On January 26, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rejected a challenge to FERC’s approval of tariff revisions from the PJM Interconnection, L.L.C. (“PJM”) regarding the so-called cost-of-new-entry (“CONE”), or the anticipated revenues required to recover costs in PJM’s wholesale capacity market.  A coalition of generators challenged PJM’s CONE as too low, which they argued undercut their own recovery in the capacity market.  In a brief opinion, the D.C. Circuit held that petitioners’ claims failed to overcome the deferential standard of review applied to factual challenges to agency orders.

On January 24, 2018, FERC staff directed Rover Pipeline LLC (“Rover”) to stop horizontal directional drilling (“HDD”) activity—which involves using a drill to bore horizontally underground and drilling mud to remove drill cuttings and maintain the bore for a newly constructed pipeline to “cross” beneath rivers and other areas—at the Tuscarawas River site due to inadvertent losses of drilling mud.  Although FERC staff found that Rover had complied with its HDD contingency plans and that drilling mud had not impacted sensitive resources, FERC staff requested Rover to provide information to assess alternate methods of crossing the Tuscarawas River.

On January 19, 2018, FERC approved PennEast Pipeline Company, LLC’s (“PennEast”) proposal to construct its 116-mile pipeline project from Pennsylvania to New Jersey (“Project”).  FERC approved the Project despite protesters challenging the Project’s need given that affiliated shippers subscribed to most of the Project’s capacity, as well as FERC’s limited environmental impact analysis after PennEast could not complete certain surveys along the Project’s route due to landowners denying PennEast access to their property.  Commissioners Cheryl A. LaFleur and Neil Chatterjee issued separate concurrences, while Commissioner Richard Glick issued a separate dissent.

On January 19, 2018, the United States Court of Appeals for the District of Columbia (the “D.C. Circuit”) rejected the New England Power Generators Association’s (the “Association”) challenge to two FERC orders on ISO New England Inc.’s (“ISO-NE”) scarcity pricing mechanisms in ISO-NE’s real-time and capacity markets.  The D.C. Circuit rejected the challenge both on procedural grounds and on the merits.

On January 22, 2018, a New York state trial court largely rejected motions to dismiss various challenges to the state’s zero emission credit (“ZEC”) program established in 2016 by the New York Public Service Commission (“NYPSC”).  The ZEC program, which is also being challenged in federal court, provides subsidies to financially struggling in-state nuclear energy generators.  Although the court allowed five of the six claims against the program to proceed to trial, the court dismissed 56 of the 61 petitioners for failing to timely raise their challenges.

On January 18, 2018, FERC took steps to develop supply chain risk management Reliability Standards and to approve several new Emergency Preparedness and Operations (“EOP”) Reliability Standards.  First, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to direct the North American Electric Reliability Corporation (“NERC”) to develop supply chain risk management requirements under the Critical Infrastructure Protection (“CIP”) Reliability Standards.  Second, in a separate order, FERC approved several new EOP Reliability Standards aimed at addressing emergency event reporting, roles and responsibilities during system restoration via blackstart resources, system restoration plans and coordination, and the loss of control center functionality. 

On January 12, 2018, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposal to revise its allocation of the costs associated with day-ahead Operating Reserves and real-time balancing Operating Reserves.  Specifically, PJM proposed to allocate uplift charges related to these reserves to Up-to-Congestion transactions (“UTCs”), a type of virtual transaction, in the same way that such uplift is allocated to other virtual transactions—namely, incremental offers of supply (“INC”) and decrement demand bids (“DEC”).  FERC rejected PJM’s proposal, without prejudice, on the grounds that PJM had failed to demonstrate that UTCs were sufficiently similar to INCs and DECs to justify allocating uplift to UTCs in the same manner that it allocates uplift to INCs and DECs.

On January 18, 2018, FERC approved California Independent System Operator Corporation’s (“CAISO”) changes to its resource adequacy program to, among other things, (1) allow capacity located in a local capacity area, but procured as system capacity, to provide system substitution capacity during forced outages and (2) cap a load serving entity’s (“LSE”) monthly local capacity requirement at its monthly system capacity requirement.

On January 12, 2018, FERC denied authorization to transfer a 1,159 MW coal-fired generation facility (“Pleasants Facility”) owned by Allegheny Energy Supply Company, LLC (“AE Supply”) to its affiliate, Monongahela Power Company (“Mon Power”).  After considering the applicable tests for affiliate transfers under the Federal Power Act (“FPA”), FERC determined that the parties’ proposed transaction was not in the public interest because it presented potential concerns of captive ratepayers cross-subsidizing non-regulated entities and because certain solicitation criteria were not met.  The denial is without prejudice, so Mon Power and AE Supply may resubmit an application that corrects the shortcomings identified by FERC.

On January 8, 2018, FERC terminated the Department of Energy’s (“DOE”) Proposed Rule on Grid Reliability and Resilience Pricing (“Proposed Rule”) proceeding, and, instead, initiated a new proceeding whereby FERC plans to collect information on resilience from regional transmission organizations (“RTO”) and independent system operators (“ISO”).  Once that information is collected, FERC will determine whether further action is necessary to address grid resilience.  While FERC’s decision was unanimous, three of FERC’s Commissioners issued separate concurring opinions.  Of note, Commissioner Neil Chatterjee stated that while he would have preferred an order that took an interim step to address the issues raised in the Proposed Rule, he looked forward to addressing those critical issues in the new proceeding established by FERC.