On January 31, 2020, FERC rejected Southwest Power Pool, Inc.’s (“SPP”) proposed Tariff revisions to eliminate SPP’s current policy of offering transmission revenue credits as reimbursement for certain transmission network upgrades, and to instead provide term- and value-limited transmission congestion rights for all such upgrades. Under SPP’s proposal, a party that funds certain network upgrades would receive incremental transmission congestion rights for a limited term of up to twenty years or until the party that sponsored the upgrade recovered their costs, with interest. FERC held that this cap on recovery would disincentivize construction of merchant transmission projects, and rejected SPP’s proposal without prejudice to SPP submitting a revised proposal that does not impose a cap on the term and value of the incremental transmission congestion rights.
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On January 24, 2020, FERC issued its rehearing order on several different issues regarding the recovery of costs associated with the abandoned Potomac-Appalachian Transmission Highline Project (“PATH”). Previously, in January 2017, FERC reduced PATH’s return on equity (“ROE”) during its abandonment phase from 10.4 to 8.11 percent, and denied PATH’s recovery of expenditures related to certain public relations activities. On rehearing, FERC:

  1. Upheld its prior determination that the project’s abandonment significantly reduced its risk profile;
  2. Declined to address PATH’s arguments that FERC erred in reducing its ROE to 8.11 percent, and instead established a paper hearing addressing whether and how FERC’s proposed revised base ROE methodology should apply; and
  3. Reversed its prior denial for PATH to recover expenditures related to public information campaigns about the benefits and licensing of the project.
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On January 10, 2020, FERC issued two separate orders approving Stipulation and Consent Agreements (“Agreements”) between the Office of Enforcement (“Enforcement”) and Emera Energy Incorporated (“Emera Energy”) and Exelon Generation Company, LLC (“Exelon”), respectively. Both Agreements relate to alleged violations of ISO New England Inc.’s (“ISO-NE”) Tariff. Specifically, with respect to Emera Energy, FERC alleged that Emera Energy violated the Tariff’s requirement that evidence supporting Fuel Price Adjustment Requests (“FPA Requests”) must reflect an arm’s length transaction. With respect to Exelon, FERC alleged that Exelon misreported the type and quantity of start-up fuel used by its Mystic 7 generating unit (“Mystic 7”). In both cases, FERC found that the Agreements were in the public interest and the Enforcement investigations were resolved on fair and equitable terms.

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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.
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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.

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On November 26, 2019, FERC rejected, without prejudice, various filings from Basin Electric Power Cooperative (“Basin”) to establish FERC-jurisdictional rates, terms, and conditions of wholesale power and transmission service ahead of certain anticipated changes among Basin’s member cooperatives that would trigger FERC jurisdiction. FERC generally rejected the filings as “patently” deficient.
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On December 3, 2019, FERC denied a challenge filed by Southern Maryland Electric Cooperative, Inc. (“SMECO”) challenging Potomac Electric Power Company’s (“Pepco”) balance of prepaid pension assets (“Prepaid Pension Assets”) included in Pepco’s annual transmission rate update. FERC found that SMECO did not raise any serious doubt about the prudence of the Prepaid Pension Assets and that Pepco’s inclusion of a portion of the Prepaid Pension Assets amount in its rate base was reasonable.
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On November 18, 2019, Anbaric Development Partners, LLC (“Anbaric”) filed a complaint against PJM Interconnection, L.L.C. (“PJM”) alleging that PJM’s transmission interconnection procedures deny meaningful open access interconnection service to merchant transmission projects designed to connect remote generation resources, including offshore wind generation, to the PJM transmission system (“Transmission Platform Projects”). Anbaric requested that FERC: find that the PJM Tariff is unjust, unreasonable and unduly discriminatory or preferential because it does not provide Transmission Platform Projects the opportunity to obtain material interconnection rights; direct that Transmission Platform Projects be given the opportunity to obtain material interconnection rights; and order PJM to modify its Tariff to include a new category of Transmission Platform Projects to connect remote renewable generation facilities to the PJM Transmission System. Anbaric also requested that any order from FERC apply to all of Anbaric’s projects with positions in PJM’s interconnection queue as of the date of its complaint.
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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.
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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. 
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