Inc. d/b/a CPower (“CPower”) for a one-time waiver of ISO New England, Inc’s (“ISO-NE”) Market Rule 1 in order to permit CPower’s summer-only demand capacity distributed generation resources, for which it elected Renewable Technology Resource (“RTR”) treatment, to participate in ISO-NE’s fourteenth Forward Capacity Auction (“FCA 14”) and the substitution auction. CPower presented two alternative options for waiver, arguing that an unintended interaction between ISO-NE’s RTR and “composite offer” Tariff provisions caused its resources to be excluded from FCA 14 and the substitution auction. FERC denied CPower’s request, even though ISO-NE supported one of the alternatives that CPower presented. Commissioner Richard Glick dissented in part, explaining that he also would have granted one of CPower’s proffered waiver options.

On January 31, 2020, FERC granted Xcel Energy Services Inc.’s application to terminate Southwestern Public Service Company’s (“SPS”) mandatory purchase obligation under Public Utility Regulatory Policies Act of 1978 (“PURPA”). In its order, FERC specifically found that (i) SPS, as a member of Southwest Power Pool, Inc. (“SPP”), is entitled to the presumption that qualifying cogeneration or small power production facilities (“QFs”) within SPS’s footprint have nondiscriminatory access to markets, and (ii) the protestors failed to adequately rebut this presumption. Accordingly, SPS is relieved of its obligation to enter into new contracts to purchase QF electric energy. FERC granted the application effective September 5, 2019.

On February 3, 2020, FERC denied a waiver request filed by Genbright LLC (“Genbright”) seeking a one-time limited waiver of Market Rule 1 in the ISO New England Inc. (“ISO-NE”) Transmission, Markets and Services Tariff (“Tariff”) to allow fourteen distributed energy resource projects (the “DER Projects”) to participate in the fourteenth ISO-NE Forward Capacity Auction (“FCA 14”).  According to Genbright, the DER Projects did not qualify to participate in this year’s capacity auction because Genbright sought interconnection under a state-administered interconnection process rather than the FERC jurisdictional interconnection options specified in the ISO-NE Tariff, and Genbright argued that the interconnected utility should have alerted Genbright of the FERC-jurisdictional status of its interconnections.  In denying the request, FERC found that granting waiver would inappropriately allow Genbright to avoid ISO-NE’s complex interconnection study process.

On January 31, 2020, FERC rejected Southwest Power Pool, Inc.’s (“SPP”) proposed Tariff revisions to eliminate SPP’s current policy of offering transmission revenue credits as reimbursement for certain transmission network upgrades, and to instead provide term- and value-limited transmission congestion rights for all such upgrades. Under SPP’s proposal, a party that funds certain network upgrades would receive incremental transmission congestion rights for a limited term of up to twenty years or until the party that sponsored the upgrade recovered their costs, with interest. FERC held that this cap on recovery would disincentivize construction of merchant transmission projects, and rejected SPP’s proposal without prejudice to SPP submitting a revised proposal that does not impose a cap on the term and value of the incremental transmission congestion rights.

On January 27, 2020, FERC petitioned the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) for rehearing en banc of that court’s split (2-1) decision finding that the bankruptcy court’s concurrent jurisdiction is paramount, and that therefore, FERC-jurisdictional power purchase agreements may be rejected in bankruptcy without FERC review (see December 19, 2019 edition of the WER for a detailed analysis of the majority’s opinion and Judge Richard Allen Griffin’s opinion dissenting in part). This case is important because different courts have come to opposite conclusions over whether a debtor must obtain FERC authorization before it effects rejection in bankruptcy of a FERC-jurisdictional contract. This issue is also pending before the Ninth Circuit in proceedings associated with Pacific Gas & Electric’s ongoing bankruptcy proceeding.

On January 30, 2020, FERC granted in part and denied in part a declaratory order petition filed by PennEast Pipeline Company (“PennEast”) requesting that the Commission interpret the scope of a natural gas pipeline company’s eminent domain authority under the Natural Gas Act (“NGA”). FERC’s order follows a September 2019 decision by the United States Court of Appeals for the Third Circuit (“Third Circuit”), In re PennEast Pipeline Company, LLC (see September 18, 2019 edition of the WER). FERC’s January 30 declaratory order agreed with PennEast that Congress intended the NGA to be a vehicle for granting condemnation authority, and therefore intended to delegate the federal government’s own exemption from state sovereign immunity under the Eleventh Amendment to a natural gas company that holds a valid, FERC-issued Certificate of Public Convenience and Necessity (“CPCN”). However, FERC refrained from deciding whether that delegation of power is constitutional. The order was issued on a 2-1 vote, with Commissioner Richard Glick dissenting on both procedural and substantive grounds.

On January 29, 2020, thirty-six Democratic members of the U.S. House of Representatives (“Representatives”) signed a letter expressing their concern about FERC’s December 19, 2019 Order (“Order”) directing PJM Interconnection, L.L.C (“PJM”) to apply its Minimum Offer Price Rule (“MOPR”) to all state-subsidized capacity resources (see December 20, 2019 edition of the WER). According to the Representatives, the Order “nullif[ies]” state energy preferences, prohibits states from pursuing their policy goals, increases consumer costs by forcing them to buy duplicative capacity, runs contrary to FERC’s duty to ensure energy markets are truly competitive, and places deregulated markets at risk. The Representatives requested that the Commission provide a response to each concern discussed in the letter.

On January 30, 2020, FERC accepted revisions to the Midcontinent Independent System Operator, Inc. (“MISO”) planning resource auction participation rules for resources expecting extended outages during the planning year.  FERC simultaneously dismissed as moot an earlier-filed complaint by Wolverine Power Supply Cooperative (“Wolverine”) that alleged MISO’s Open Access Transmission, Energy and Operating Reserves Markets Tariff (“Tariff”) was unjust and unreasonable because it allowed resources with MISO-approved outages for the entire planning year to participate in the resource auction.