On April 29, 2019, FERC accepted revisions proposed by PJM Interconnection, L.L.C. (“PJM”) to its Open Access Transmission Tariff (“Tariff”) and Amended and Restated Operating Agreement (“Operating Agreement”) to allow market participants to submit day-ahead offers that vary by hour and to update such offers in real time (“April Order”).  FERC also denied PJM’s motion for clarification as to whether PJM’s Independent Market Monitor (“IMM”) may file certain complaints against PJM.

On April 17, 2019, FERC issued a Notice of Proposed Rulemaking (“NOPR”) in which it proposed to approve, pending certain modifications, Critical Infrastructure Protection (“CIP”) Reliability Standard CIP-012-1 (“Proposed Reliability Standard”), as submitted by the North American Electric Reliability Corporation (“NERC”).  The Proposed Reliability Standard is designed to mitigate cybersecurity risks associated with communications between bulk electric system control centers.  While FERC found that the Proposed Reliability Standard largely met FERC’s directive set forth in Order No. 822, FERC stated that the Proposed Reliability Standard did not address all of its concerns, and thus proposed to direct NERC to modify the Proposed Reliability Standard.

On April 23, 2019 FERC granted in part and denied in part a rehearing request (“Rehearing Order”) filed by American Municipal Power Inc. (“AMP”) of FERC’s February 5, 2018 order (“February 5 Order”) accepting PJM Interconnection, L.L.C.’s (“PJM”) revisions to amend its Open Access Transmission Tariff (“Tariff”) and Amended and Restated Operating Agreement (“Operating Agreement”) to improve the process for adding a pseudo-tied resource into the PJM region.  As part of this process, PJM proposed to incorporate two pro forma pseudo-tie agreements and a pro forma system modification reimbursement agreement (“Reimbursement Agreement”).  In the Rehearing Order, FERC granted AMP’s request on rehearing that the indemnification provisions of the Reimbursement Agreement should be consistent with related provisions in the pro forma pseudo-tie agreements.  FERC denied rehearing with respect to the compensation provision and the suspension and termination provisions in the pro forma pseudo-tie agreements.

On April 23, 2019, FERC denied Flint Riverkeeper’s and Chattahoochee Riverkeeper’s (“Riverkeepers”) request for attorney’s fees after the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) vacated the certificates of public convenience and necessity (“CPCNs”) FERC issued for the Southeast Market Pipelines Project (see March 20, 2018 edition of the WER).  In doing so, FERC found, among other things, that the certificate proceeding at FERC did not qualify as an “adversary proceeding” under the Equal Access to Justice Act (“EAJA”) for which the Riverkeepers could seek attorney’s fees because: (1) certificate proceedings are excluded from the definition of “adversary proceeding” and (2) FERC is not represented by counsel in a certificate proceeding but rather acts as an adjudicator.

On April 18, 2019, FERC granted Sunrun, Inc.’s petition for declaratory order and request for waiver of the Public Utility Regulatory Policies Act (“PURPA”) Qualified Facility (“QF”) certification requirements for certain of its residential solar photovoltaic (“PV”) systems.  Specifically, FERC granted Sunrun limited waivers of: (1) the QF certification requirement for Sunrun-financed residential rooftop solar PV systems under 20 kW where such systems, though separately interconnected, may aggregate to over 1 MW within a one-mile radius; and (2) the requirement in Item 8a of the QF self-certification Form No. 556 to identify related PV systems of 20 kW or less located within a one mile radius.  FERC’s order noted its intention to ease administrative burdens on both Sunrun and itself, and affirmed that certain certification filing exemptions available to QFs under 1 MW can persist as Sunrun expands and its financed PV systems aggregate to over 1 MW within a one-mile radius.

On April 18, 2019, FERC found that the fast-start pricing practices of New York Independent System Operator, Inc. (“NYISO”) and PJM Interconnection, L.L.C. (“PJM”) were unjust and unreasonable and directed NYISO and PJM to revise their tariffs to implement certain changes discussed in the orders (“2019 Orders”).  In doing so, FERC found that NYISO’s and PJM’s current fast-start tariff provisions do not allow prices to reflect the marginal cost of serving load.

On April 18, 2019, FERC issued a unanimous order, supported by all FERC Commissioners, ruling that the California State Water Resources Control Board (“SWRCB”) waived authority to issue a water quality certification under Section 401 of the Clean Water Act (“CWA”), 33 U.S.C. § 1641, in the pending hydropower relicensing of the Middle Fork American River Project (“Project”).  Applying the U.S. Court of Appeals for the D.C. Circuit’s (“D.C. Circuit”) seminal opinion in Hoopa Valley Tribe v. FERC issued in early 2019 (see January 30, 2019 edition of the WER), FERC held that SWRCB’s “active[] participation” in the applicant’s annual withdrawal-and-resubmittal of the license applicant’s request for Section 401 certification since 2012, “on occasion directly requesting the withdrawal and refiling,” constituted an agreement between the applicant and SWRCB that does not re-start the maximum one-year time period for states to act on a request for water quality certification under Section 401.

On April 15, 2019, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) changes to its Variable Resource Requirement (“VRR”) demand curve as well as key cost inputs to the curve, in connection with PJM’s 2019 Base Residual Auction for the 2022/2023 Delivery Year.  While FERC concluded that PJM’s proposal would produce accurate market signals, encourage appropriate capacity investment, and achieve an adequate level of reliability, the decision sparked a dissent from Commissioner Glick, who argued that PJM failed to show that its proposed VRR curve would produce just and reasonable rates.  Commissioner Glick added that the proposal did not go far enough to correct either oversupply of generation in the capacity market or distorted price signals for Energy and Ancillary (“EAS”) services.

On April 18, 2019, FERC issued Order No. 858, revising its regulations to conform with the America’s Water Infrastructure Act (“AWIA”), which added sections 34 and 35 to the Federal Power Act (“FPA”) authorizing FERC to issue or amend licenses for: (1) qualifying facilities at an existing nonpowered dams (section 34); and (2) closed-loop pumped storage projects (section 35).  In conformance with AWIA, Order No. 858 establishes an expedited hydropower licensing process for projects covered by newly-added FPA sections 34 and 35. 

On April 18, 2019, FERC partially granted a complaint American Wind Energy Association and the Wind Coalition filed against the Southwest Power Pool, Inc. (“SPP”), alleging that the membership exit fee provisions, as applied to entities who are not transmission owners, violated the cost causation principle and resulted in unduly discriminatory rates (the “Complaint”).  FERC found that SPP’s membership exit fee is unjust and unreasonable because it creates a barrier to SPP membership for non-transmission owners and appears to be excessive. Accordingly, FERC directed SPP to eliminate the membership exit fee for non-transmission owners.