On November 21, 2019, FERC issued Opinion No. 569, adopting a revised methodology to determine whether an established rate of return on equity (“ROE”) is just and reasonable under Section 206 of the Federal Power Act. Additionally, FERC applied this new methodology to two complaint proceedings involving the base ROEs of Midcontinent Independent System Operator, Inc. (“MISO”) transmission owners (“TOs”). FERC found first that the MISO TOs’ ROE of 12.38 percent in the first complaint (“First Complaint”) was unjust and unreasonable, and ordered refunds based on this finding. FERC then found that the MISO TOs’ ROE of 9.88 percent in the second complaint (“Second Complaint”) fell within the range of presumptively just and reasonable ROEs, and subsequently dismissed the complaint. Commissioner Glick dissented in part, stating that refunds should have been ordered with regard to the Second Complaint. Continue Reading FERC Revises ROE Methodology, Applies New Approach in Complaints Against MISO TOs

On November 21, 2019, FERC’s Office of Enforcement (“OE”) released its thirteenth annual Report on Enforcement (“Report”) to provide an update about its activities during the last fiscal year (i.e., 12-months ending September 30, 2019; hereinafter “FY2019”). The Report provides an overview of, and statistics reflecting, the activities of OE’s Divisions of Investigations (“DOI”), Division of Audits and Accounting (“DAA”), Division of Analytics and Surveillance (“DAS”), and Division of Energy Market Oversight (“DEMO”). Continue Reading FERC Issues 2019 Report on Enforcement

On November 22, 2019, FERC issued three separate orders accepting, subject to further compliance, California Independent System Operator Corporation’s (“CAISO”), the Midcontinent Independent System Operator, Inc.’s (“MISO”), and ISO New England, Inc.’s (“ISO-NE”) proposals to comply with FERC Order Nos. 841 and 841-A—addressing energy storage resources’ (“ESR”) participation in Regional Transmission Organization/Independent System Operator (“RTO/ISO”)-operated markets (see February 20, 2018 edition of the WER; April 10, 2019 edition of the WER; and May 22, 2019 edition of the WER for more background and context on Order No. 841). The November 22 orders, which follow FERC’s previous acceptance of PJM Interconnection, L.L.C.’s and Southwest Power Pool, Inc.’s storage participation proposals (see October 24, 2019 edition of the WER), found that the RTOs/ISOs generally complied with the requirements of Order No. 841. FERC ordered certain modifications to each RTO’s/ISO’s proposals, addressing metering and accounting practices, ESR bidding parameters, minimum size requirements, and transmission service charges, in addition to other issues. Commissioner McNamee issued separate opinions concurring with all three orders. Continue Reading FERC Conditionally Accepts CAISO, MISO, and ISO-NE Order No. 841 Energy Storage Participation Proposals

On November 21, 2019, FERC announced that public utilities with transmission formula rates must revise those rates to account for changes in accumulated deferred income taxes (“ADIT”) resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”). Utilities with transmission formula rates under an Open Access Transmission Tariff, a transmission owner tariff, or a rate schedule must:

  • include a mechanism to deduct any excess ADIT from, or add any deficient ADIT to, their rate base in order to ensure rate base neutrality (the “Rate Base Adjustment Mechanism”);
  • return to, or recover from, customers any excess or deficient ADIT through an adjustment to the formula rate’s income tax allowance (“Income Tax Allowance Adjustment Mechanism”); and
  • incorporate a new permanent worksheet into the formula rate to annually track ADIT amounts.

FERC declined to adopt any compliance requirements for transmission stated rates, finding that the utility’s next rate case would be the most appropriate place to address excess or deficient ADIT resulting from the TCJA. Compliance filings are due the later of: (1) 30 days from the effective date of the final rule; or (2) the utility’s next informational filing following the final rule.  Continue Reading FERC: Transmission Formula Rates Must Account for Excess/Deficient ADIT following Tax Rate Change

On November 14, 2019, the Senate Committee on Energy and Natural Resources (“Committee”) held a hearing to consider the nomination of Dan Brouillette as Secretary of Energy. Mr. Brouillette is currently DOE’s Deputy Secretary, and has been nominated by President Trump to replace outgoing Secretary Rick Perry. Continue Reading Nominee for DOE Secretary Dan Brouillette Testifies Before Senate Committee on Energy and Natural Resources

On November 8, 2019, Representative Frank Pallone, Jr. (D-NJ), Chairman of the House  Energy and Commerce Committee, and Representative Bobby L. Rush (D-IL), Chairman of the Subcommittee on Energy (collectively the “Chairmen”), wrote a letter to FERC Chairman Neil Chatterjee expressing their concerns regarding FERC’s proposed changes to sections 201 and 210 of the Public Utility Regulatory Policies Act (“PURPA”). Continue Reading House Energy and Commerce Chairs Pen Letter to FERC on Proposed PURPA Reform

On October 17, 2019, FERC denied requests for rehearing filed by the California State Water Resources Control Board (“SWRCB”) and conservation organizations in response to the Commission’s unanimous April 18, 2019 order finding that SWRCB had waived its authority under section 401(a)(1) of the Clean Water Act (“CWA”), 33 U.S.C. § 1641, to issue a water quality certification for the relicensing of Placer County Water Agency’s Middle Fork American River Hydroelectric Project (“Middle Fork Project”) (see April 24, 2019 edition of the WER). Continue Reading FERC Denies Rehearing of Order Finding that California Waived Clean Water Act Authority

On October 17, 2019, FERC amended its Policy Statement on Consultation with Indian Tribes in Commission Proceedings (“Policy Statement”) by adding a specific reference to treaty rights, noting that the Commission addresses input from tribes in its National Environmental Policy Act (“NEPA”) documents, and adding consultation with Alaska Native Corporations to the Policy Statement. Continue Reading FERC Revises Policy Statement on Tribal Consultation

On August 29, 2019, FERC issued a final rule revising 18 C.F.R. § 385.2001(a) and requiring that all physical filings and submissions to be delivered to FERC, other than those sent via the U.S. Postal Service (“USPS”) are to be sent to FERC’s off-site security screening facility in Rockville, Maryland (see September 17 edition of the WER).  The rule was scheduled to go into effect on November 4, 2019, 60 days after its publication in the Federal Register. Continue Reading FERC Postpones Effective Date of Filing Regulation

On October 17, 2019, pursuant to the America’s Water Infrastructure Act (AWIA) of 2018, FERC issued a guidance document for applicants seeking preliminary permits or licenses for closed-loop pumped storage projects at abandoned mine sites.  It also issued a list of 230 existing nonpowered federal dams that FERC—along with the Secretaries of the Interior, Army, and Agriculture (collectively, the Secretaries)—determined have the greatest potential for nonfederal hydropower development. Continue Reading FERC Issues Guidance for Closed-Loop Pumped Storage Projects at Abandoned Mines and List of Nonpowered Dams with Potential for Non-Federal Hydroelectric Development