On March 21, 2019, the Commission issued a proposed order directing two wind energy generators, Cedar Creek Wind Energy, LLC (“Cedar Creek”) and Cedar Creek II, LLC (“Cedar Creek II”) (collectively the “Cedar Creek Entities”) to provide interconnection and transmission service to a proposed wind project, Mountain Breeze Wind, LLC (“Mountain Breeze”) across jointly-owned interconnection customer facilities (“ICIF”) to the Public Service Company of Colorado (“PSCo”) transmission system.  Although Cedar Creek II sought to dismiss the matter as an impermissible attempt by Mountain Breeze to acquire an ownership interest in the ICIF outside of a Federal Power Act (“FPA”) Section 203 or Section 205 proceeding, FERC rejected this characterization and instead found narrowly that Mountain Breeze had properly filed an application for Commission-ordered service under FPA Sections 210 and 211.  FERC directed the parties to attempt to reach an agreement on the terms and conditions for interconnection and transmission service, or a separate order prescribing such terms and conditions would be issued.

On March 26, 2019, FERC accepted, subject to condition, AMP Transmission, LLC’s (“AMP”) proposed formula rate template and implementation protocols (collectively, “Formula Rate”) to recover a revenue requirement based on a cash-flow method for AMP’s integrated transmission facilities located in the PJM Interconnection, L.L.C. (“PJM”) region.  As a minor condition of acceptance, FERC directed AMP to revise on compliance its Formula Rate to enable AMP to use it in PJM transmission zones that require different rate years, as opposed to only in zones whose rate year is based on the calendar year.

On March 21, 2019, the same day FERC issued an inquiry into Return on Equity (“ROE”) policies (see here), FERC also published another Notice of Inquiry (“NOI”) seeking comments on the scope and implementation of its electric transmission incentives policy and regulations.  The NOI covers a broad range of topics from using incentives to encourage new technology integration to unlocking location constrained resources and addressing resiliency concerns.  Initial comments are due 90 days after the NOI is published in the Federal Register, with reply comments due 30 days thereafter.

On March 20, 2019 the Missouri Public Service Commission (“MPSC”) granted a certificate of convenience and necessity (“CCN”) to Grain Belt Express Clean Line LLC (“Grain Belt”) for a $2.35 billion, 780-mile, 600 kV transmission line that is planned to deliver wind-generated electricity from western Kansas to customers in both MISO and PJM. While the MPSC previously denied Grain Belt’s application for a CCN in a 2015 decision that cited burdens to affected landowners, its March 20 order concludes that “the broad economic, environmental, and other benefits of the Project to the entire state of Missouri outweigh the interests of the individual landowners,” whose concerns would be “addressed through carefully considered conditions placed on the CCN.”

On March 21, 2019, FERC issued a Notice of Inquiry (“NOI”) seeking information regarding whether and how to revise its policy for determining the rate of return on equity (“ROE”) used in setting rates charged by jurisdictional public utilities.  The NOI also seeks comment on whether any changes to the Commission’s ROE policies for public utilities should be applied to interstate natural gas and oil pipelines.  Specifically, the NOI requests information in eight areas:  (1) the role of FERC’s base ROE in investment decision-making and what objectives should guide the Commission’s approach; (2) whether uniform application of FERC’s base ROE policy across the electric, interstate natural gas pipeline and oil pipeline industries is appropriate and advisable; (3) performance of the discounted cash flow (“DCF”) model; (4) proxy groups; (5) the choice of financial model(s) used; (6) the mismatch between market-based ROE determinations and book-value rate base; (7) how FERC determines whether an existing ROE is unjust and unreasonable under the first prong of Federal Power Act section 206; and (8) model mechanics and implementation.

On March 19, 2019, FERC conditionally accepted the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed tariff revisions to: (1) clarify how market participants with pseudo-ties outside of MISO can use virtual transactions to align Financial Transmission Rights (“FTRs”) and transmission usage charges; and (2) reduce the administrative charges assessed to market participants with a pseudo-tie of generation or load out of MISO.

At a time of significant industry transformation driven by technological change and spurred on by environmental policy concerns, the Federal Energy Regulatory Commission (“FERC” or “Commission”) has now added a significant layer to the stack of policy debates – the future of transmission investment.  Many states have seized the initiative in terms of establishing preferable resource mixes for in-state customers, and are spearheading significant pushes for greater renewable and storage resource deployment.  FERC has now joined the fray by opening up the policy debate anew regarding how to spur (or whether to spur) additional transmission sector investment.  The FERC order described below focuses on regulatory and market rules impacting transmission investment (Docket No. PL19-3-000).  The agency also opened a companion docket requesting comments on the details of its policies regarding establishment of a public utility transmission owner’s stated return on equity (“ROE”) (Docket No. PL19-4-000).  The Washington Energy Report will provide detailed summaries of these orders via our blog.  FERC’s mention here of “an increased emphasis on the reliability of transmission infrastructure” (emphasis added) could signal an attempt to re-focus the U.S. Department of Energy’s resiliency concerns to an arena that gives FERC home-field advantage.  Lest the states forget, FERC controls the price of admission for a ticket to the interstate transmission network, and this open-ended fact-finding effort bears a high likelihood of impacting the price of such tickets (for a large portion of the continental United States).

On March 11, 2019, a U.S. district court judge in California denied FERC’s motion to withdraw the reference of Pacific Gas and Electric’s (“PG&E”) adversary proceeding from the U.S. Bankruptcy Court in the ongoing jurisdictional dispute between FERC and the bankruptcy court.  In his ruling, Judge Haywood Gilliam Jr. of the U.S. District Court for the Northern District of California held that removal of the case from the bankruptcy courts was neither required nor permitted because the plain language of the Bankruptcy Code is sufficient to address the questions raised in the proceeding.

On March 11, 2019, PJM Interconnection, L.L.C. (“PJM”) made a filing informing FERC that it has begun advising Capacity Market Sellers to use both its existing capacity market rules, as well as its proposed Capacity Reform rules while it awaits a final order from FERC on the proposed reforms.  PJM stated that this approach ensures that all Capacity Market Sellers will have satisfied both the existing and PJM’s proposed pre-auction requirements prior to the conduct of the August 2019 Base Residual Auction (for the 2022/2023 Delivery Year) in anticipation of a Commission order.  The Capacity Reform rules include revised Minimum Offer Price (“MOPR”) rules and the “Resource Carve-Out” alternative.

On March 6, 2019, the New Hampshire Public Utilities Commission (“PUC”) declined to reconsider an earlier order refusing to enforce a newly-enacted mandatory biomass power purchase obligation, and associated subsidy scheme. Although the New Hampshire PUC ruled narrowly in both decisions, the law subsidizing state biomass generators at above-market rates is the latest in a series of recent state actions pushing the jurisdictional line between FERC and state authority (see, e.g., April 27, 2016 edition of the WER; September 25, 2018 edition of the WER; October 3, 2018 edition of the WER).  As of this writing, challenges to the law remain pending at FERC.