On July 9, 2018, FERC denied Cloverland Electric Cooperative’s (“Cloverland”) application to terminate its mandatory obligation under the Public Utilities Regulatory Policies Act of 1978 (“PURPA”) to purchase electric energy and capacity from qualifying cogeneration or small power production facilities (“QF”) with a net capacity in excess of 20 megawatts.  In denying the request, FERC emphasized that direct membership in regional transmission organizations or independent system operators is necessary to meet the exemption Cloverland requested under PURPA.

On June 29, 2018, FERC rejected proposals by Calpine Corporation (“Calpine”) and PJM Interconnection, L.L.C. (“PJM”) to address what they view as shortcomings in PJM’s capacity markets resulting from what they characterize as state subsidy programs that suppress capacity prices (the “June 29 Order”). 

On July 2, 2018, FERC denied ISO New England Inc.’s (“ISO-NE”) request for waiver of its Transmission, Markets, and Services Tariff (“Tariff”) and instituted a Federal Power Act (“FPA”) section 206 proceeding because, according to FERC, the Tariff may be unjust and unreasonable.  Specifically, ISO-NE requested waiver of certain provisions in its Tariff in order to delay the retirement of two generating units owned by Exelon Generation Company, LLC (“Exelon”) for fuel security purposes.  FERC denied the waiver request and preliminarily found that the Tariff did not sufficiently address specific regional fuel security concerns. 

On June 29, 2018, FERC approved the California Independent System Operator, Inc.’s (“CAISO”) revisions to its congestion revenue rights (“CRR”) auction intended to address the shortfall between CRR auction revenues and amounts owed by CAISO to holders of auctioned CRRs.  Specifically, CAISO proposed to (1) require CAISO transmission owners to submit all known transmission maintenance outages for the next year by July 1, rather than October 15; and (2) limit the allowable source and sink pairs eligible for the CRR auction to pairs associated with supply delivery and to exclude non-delivery CRR pairs.

On Thursday, June 28, 2018, the Senate approved ten individual hydropower bills by unanimous consent.  Seven of the ten were previously passed by the House and will now go to the President for his signature.  The remaining three bills have not yet been passed by the House, but in all three cases, the House has passed either a companion bill or bills with language similar to the Senate bills.

Three recent FERC staff decisions (“Decisions”) confirm that, for purposes of establishing the mandatory licensing requirements under the Federal Power Act (“FPA”), groundwater is not a “non-navigable Commerce Clause stream.”  Thus, a hydropower project—and particularly a closed-loop pumped storage project—that uses only groundwater as its water source will not require FERC licensing if the project does not trigger other jurisdictional tests under the FPA.

On June 21, 2018, the Supreme Court of the United States (“Supreme Court”) held that the U.S. Securities Exchange Commission’s (“SEC”) Administrative Law Judges (“ALJs”) are “Officers of the United States” whose appointment must meet the requirements of the Constitution’s Appointments Clause.  Accordingly, pursuant to the Appointments Clause, the SEC ALJs must be appointed by the SEC itself, as the “Head of the Department.”  It is unclear whether this impacts any of the current ALJs at FERC. 

On June 21, 2018, FERC issued an order instituting several proceedings, pursuant to section 206 of the Federal Power Act, to examine the methodology utilized by certain public utilities for calculating Accumulated Deferred Income Tax (“ADIT”) balances in their projected test year and annual true-up calculations for their formula transmission rates.

On June 15, 2018, in separate opinions, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) affirmed two FERC rulings that denied utilities’ requests to be made whole for purchasing natural gas at inflated prices to comply with their PJM Interconnection, L.L.C. (“PJM”) capacity resource obligations during the 2014 Polar Vortex.  Specifically, the D.C. Circuit upheld FERC’s holdings that (1) permitting the utility in one case to recover costs retroactively would violate the filed rate doctrine and the rule prohibiting retroactive ratemaking and (2) the utility in the second case was not entitled to indemnification for its losses resulting from PJM requesting the utility to comply with its capacity resource obligations.