On March 21, 2024, the Senate Committee on Energy and Natural Resources held a hearing to consider President Biden’s three recent nominations to the Federal Energy Regulatory Commission (“FERC” or “Commission”): (1) David Rosner for the term expiring June 30, 2027; (2)Lindsay S. See for the term expiring June 30, 2028; and (3)Judy W. Chang for the term expiring June 30, 2029.Rosner is an energy industry analyst at FERC and led efforts related to the Commission’s rulemaking on energy storage resources, electric transmission, offshore wind integration, fuel security, and natural gas-electric coordination. See is the Solicitor General of West Virginia, and manages West Virginia’s civil and criminal appellate dockets, with a focus on regulatory and administrative law matters. Chang is an energy economics and policy analyst and was the former Undersecretary of Energy and Climate Solutions for Massachusetts, where she set policies for the Commonwealth’s energy sector.Continue Reading Senate Committee Considers Three New FERC Nominees

On February 15, 2024, FERC approved two new extreme cold weather Reliability Standards EOP-011-4 (Emergency Operations) and TOP-002-5 (Operations Planning).

This approval is the culmination of a joint inquiry and November 2021 report (“Report”) among FERC, the North American Electric Reliability Corporation (“NERC”), and regional entity staff into a February 2021 cold weather reliability event that affected Texas and the South-Central United States, which was the largest controlled firm load shed event in U.S. history.  The Report recommended reliability standard enhancements to improve extreme cold weather operations, preparedness, and coordination.Continue Reading FERC Approves Extreme Cold Weather Reliability Standards EOP-011-4 and TOP-002-5

At the February 15, 2024, FERC open meeting and in four orders issued the same day, FERC established a new policy governing its issuance of preliminary permits under section 4(f) of the Federal Power Act (“FPA”), pursuant to which it will not issue preliminary permits for projects located on Tribal lands if the Tribe on whose land the project is proposed to be located opposes the permit. FERC explained that this policy change is based on the agency’s commitment to ensuring that Tribal concerns and interests are considered whenever FERC’s actions or decisions have the potential to adversely affect Tribes or Tribal trust resources. To avoid future permit denials, FERC emphasized that potential applicants should fully inform Tribes about proposed projects on their lands before filing the permit application.Continue Reading FERC Establishes New Policy to Reject Hydropower Preliminary Permit Applications Based on Tribal Opposition to Projects Located on Their Tribal Lands

On December 1, 2023, the United States Court of Appeals for the Third Circuit (“Third Circuit”) upheld PJM Interconnection, L.L.C.’s (“PJM”) latest minimum offer price rule (the “Focused MOPR”), denying challenges to both the substance of the rule and FERC’s “constructive” approval of the rule, which went into effect after the Commissioners deadlocked two-to-two and failed to issue a timely order accepting or denying the Focused MOPR. The Third Circuit held that a court’s review of FERC’s “action,” whether actual or constructive, proceeds under the same deferential standards in the Federal Power Act (“FPA”) and the Administrative Procedure Act (“APA”), and encompasses the Commissioners’ mandatory statements setting forth their reasoning for approving or denying the filing. On the merits, the Third Circuit held that FERC’s acceptance of PJM’s Focused MOPR policy was not arbitrary and capricious, pointing to arguments laid out in then-Chairman Glick’s and Commissioner Clements’ Joint Statement supporting the Focused MOPR.Continue Reading Third Circuit Upholds FERC’s Approval of PJM’s Focused MOPR

On September 21, 2023, the Commission approved, in part, PJM Interconnection L.L.C.’s (“PJM”) proposed tariff revisions regarding the calculation of the Financial Transmission Right (“FTR”) credit requirement (“September Order”). PJM’s revisions, among other things, would calculate collateral based on a historical simulation model (“HSIM”) instead of a historical value model. FERC accepted the proposal with the exception of PJM’s proposed 97% confidence interval in the HSIM model, and instead required PJM to use a 99% confidence interval.Continue Reading FERC Directs PJM to Use a Historical Simulation Model with a 99% Confidence Level for its FTR Credit Requirement

On May 3, 2023, a divided FERC voted 3-1 to deny a widely-supported complaint by multiple utilities in the Southwest Power Pool (“SPP”) region arguing that the absence of the new 15% generation Planning Reserve Margin (“Reserve Margin”) from the SPP tariff rendered that tariff unjust and unreasonable.  The Reserve Margin dictates exactly how much electric generating capacity load-serving utilities must own or have under contract to serve customers.  The complaining utilities argued that customers in SPP could be harmed by the costs associated with the rapid increase in the Reserve Margin with little corresponding reliability benefit and asked FERC to keep closer tabs on the process.  The utilities’ request for additional FERC oversight was opposed only by SPP itself.  As a result of the decision, SPP is free to change the Reserve Margin without any oversight by FERC or approval by a single state commission.   FERC further held that a complaint alleging that a key rate is missing from a tariff in violation of section 205 of the Federal Power Act and the Commission’s Rule of Reason fails to state a claim upon which relief could be granted. Continue Reading Divided FERC Announces Hands-Off Approach to Capacity Issues in SPP, Raises Questions About Tariff Detail Complaints

On February 21, 2023, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed tariff revisions governing the Locational Deliverability Area Reliability Requirement (“LDA Reliability Requirement”) calculation, effective December 24, 2022, and applicable to the 2024/2025 Base Residual Auction (“BRA”), which was in progress at the time that PJM submitted its filing. Specifically, FERC accepted tariff changes that would allow PJM, during the BRA process, to exclude Planned Generation Capacity Resources from the LDA Reliability Requirement calculation if the addition of such resources materially increases the reliability requirement and such resources do not participate in the capacity auction. The February 21 Order also dismissed as moot a complaint filed by PJM challenging the justness and reasonableness of the existing LDA Reliability Requirement. Finally, the February 21 Order stated that FERC would soon convene a forum to examine the functioning of the PJM capacity market. Commissioner Danly issued a separate dissenting statement.Continue Reading FERC Accepts PJM Capacity Market Revisions to Locational Deliverability Area Reliability Requirement, Sparks Strong Dissent from Commissioner Danly

On January 27, 2023, FERC approved the Midcontinent Independent System Operator, Inc. (“MISO”) Transmission Owners’ (“TOs”) proposal to terminate reactive power charges and compensation under MISO’s Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”), effective December 1, 2022.  As a result, MISO will no longer charge transmission customers for reactive power service within the standard power range, and no generators, whether affiliated with the MISO TOs or not, will receive compensation for providing reactive power service within the standard power factor range.  Nevertheless, FERC’s determination does not affect MISO generators’ ongoing obligation to provide reactive power.  If MISO directs a generator to provide reactive power outside of the standard power factor range, the generator will be compensated based on existing mechanisms already included in MISO’s Tariff.  Continue Reading FERC Allows MISO Transmission Owners to Retroactively Terminate Reactive Power Compensation Back to December 2022

On January 19, 2023, the Commission issued a final rule that directs the North American Electric Reliability Corporation (“NERC”) to develop and submit reliability standards for monitoring high and medium impact bulk electric systems with high-speed internet connections. The Commission stated that the new reliability standards would assist entities in monitoring network traffic inside the bulk electric systems and detecting unauthorized activity inside those systems.Continue Reading FERC Directs NERC to Develop Internal Network Security Monitoring for High and Medium Impact Bulk Electric System Cyber Systems