On March 9, 2018, a divided FERC approved the Competitive Auctions with Sponsored Policy Resources (“CASPR”) proposal submitted by the ISO New England Inc. (“ISO-NE”). Developed through an extensive stakeholder process that began in 2016, CASPR was promoted by ISO-NE as a mechanism to integrate out-of-market state resource policies that might otherwise suppress capacity market prices in ISO-NE’s capacity market. A divided FERC approved the proposal as a just and reasonable accommodation of state policies, with Commissioner Powelson dissenting, arguing that the proposal dilutes market signals and “threatens the viability” of ISO-NE’s capacity market. Commissioners LaFleur and Glick concurred with the outcome, but criticized the order’s guidance on adapting markets to state energy policies, and reliance on minimum offer pricing rules (“MOPRs”) as the “standard solution” to achieve that end.

On March 13 and March 15, 2018, FERC took actions to address tax law changes resulting from the Tax Cuts and Jobs Act of 2017 for electricity, natural gas, and oil companies.  In addition, on March 15, 2018, in response to a federal court remand, FERC stated that master limited partnership (“MLP”) interstate natural gas and oil pipelines will no longer be allowed to receive an income tax allowance in cost of service rates.

On March 8, 2018, President Donald Trump signed an order that enacts tariffs on steel and aluminum imports from all overseas countries, while exempting Canada and Mexico from such tariffs for now.  The proclamations signed by the President will institute a tariff of 25% on steel and 10% on aluminum imports.  The tariffs are expected to become effective March 23, 2018.

On March 6, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied Duke Energy Carolinas, LLC’s (“Duke Energy”) petition for review of FERC’s grant of a forty-year license for the Catawba-Wateree Project (“Project”).  FERC had found that, despite Duke Energy’s requested fifty-year term for the license renewal, the measures required by FERC in issuing the license were only “moderate,” and thus warranted the forty-year term.  Duke Energy argued that FERC acted arbitrarily and capriciously by not granting the fifty-year license.  The D.C. Circuit deferred to FERC’s analysis in granting a forty-year license.

On March 5, 2018, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) revisions to the appendices to Schedule 12 of its Open Access Transmission Tariff (“Tariff”).  Under Schedule 12, PJM annually files updates to the cost responsibility assignments for transmission enhancement and expansion projects selected in PJM’s Regional Transmission Plan (“RTEP”).  Through the Tariff revisions, PJM sought to update load-ratio share and solution-based distribution factor (“DFAX”) cost allocations in the appendices to Schedule 12 for Regional Facilities, Necessary Lower Voltage Facilities, and Lower Voltage Facilities.  Additionally, pursuant to prior FERC orders issued in late-2017, PJM’s Tariff revisions sought to reduce the cost responsibility assignments under the appendices of Schedule 12 of PJM’s Tariff to certain merchant facilities—including, Hudson Transmission Partners and Linden VFT, LLC (together, the “Merchant Facilities”)—to zero.

In a decision issued on March 6, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or the court) upheld a series of FERC orders declining to direct Entergy Services Inc. (“Entergy”) to pay refunds for previously misallocated capacity costs.  The D.C. Circuit found that FERC adequately explained its reasoning and clarified that—contrary to previous assertions—the Commission has no general policy of ordering refunds in cases involving flawed rate design, and that it had adequately explained that such a refund order would be inequitable in this instance.

On March 7, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) granted FERC’s request to stay the issuance of a mandate that would have vacated FERC’s certificate order approving the Southeast Market Pipelines Project (“SMP Project”), a natural gas pipeline currently in service in the southeastern United States.  The D.C. Circuit’s order effectively avoids shutdown of the SMP Project while FERC finalizes its supplemental review of the project incorporating its revised environmental analysis.  As a result of the D.C. Circuit’s order, FERC now has until March 26, 2018 to issue a new order authorizing the project.

On February 23, 2018, FERC approved PJM Interconnection, L.L.C.’s (“PJM”) changes to its tariff and Reliability Assurance Agreement (“RAA”) to revise Reliability Pricing Model (“RPM”) capacity market rules in order to accommodate greater participation from seasonal resources.  Specifically, FERC approved changes related to: (1) resource aggregation for submitting combined capacity market sell offers; (2) granting winter-period interconnection rights; and (3) demand response resource measurement and verification for seasonal resources.  However, FERC separately responded to complaints that the RPM does not adequately accommodate seasonal resources by directing FERC staff to establish a technical conference to explore whether further changes are needed to permit seasonal resource participation.

In dual orders issued on February 28, 2018, FERC affirmed that the current resource adequacy requirements of the Midcontinent Independent System Operator, Inc. (“MISO”) remain just and reasonable, and simultaneously rejected an earlier MISO filing that would have imposed additional resource adequacy program changes.  The rejection of MISO’s earlier filing came after the United States Court of Appeals for the D.C. Circuit (“D.C. Circuit”) granted FERC a voluntary remand to reconsider its previous conditional acceptance in light of NRG Power Marketing, LLC. v. FERC (“NRG”).

On March 1, 2018, President Donald Trump said that his administration would begin imposing a 25% tariff on imported steel and a 10% tariff on imported aluminum as early as the next week.  The President’s unexpected announcement came after the Department of Commerce concluded on February 16, 2018 that the importation of steel and aluminum threatens national security.  The Commerce Department reached its conclusion after finalizing investigations under Section 232 of the Trade Expansion Act of 1962, which were initiated in April 2017 and designed to determine whether such imports “threaten to impair the national security.”