On August 9, 2019, the Federal Energy Regulatory Commission (“FERC”) ruled that hundreds of millions of dollars of ongoing and future investments by Chelan County Public Utility District (“Chelan PUD”) in the Rock Island Hydroelectric Project qualified as early-action investments under the new section 36(c) of the Federal Power Act (“FPA”). Accordingly, FERC will consider these significant investments when the Rock Island Project undergoes relicensing of its FERC license prior to the 2028 expiration of the license.
On July 25, 2019, FERC issued an order directing PJM Interconnection, L.L.C. (“PJM”) “not to conduct the 2019 BRA” (Base Residual Auction) in August (“July 2019 Order”). The 2019 BRA, which will procure capacity for the 2022-2023 Delivery Year, was already delayed from May to August while FERC considered how to apply the PJM Minimum Offer Price Rule (“MOPR”) to resources which receive out-of-market support, including Zero Emissions Credits (“ZECs”) and Renewable Energy Credits (“RECs”). If the MOPR were applied to units receiving ZECs, RECs, or other out-of-market support, it is expected capacity market prices would be higher in some regions, and market revenues may be lower for some generators receiving ZECs or RECs or their off-takers. Continue Reading FERC Directs PJM to Further Delay its 2019 Capacity Auction
On July 23, 2019, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) ruled that state substantive law should be used as the federal standard when determining landowners’ compensation in condemnation actions brought by private entities acting under the Natural Gas Act of 1938 (“NGA”). The Third Circuit ruling reversed a decision by the U.S. District Court for the Middle District of Pennsylvania (“District Court”) and remanded the case for further proceedings. Continue Reading Third Circuit Holds that State Law Controls in Pipeline Eminent Domain Just Compensation Dispute
On July 18, 2019, FERC affirmed on remand its prior approval of Pacific Gas and Electric Company’s (“PG&E”) request for a return-on-equity (“ROE”) incentive adder to its transmission rates (“RTO-Participation Incentive”) for its ongoing membership in the California Independent System Operator Corporation (“CAISO”). In its decision, which followed from a 2018 remand from the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), FERC reasserted its jurisdiction over such transmission incentive questions and determined that, absent a relevant mandate under California law requiring PG&E’s participation in CAISO, the RTO-Participation Incentive was warranted because it induces PG&E to continue its CAISO membership. Continue Reading FERC Reaffirms PG&E Transmission Rate Incentive Eligibility
On July 23, 2019, FERC Chairman Neil Chatterjee announced that the Commission is establishing a new Division of LNG Facility Review & Inspection (“DLNG”), within its Office of Energy Projects, to handle the growing number of complex applications to site, build, and operate liquified natural gas export terminals. Prior to the establishment of this division, FERC had only thirteen staff dedicated to reviewing and analyzing applications for LNG facilities. With the expansion, however, the DLNG will have twenty dedicated staff in FERC’s Washington, D.C. headquarters and eight staff in the Commission’s new Houston Regional Office. In its press release describing its new office, Chairman Chatterjee stated that Houston was chosen for DLNG’s second location because a significant amount of work related to the LNG projects, along with the necessary expertise, is in and around the Houston area.
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On July 18, 2019, FERC issued a final rule (“Order No. 860”) revising its data collection and reporting requirements for market-based rate (“MBR”) sellers (“MBR Sellers”). FERC will require MBR Sellers to provide certain information about corporate relationships and affiliations through a “relational database” that FERC will implement over the next year and a half. Among other things, FERC adopted reforms to (1) revise the scope of ownership information provided by MBR Sellers in their market-based rate filings; (2) change the information to be included in an asset appendix; (3) require MBR Sellers to submit monthly updates to their relational database; (4) require MBR Sellers to file quarterly notices of change in status, instead of 30 days after the change in status; and (5) remove the existing requirement that MBR Sellers submit corporate organization charts. Notably, FERC declined to adopt its proposal requiring MBR Sellers to submit “Connected Entity” information. Continue Reading FERC Revises Data Submission Requirements for Market-Based Rate Sellers
On July 18, 2019, FERC issued Order No. 861, modifying its regulations regarding the horizontal market power analysis required to obtain authorization to sell energy, capacity, or ancillary services at market-based rates. FERC adopted its proposal (see December 20, 2018 edition of the WER) to relieve electric power sellers of the obligation to submit indicative screens to obtain or retain market-based rate authority in any Regional Transmission Organization (“RTO”)/Independent System Operator (“ISO”) market with FERC-approved RTO/ISO monitoring and mitigation. Market-based rate sellers (“MBR Sellers”) must continue to submit indicative screens for authorization to make capacity sales in any RTO/ISO that lacks an RTO/ISO-administered capacity market subject to FERC-approved monitoring and mitigation—currently, the California Independent System Operator (“CAISO”) and Southwest Power Pool (“SPP”). FERC stated its intent for the rule is to ease regulatory burdens on MBR Sellers while simultaneously preserving its authority to prevent the exercise of market power. Continue Reading FERC Eliminates Obligation to Submit Indicative Screens to Obtain Market-Based Rate Authority in Certain Wholesale Markets
On July 19, 2019, FERC largely denied four complaints filed in May and June of 2015 (“2015 Complaints”) concerning the results of the Midcontinent Independent System Operator, Inc.’s (“MISO”) 2015/16 Planning Resource Auction (“2015/16 Auction”) for Local Resource Zone 4 (“Zone 4”). In relevant part, FERC: (1) found that the results of the 2015/16 Auction for Zone 4 were just and reasonable; and (2) denied requests to hold an evidentiary hearing to resolve issues related to the 2015/16 Auction. Specifically, FERC found no evidence in the record indicating that certain Auction offers violated the MISO Tariff, and the resulting Zone 4 auction-clearing price was just and reasonable. Continue Reading FERC Addresses Complaints Regarding Market Manipulation in MISO 2015/16 Capacity Auction
On July 18, 2019, FERC issued an order denying in part and granting in part a request for clarification or rehearing of Order No. 856, which revised its regulations relating to interlocking officers and directors. FERC provided additional clarification and explanation, but declined to make any further revisions or to allow rehearing. Continue Reading FERC Grants Partial Clarification of Final Rule on Interlocking Directorates
On June 24, 2019, FERC issued an order rejecting, without prejudice, Midcontinent Independent System Operator’s (“MISO”) and the MISO Transmission Owners’ (“MISO TOs”) proposal to allocate MISO’s share of the costs of certain interregional economic transmission projects with PJM Interconnection, L.L.C. (“PJM”) and Southwest Power Pool, Inc. within the MISO footprint (“Interregional Cost Allocation Proposal”). FERC explained that it rejected the Interregional Cost Allocation Proposal because it referenced and relied on certain provisions contained within a related, regional cost allocation proposal that FERC rejected as inconsistent with cost causation principles in a concurrently-issued order (see July 18, 2019 edition of the WER ). The June 24 order also rejected MISO’s submission of the Interregional Cost Allocation Proposal in a compliance filing in a separate complaint proceeding. FERC directed MISO to submit a new compliance filing either to confirm that an existing cost allocation method will apply to interregional projects, or to propose a new cost allocation method for these projects. Continue Reading FERC Rejects MISO Interregional Cost Allocation Proposal; Directs Further Compliance Filings