On September 30, 2019, FERC issued two orders denying requests for rehearing of orders that respectively granted Pacific Gas & Electric Company (“PG&E”) and Southern California Edison Company (“SCE”) 50-basis point return-on-equity adders for their continued participation in the California Independent System Operator Corporation (“CAISO”) (“RTO-Participation Incentive”). PG&E requested the RTO-Participation Incentive as part of its nineteenth transmission owner tariff filing; SCE requested the RTO-Participation Incentive as part of its 2018 transmission revenue requirement filing. FERC granted both requests in two separate orders issued in 2017. The California Public Utilities Commission (“CPUC”) and Transmission Agency of Northern California requested rehearing of both 2017 orders; the Sacramento Municipal Utility District (“SMUD”) also requested rehearing of the 2017 order granting PG&E the RTO-Participation Incentive (CAISO, CPUC and SMUD are collectively referred to as the “California Parties”). FERC’s September 30, 2019 orders denying the California Parties’ rehearing requests concluded that is appropriate to grant both PG&E and SCE the RTO-Participation Incentive because California law does not mandate that either utility participate in CAISO.

On September 30, 2019, FERC accepted in part and rejected in part, the California Independent System Operator’s (“CAISO”) July 2, 2019 proposed revisions (“July 2 Filing”)  to its open access transmission tariff (“Tariff”) to include three unrelated mitigation measures designed to facilitate the participation of fast-ramping hydroelectric resources in the western energy imbalance market (“EIM”). FERC accepted two aspects of CAISO’s proposal related to the mitigation timing (the “Mitigation Timing” proposal and a hydro default energy bid (“DEB”) proposal, referred to as the “Hydro DEB” proposal), but rejected CAISO’s proposal to allow an EIM entity balancing authority area (“BAA”) in the real-time market to limit dispatch of incremental net exports under certain conditions (the “Net Export Limit” proposal).

On September 27, 2019, FERC approved CAISO tariff revisions to its voluntary Capacity Procurement Mechanism (“CPM”) and mandatory Reliability-Must-Run (“RMR”) framework such that all backstop procurement from resources that would otherwise retire or mothball will be addressed through CAISO’s RMR provisions. While FERC has traditionally considered RMR contracts as measures of last resort, FERC found it just and reasonable for CAISO to expand its use of such contracts to address evolving operational needs due, in part, to the increased penetration of variable energy resources in California. Commissioner Glick partially dissented, arguing that the approved tariff changes essentially provide CAISO “unchecked authority” to enter into out-of-market contracts to meet its resource adequacy needs.

On September 30, 2019, President Donald Trump announced his intent to nominate James P. Danly for Commissioner of FERC. If confirmed by the Senate, Mr. Danly would fill the seat vacated by the passing of former Chairman Kevin McIntyre for a term to expire on June 30, 2023, resulting in three Republican Commissioners and one Democratic Commissioner.

On September 19, 2019, one Independent and four Democratic U.S. Senators wrote a letter to FERC asking for an explanation of three actions the Senators believed showed an “apparent erosion” of the “vital role” FERC plays in preventing fraud and manipulation in U.S. energy markets and financial markets: (1) the decline in FERC-initiated civil penalty actions and the abrupt termination of non-public investigations without explanation; (2) the elimination of the Division of Energy Market Oversight (“DEMO”); and (3) the rescission of its policy on issuing Notices of Alleged Violations (“NAVs”) for investigations. Those Senators were Maria Cantwell (D-WA), Dianne Feinstein (D-CA), Ron Wyden (D-OR), Edward Markey (D-MA), and Angus King (I-ME).

On September 16, 2019, FERC accepted revisions to the PJM Interconnection, L.L.C. (“PJM”) tariff that: (1) establish a process by which existing capacity sellers can request removal of their capacity resource’s status; and (2) revise the process for must-offer exceptions due to an existing seller’s physical inability to meet its capacity requirements. The changes clarify how existing capacity resources may, under certain circumstances, effectively elect to “opt out” of PJM’s annual capacity auctions (termed Based Residual Auctions, or “BRAs”).

On September 19, 2019, FERC granted a petition for declaratory order by the New England Ratepayers Association (“New England Ratepayers”), which asked FERC to find that a New Hampshire statute, Senate Bill 365 (“SB 365”), mandating a purchase price for wholesale sales of certain biomass and waste generators in the state, is preempted by the Federal Power Act (“FPA”) and violates section 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”).

On September 25, 2019, FERC issued a notice stating that the results of the ISO New England, Inc. (“ISO-NE”) thirteenth Forward Capacity Auction (“FCA”) went into effect as of June 28, 2019 by operation of law—i .e., without FERC action. FCA 13 went into effect by operation of law due to a lack of quorum in the proceeding in which ISO-NE submitted the auction results and requested FERC approval of the auction as being conducted in accordance with ISO-NE’s Tariff and producing just and reasonable rates. Under Section 205 of the Federal Power Act, FERC has 60 days to act on a proposed rate filing; if FERC takes no action in that 60-day period—a very rare occurrence—then the rate becomes effective automatically. On September 27, 2019, Commissioner Richard Glick issued a statement indicating that he did not participate in the proceeding due to an ethics pledge that precludes him from working on any matters in which his former employer, Avangrid Inc., or any of its affiliates or subsidiaries is a party until November 29, 2019. Commissioner Glick explained that he could not participate because Vineyard Wind LLC, a joint venture between Avangrid Renewables, LLC and Copenhagen Infrastructure Partners, was a party to the proceeding.

On September 20, 2019, FERC issued an original license to McMahan Hydroelectric, LLC (“McMahan”) for the 600-kilowatt Bynum Hydroelectric Project, located on the Haw River in Chatham County, North Carolina. In its licensing order, FERC held that North Carolina waived authority under section 401 of the Clean Water Act (“CWA”) by failing to act within one year of receiving McMahan’s request for water quality certification under section 401. In a separate statement, Commissioner Glick—while agreeing with the conclusion that North Carolina had waived section 401 authority—dissented in the Commission’s rationale for finding waiver.

On September 18, 2019, the First Circuit Court of Appeals (“First Circuit”) affirmed the U.S. District Court for the District of Massachusetts’s (“District Court”) ruling that dismissed twelve New England retail electricity customers’ (“Plaintiffs”) federal antitrust and state-law claims against Eversource Energy and Avangrid, Inc (“Defendants”).  Initially, Plaintiffs filed their lawsuit in District Court, claiming Defendants violated section 2 of the Sherman Act, 15 U.S.C. § 2, as well as various state antitrust and consumer-protection laws (see December 12, 2017 edition of the WER).  The District Court dismissed Plaintiffs’ claims, finding that they were barred by the filed-rate doctrine and, alternatively, that the Plaintiffs lacked antitrust standing and failed to plausibly allege a monopolization claim under the Sherman Act.  On review, the First Circuit agreed with the District Court that the filed-rate doctrine barred Plaintiffs’ federal and state law claims.  Accordingly, the First Circuit found no need to reach the District Court’s alternative grounds for dismissal and dismissed Plaintiffs’ federal and state claims pursuant to the filed-rate doctrine.