On July 24, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) affirmed FERC’s 2015 and 2016 orders denying challenges to ISO New England’s (“ISO-NE”) ninth and tenth Forward Capacity Auctions (“FCA 9” and “FCA 10”) and approving the results of those auctions.  The D.C. Circuit found that petitioners, Utility Workers Union of America Local 464 and its President, Robert Clark, failed to establish standing to challenge the FERC orders approving the results of FCA 9 and FCA 10. Continue Reading D.C. Circuit Affirms FERC Finding of No Manipulation in ISO-NE Capacity Market Auction

On July 26, 2018, FERC approved AEP Energy Partners, Inc.’s (“AEP Energy”) request that Sharyland Utilities, L.P., AEP Texas, Inc., and Electric Transmission Texas, LLC (collectively, “Tie Owners”) provide AEP Energy with transmission service across interconnections between the Electric Reliability Council of Texas (“ERCOT”) and the Mexcian Comisión Federal de Electricidad (“CFE”) transmission system.  In issuing that ruling, FERC seemingly went out of its way to suggest that if two proposed transmission projects – unrelated to AEP Energy’s request – are completed, the interconnections between ERCOT and the CFE system could result in interstate power flows in ERCOT.  While the Commission did not go any further other than to point out this fact, if FERC finds that such interstate power flows exist, FERC could potentially subject utilities in ERCOT to FERC’s plenary Federal Power Act (“FPA”) jurisdiction. Continue Reading FERC Suggests Interstate Power Flows Could Be Coming to ERCOT

On July 25, 2018, the U.S. Court of Appeals for the Fourth Circuit (“Fourth Circuit”) affirmed the U.S. District Court for the Western District of Virginia’s (“District Court”) opinion rejecting landowners’ constitutional challenge provisions of the Natural Gas Act (“NGA”) regarding the natural gas pipeline certificate process.  Specifically, the Fourth Circuit agreed that the District Court lacked jurisdiction to review the complaint, finding that Congress intended the complaint to be brought before FERC instead. Continue Reading Fourth Circuit Dismisses Constitutional Challenges to NGA Pipeline Certificate Process

On July 18, 2018, FERC affirmed its Revised Policy Statement on Treatment of Income Taxes (“Revised Policy Statement”), where FERC stated that it will generally not permit master-limited partnerships (“MLPs”) to recover income tax allowance in their cost of service.  In doing so, FERC dismissed requests for clarification and rehearing of its Revised Policy Statement, reiterating that tax pass-through entities (including MLPs) that recover an income tax allowance in addition to a return on equity (“ROE”) based on the discounted cash flow (“DCF”) methodology double recover investors’ tax costs.  FERC did however explain that while pass-through entities may eliminate previously-accumulated sums of accumulated deferred income tax (“ADIT”) from their cost of service, they did not need to refund those ADIT balances to ratepayers.  Continue Reading FERC Affirms Policy on Income Tax Allowance for Gas Pipelines

On July 18, 2018, FERC issued Order No. 849, finalizing its procedures and regulations regarding the effect of reduced corporate income taxes on certain natural gas pipelines and their rates at FERC.  Notably, Order No. 849 requires interstate natural gas pipelines to submit “FERC Form No. 501-G,” an abbreviated cost and revenue study designed to illustrate the effect of reduced corporate tax rates, which FERC might then use to determine whether the pipeline’s rates may be unjust and unreasonable under the Natural Gas Act (“NGA”).  Continue Reading FERC Finalizes Procedures for Evaluating Income Tax Cuts on Gas Pipeline Rates

On July 19, 2018, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued a Notice of Proposed Rulemaking (“NOPR”) that would update FERC’s regulations regarding interlocking positions.  According to the NOPR, the proposed revisions to parts 45 and 46 of the Commission’s regulations aim to “reflect statutory changes to the circumstances in which an applicant who would otherwise require Commission authorization to hold an interlocking position need not do so.” Continue Reading FERC Proposes Reforms to Regulations Governing Interlocking Positions

On July 13, 2018, pursuant to section 205 of the Federal Power Act (“FPA”), FERC accepted and set for hearing a cost-of-service agreement between Constellation Mystic Power, LLC (“Mystic”), Exelon Generation Company, LLC (“Exelon”), and ISO New England Inc. (“ISO-NE”) providing cost-of-service compensation to Mystic for continued operation of two gas-fired generating units (“Mystic 8 and 9”) to ensure fuel security in New England.  Commissioners Powelson and Glick dissented. Continue Reading FERC Accepts and Sets for Hearing Cost-of-Service Compensation Agreement

On July 10, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) rejected the Delaware Riverkeeper Network’s and its director Maya van Rossum’s (collectively, “Appellants”) claim that FERC is incentivized to approve new natural-gas pipeline certificates in order to secure itself future funding sources.  The D.C. Circuit also rejected Appellants’ challenge to FERC’s use of tolling orders to meet its statutory deadlines for taking action on rehearing applications. Continue Reading D.C. Circuit Rejects Challenges Alleging FERC Due Process Violations

On July 5, 2018, the Midcontinent Independent System Operator, Inc. (“MISO”) proposed to restore provisions in its Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) to allow Transmission Owners the discretion to elect to provide initial funding for network upgrades.  MISO filed its proposed Tariff changes after the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) vacated earlier FERC orders that required MISO interconnection customers’ consent before allowing Transmission Owner funding of interconnection-related network upgrades.  Continue Reading MISO Proposes to Reinstate Prior Transmission Owner Network Upgrade Funding Mechanism

On July 9, 2018, FERC denied Cloverland Electric Cooperative’s (“Cloverland”) application to terminate its mandatory obligation under the Public Utilities Regulatory Policies Act of 1978 (“PURPA”) to purchase electric energy and capacity from qualifying cogeneration or small power production facilities (“QF”) with a net capacity in excess of 20 megawatts.  In denying the request, FERC emphasized that direct membership in regional transmission organizations or independent system operators is necessary to meet the exemption Cloverland requested under PURPA. Continue Reading FERC Denies Application to Terminate PURPA Mandatory Purchase Obligation