On July 25, 2019, FERC issued an order directing PJM Interconnection, L.L.C. (“PJM”) “not to conduct the 2019 BRA” (Base Residual Auction) in August (“July 2019 Order”).  The 2019 BRA, which will procure capacity for the 2022-2023 Delivery Year, was already delayed from May to August while FERC considered how to apply the PJM Minimum Offer Price Rule (“MOPR”) to resources which receive out-of-market support, including Zero Emissions Credits (“ZECs”) and Renewable Energy Credits (“RECs”).  If the MOPR were applied to units receiving ZECs, RECs, or other out-of-market support, it is expected capacity market prices would be higher in some regions, and market revenues may be lower for some generators receiving ZECs or RECs or their off-takers.

On July 23, 2019, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) ruled that state substantive law should be used as the federal standard when determining landowners’ compensation in condemnation actions brought by private entities acting under the Natural Gas Act of 1938 (“NGA”).  The Third Circuit ruling reversed a decision by the U.S. District Court for the Middle District of Pennsylvania (“District Court”) and remanded the case for further proceedings.

On July 18, 2019, FERC affirmed on remand its prior approval of Pacific Gas and Electric Company’s (“PG&E”) request for a return-on-equity (“ROE”) incentive adder to its transmission rates (“RTO-Participation Incentive”) for its ongoing membership in the California Independent System Operator Corporation (“CAISO”).  In its decision, which followed from a 2018 remand from the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), FERC reasserted its jurisdiction over such transmission incentive questions and determined that, absent a relevant mandate under California law requiring PG&E’s participation in CAISO, the RTO-Participation Incentive was warranted because it induces PG&E to continue its CAISO membership.

On July 23, 2019, FERC Chairman Neil Chatterjee announced that the Commission is establishing a new Division of LNG Facility Review & Inspection (“DLNG”), within its Office of Energy Projects, to handle the growing number of complex applications to site, build, and operate liquified natural gas export terminals.  Prior to…

On July 18, 2019, FERC issued a final rule (“Order No. 860”) revising its data collection and reporting requirements for market-based rate (“MBR”) sellers (“MBR Sellers”).  FERC will require MBR Sellers to provide certain information about corporate relationships and affiliations through a “relational database” that FERC will implement over the next year and a half.  Among other things, FERC adopted reforms to (1) revise the scope of ownership information provided by MBR Sellers in their market-based rate filings; (2) change the information to be included in an asset appendix; (3) require MBR Sellers to submit monthly updates to their relational database; (4) require MBR Sellers to file quarterly notices of change in status, instead of 30 days after the change in status; and (5) remove the existing requirement that MBR Sellers submit corporate organization charts.  Notably, FERC declined to adopt its proposal requiring MBR Sellers to submit “Connected Entity” information.

On July 18, 2019, FERC issued Order No. 861, modifying its regulations regarding the horizontal market power analysis required to obtain authorization to sell energy, capacity, or ancillary services at market-based rates.  FERC adopted its proposal (see December 20, 2018 edition of the WER) to relieve electric power sellers of the obligation to submit indicative screens to obtain or retain market-based rate authority in any Regional Transmission Organization (“RTO”)/Independent System Operator (“ISO”) market with FERC-approved RTO/ISO monitoring and mitigation.  Market-based rate sellers (“MBR Sellers”) must continue to submit indicative screens for authorization to make capacity sales in any RTO/ISO that lacks an RTO/ISO-administered capacity market subject to FERC-approved monitoring and mitigation—currently, the California Independent System Operator (“CAISO”) and Southwest Power Pool (“SPP”).  FERC stated its intent for the rule is to ease regulatory burdens on MBR Sellers while simultaneously preserving its authority to prevent the exercise of market power.

On July 19, 2019, FERC largely denied four complaints filed in May and June of 2015 (“2015 Complaints”) concerning the results of the Midcontinent Independent System Operator, Inc.’s (“MISO”) 2015/16 Planning Resource Auction (“2015/16 Auction”) for Local Resource Zone 4 (“Zone 4”).  In relevant part, FERC: (1) found that the results of the 2015/16 Auction for Zone 4 were just and reasonable; and (2) denied requests to hold an evidentiary hearing to resolve issues related to the 2015/16 Auction.  Specifically, FERC found no evidence in the record indicating that certain Auction offers violated the MISO Tariff, and the resulting Zone 4 auction-clearing price was just and reasonable.

On July 18, 2019, FERC issued an order denying in part and granting in part a request for clarification or rehearing of Order No. 856, which revised its regulations relating to interlocking officers and directors.  FERC provided additional clarification and explanation, but declined to make any further revisions or to allow rehearing.

On June 24, 2019, FERC issued an order rejecting, without prejudice, Midcontinent Independent System Operator’s (“MISO”) and the MISO Transmission Owners’ (“MISO TOs”) proposal to allocate MISO’s share of the costs of certain interregional economic transmission projects with PJM Interconnection, L.L.C. (“PJM”) and Southwest Power Pool, Inc. within the MISO footprint (“Interregional Cost Allocation Proposal”).  FERC explained that it rejected the Interregional Cost Allocation Proposal because it referenced and relied on certain provisions contained within a related, regional cost allocation proposal that FERC rejected as inconsistent with cost causation principles in a concurrently-issued order (see July 18, 2019 edition of the WER ).  The June 24 order also rejected MISO’s submission of the Interregional Cost Allocation Proposal in a compliance filing in a separate complaint proceeding.  FERC directed MISO to submit a new compliance filing either to confirm that an existing cost allocation method will apply to interregional projects, or to propose a new cost allocation method for these projects.

On June 24, 2019, FERC rejected the Midcontinent Independent System Operator, Inc.’s (“MISO”) and the MISO Transmission Owners’ (collectively, “Filing Parties”) tariff revisions regarding cost allocation for regional and local economic transmission projects, finding that the cost allocation methodology related to the Filing Parties’ newly proposed Local Economic Project category was inconsistent with the cost-causation principle.  FERC rejected the Filing Parties’ filing as a whole based on the above finding, however FERC did provide guidance on other portions of the filing, stating that it did not find such other aspects of the filing to be unjust and unreasonable.