On January 10, 2020, the Council on Environmental Quality (CEQ) published the long-awaited proposed rule to amend its regulations implementing the National Environmental Policy Act of 1969 (NEPA).  The statute, sometimes pejoratively referred to as a “paper-tiger,” requires a federal agency to take a hard look at the environmental impacts of certain proposed projects, but does not mandate any particular outcome.

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On December 20, 2019, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) denied petitions for review of a series of FERC orders that exempted certain North Carolina transmission customers of Virginia Electric and Power Company (“Dominion”) from the incremental costs to underground certain transmission lines in the Virginia portion of the Dominion’s service territory.  The challenges were brought by certain Virginia transmission customers of Dominion Energy, which sought to overturn FERC’s determination that only Dominion’s Virginia wholesale customers, not its North Carolina customers, should bear the costs of undergrounding three transmission line upgrade projects. Continue Reading D.C. Circuit Affirms FERC Undergrounding Decision

On December 30, 2019, FERC accepted, subject to further compliance, revisions to PJM Interconnection, L.L.C.’s (“PJM”) Price Responsive Demand (“PRD”) program to align the program’s rules and requirements with those applicable to supply-side “Capacity Performance Resources” participating in PJM’s capacity market. PJM previously submitted PRD revisions in February 2019, but FERC rejected PJM’s filing in a June 2019 order, on the basis that PJM’s proposed method for calculating the Nominal PRD Value—i.e., the MW amount to be curtailed—was inconsistent with the manner in which PJM calculated a Load Serving Entity’s (“LSE”) capacity supply obligation (see July 18, 2019 edition of the WER). FERC’s December 30 order accepted PJM’s proposal to maintain the existing Nominal PRD Value calculation based on a LSE’s capacity obligation, which is itself derived from the LSE’s annual coincident peak demand. In response to a protest from PJM’s Independent Market Monitor (“IMM”), FERC also required PJM to clarify on compliance that an LSE is not eligible to receive certain bonus payments for load reductions during system emergencies when the prevailing LMP has not reached the applicable trigger price. Continue Reading FERC Accepts Revisions to PJM’s Price Responsive Demand Program

On December 30, 2019, FERC accepted tariff revisions by the California Independent System Operator Corporation (“CAISO”) to apply three previously accepted-interim provisions designed to address the Aliso Canyon natural gas storage facility’s (“Aliso Canyon”) continued operational limitations and impacts on CAISO’s system.

Continue Reading FERC Accepts CAISO’s Tariff Revisions Addressing Aliso Canyon Natural Gas Constraints

On December 19, 2019, FERC issued a long-awaited order in which it directed PJM Interconnection, L.L.C. (“PJM”) to apply its Minimum Offer Price Rule (“MOPR”) to all state-subsidized capacity resources (“December 2019 Order”). FERC also adopted limited grandfathering and exemptions for certain resources.  The December 19 Order will have a significant impact on PJM’s capacity market. PJM requires resources subject to the MOPR to offer into the PJM capacity auctions at or above a PJM-determined offer floor. When this floor is above capacity auction clearing prices, the resource does not clear the market or receive any capacity market revenue. Capacity prices are also higher than they would be had the resource cleared the market. Continue Reading FERC Orders PJM to Apply the Minimum Offer Price Rule to All Resources Receiving “State Subsidies”

On December 12, 2019, the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) issued an opinion affirming in part and reversing in part a bankruptcy court’s assertion of exclusive and unlimited jurisdiction over certain of FirstEnergy Solutions’ (“FES”) power purchase agreements that FERC had previously approved under the Federal Power Act (“FPA”) and that FES sought to reject in bankruptcy. While the Sixth Circuit agreed that the bankruptcy court has jurisdiction to decide whether FES may reject the contracts, it rejected the bankruptcy court’s decision to enjoin FERC from taking any action relating to the contracts, and permitting FES to reject the contracts. Characterizing the bankruptcy court’s decision as “a rash and unnecessary overreach,” the Sixth Circuit held that the injunction issued against FERC was overly broad, and the bankruptcy court’s standard for deciding whether to permit FES to reject the contracts too limited. The Sixth Circuit also rejected the bankruptcy court’s sole application of the business judgment rule to decide whether to permit FES to reject the contracts at issue. Rather, the Sixth Circuit held that the court should have also taken public interest considerations into account, and should have invited FERC to participate and provide an opinion in accordance with the FPA. Judge Richard Allen Griffin penned separate opinion dissenting in part, in which he concluded that the bankruptcy court exceeded its jurisdiction and infringed on FERC’s exclusive jurisdiction to decide whether to modify or abrogate a filed rate. Continue Reading Sixth Circuit Holds that Bankruptcy Courts Must Permit FERC Participation in Bankruptcy Proceedings Considering Rejection of FERC-Jurisdictional Contracts

On December 2, 2019, FERC staff (“Staff”) issued its annual report (“Report”) on demand response and advanced metering, a high-level review of demand response potential in the retail and wholesale markets. In the Report, Staff highlights that: (i) advanced meters account for more than half of all meters in operation in the United States, (ii) multiple states have received approval for, or proposed, advanced meter deployment programs, (iii) many state regulators appear to support advanced meter investments, and (iv) from 2017 to 2018, there was an almost 8% increase in the overall demand response participation in wholesale markets. Continue Reading FERC Staff Issues 2019 Assessment of Demand Response and Advanced Metering

On December 6, 2019, a bipartisan group of ten U.S. Senators wrote to FERC Chairman Neil Chatterjee asking for assurances that FERC fully appreciates the threat posed to the nation’s energy infrastructure by the use of equipment manufactured by Huawei Technologies Co., Ltd. (“Huawei”).  The letter praised FERC’s creation of a new cybersecurity division and expressed hope that the new division’s first objective would be defending the nation’s infrastructure against threats posed by the use of Huawei’s equipment. Continue Reading Bipartisan Group of Senators Seek FERC Assurances Regarding Huawei Equipment Threat

On December 10, 2019 FERC accepted ISO New England Inc.’s (“ISO-NE”) proposed revisions to its Tariff to enhance the competitive transmission solicitation process and make additional improvements to ISO-NE’s transmission planning process (“Transmission Planning Improvements”). ISO-NE’s proposal was joined by New England Power Pool Participants Committee and the Participating Transmission Owners Administrative Committee (collectively, “Filing Parties”). The Filing Parties’ Transmission Planning Improvements went into effect on December 10, 2019.

Continue Reading FERC Accepts Changes to ISO-NE’s Competitive Transmission Solicitation Process

On December 9, 2019, the U.S. Supreme Court decided not to revisit the U.S. Court of Appeals for D.C. Circuit’s decision in Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (2019), allowing the lower court’s ruling to stand.  The key holding of the D.C. Circuit’s opinion, which concerned the ongoing Federal Energy Regulatory Commission’s (“FERC”) relicensing of the Klamath Hydroelectric Project, is that the States of California and Oregon waived their authorities under section 401 of the Clean Water Act (CWA), 33 U.S.C. § 1341, by failing to rule on the applicant’s submitted request for water quality certification within one year.  The D.C. Circuit held that the plain language of CWA section 401 establishes a maximum period of one year for states to act on a request for water quality certification.  Accordingly, the court further held that FERC erred in concluding that the “withdrawal-and-resubmittal” of the water quality certification application on an annual basis resets the one-year statutory time period for state action under section 401. Continue Reading Supreme Court Declines to Hear Clean Water Act Section 401 Case