On December 3, 2018, FERC largely rejected a complaint filed by Monterey MA, LLC (“Monterey”) alleging that PJM Interconnection, L.L.C. (“PJM”) improperly adjusted prices after two transmission line outage events for unauthorized reasons, and without proper notice and documentation in violation of PJM’s Tariff.  Monterey requested that FERC reinstate original prices and that changes be made to the Tariff relating to price revisions so that re-pricing events are more transparent for market participants.  FERC mostly found that Monterey’s allegations were unreasonable and thus largely denied Monterey’s complaint, including Monterrey’s request to reinstate the original market prices.

On November 19, 2018, FERC denied a complaint filed by CXA La Paloma, LLC (“La Paloma”) requesting that FERC use its jurisdiction over resource adequacy to direct the California Independent System Operator Corp. (“CAISO”) to implement centralized capacity procurement.  FERC found that La Paloma failed to meet its burden to demonstrate that CAISO’s tariff was unjust, unreasonable, or unduly discriminatory or preferential under section 206 of the Federal Power Act.

On November 19, 2018, FERC accepted ISO New England Inc.’s (“ISO-NE”) request to terminate the capacity supply obligation (“CSO”) of the Clear River Unit 1 natural gas-fired generator (“Clear River”) for the 2021–2022 Capacity Commitment Period. In doing so, FERC found that ISO-NE had the right under its Tariff to terminate Clear River’s CSO because Clear River’s project sponsor, Invenergy Energy Management LLC (“Invenergy”), had covered Clear River’s CSO for two consecutive Capacity Commitment Periods. In the same order, FERC denied Invenergy’s request for waiver of certain provisions of ISO-NE’s Tariff related to the termination of Clear River’s CSO.

On November 26, 2018, FERC partially granted the California Independent System Operator Corp. (“CAISO”) a temporary extension of two sets of tariff provisions concerning natural gas system limitations on CAISO’s system and corresponding market operations.  While FERC temporarily extended six tariff provisions related to the Aliso Canyon gas storage facility (“Aliso Canyon”) effective November 30, 2018, and December 16, 2018, as requested, it rejected CAISO’s proposal to temporarily extend the tariff revisions regarding gas price scalars.

On November 27, 2018, the Senate Committee on Energy and Natural Resources (“ENR Committee”) advanced FERC nominee Bernard McNamee to a full vote on the Senate floor.  The ENR Committee furthered Mr. McNamee’s nomination with a bipartisan vote of 13-10, with one Democrat joining the entire Republican majority on the ENR Committee.  If confirmed by the full Senate, Mr. McNamee will join current FERC Commissioners Cheryl A. LaFleur, Richard Glick, Kevin McIntyre, and Chairman Neil Chatterjee.

On November 15, 2018, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to implement Public Law No. 115-247, which amended section 203 of the Federal Power Act (“FPA”) to clarify that FERC authorization is only required for mergers or consolidations valued at more than $10 million.  In addition, in accordance with the new law’s requirements, FERC proposes that transactions that are valued at $10 million or less, but more than $1 million, would only be subject to a notification requirement.

On November 15, 2018, Bernard L. McNamee, who has been nominated to fill the vacancy left by former FERC Commissioner Robert Powelson, testified before the Senate Committee on Energy and Natural Resources (“Committee”).  Currently, Mr. McNamee heads the Department of Energy’s (“DOE”) Office of Policy.

On November 15, 2018, FERC issued a Notice of Proposed Rulemaking (“NOPR”) addressing the effect of the Tax Cuts and Jobs Act of 2017 (“TCJA”), which lowered the federal corporate tax rate from 35 percent to 21 percent, on accumulated deferred income tax (“ADIT”) balances. Specifically, FERC proposed to require transmission companies to remove excess ADIT or add deficient ADIT to their rate bases. In addition, FERC issued a policy statement providing accounting and ratemaking guidance related to the treatment of ADIT (“Policy Statement”).

On October 15, 2018, FERC issued two orders involving rate of return on equity (“ROE”): the first was an order directing parties in two proceedings involving the base ROE of the transmission owning members of the Midcontinent Independent System Operator, Inc. (“MISO”) to submit briefs concerning a proposed change in FERC’s approach to determining the base ROE of public utilities previously outlined in Martha Coakley v. Bangor Hydro-Elec. Co. (“Coakley Briefing Order”) (see October 25, 2018 edition of the WER); the second was an order providing guidance regarding the effect of the Coakley Briefing Order on pending proceedings involving base ROE issues that have been set for hearing and settlement judge procedures.