On March 15, 2018, FERC issued three interrelated orders regarding the creation of a new Transco within the Southwest Power Pool, Inc. (“SPP”), the integration of a new Transmission Owner within SPP, and the allocation of existing transmission costs for new transmission owners within the region.  The package of orders stems from South Central MCN LLC’s (“South Central”) acquisition of transmission facilities from a public power entity, the City of Nixa, Missouri. Continue Reading FERC Issues Orders Regarding SPP’s Allocation of Existing Facility Transmission Costs for New Transmission Owners

On March 14, 2018 and March 15, 2018, FERC issued separate orders (1) reinstating the certificate for the Southeast Market Pipelines Project (“SMP Project”) and (2) authorizing DTE Midstream Appalachia, LLC’s (“DTE”) Birdsboro Pipeline Project.  In approving the projects, FERC held that determining the significance of the indirect effect of a pipeline on downstream greenhouse gas (“GHG”) emissions is not possible for purposes of FERC’s National Environmental Policy Act (“NEPA”) analysis, and that the Social Cost of Carbon tool is not appropriate for estimating a project’s downstream impacts in FERC’s NEPA analysis.  In partial dissents, Commissioners Cheryl LaFleur and Richard Glick asserted that GHG emissions estimates and the Social Cost of Carbon tool can inform FERC’s Natural Gas Act (“NGA”) section 7 evaluation. Continue Reading FERC Certificate Orders Address Estimates of Pipeline Impacts on Downstream GHG Emissions

On March 12, 2018, the U.S. Court of Appeals for the Second Circuit (“Second Circuit”) held that the New York Department of Environmental Conversation (“NY DEC”) waived its authority to act on Millennium Pipeline Company, L.L.C.’s (“Millennium”) application for a Clean Water Act (“CWA”) section 401 water quality certification by not acting on the application within one year of receipt.  In doing so, the Second Circuit rejected the NY DEC’s argument that the one-year statutory deadline begins when a state agency deems the application complete, rather than when the application is received. Continue Reading Second Circuit Affirms FERC Ruling that NY DEC Waived Authority on CWA Permit for Pipeline Project

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. Continue Reading A Divided FERC Approves ISO-NE’s Capacity Market Changes to Accommodate State Subsidized Resources

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. Continue Reading FERC Addresses Impact of Tax Cuts on Rates for Energy Companies and Eliminates Income Tax Allowance for Master Limited Partnerships

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. Continue Reading Trump Orders Steel and Aluminum Tariffs

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. Continue Reading D.C. Circuit Defers to FERC’s Qualitative Approach for Establishing Term for Hydroelectric Project Licenses

On March 5, 2018, FERC accepted PJM Interconnection, L.LC.’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.  Continue Reading FERC Accepts PJM’s Load-Ratio Share and Solution-Based DFAX Proposal

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. Continue Reading D.C. Circuit Affirms FERC Refund Denial in Louisiana PSC Cost Allocation Challenge

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. Continue Reading D.C. Circuit Grants FERC Extra Time to Reissue Approval of SE Market Pipelines Project