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 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 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

In an order issued February 15, 2018 (“February 15 Order”), FERC found that several transmission owners participating in the PJM Interconnection, L.L.C. (“PJM”) market have been acting inconsistently with FERC Order No. 890, and that certain terms and conditions in PJM’s Open Access Transmission Tariff (“OATT”) are unjust and unreasonable.  In particular, FERC concluded that the PJM transmission owners’ planning processes ran afoul of the coordination and transparency principles in Order No. 890 by allowing the incumbent transmission owners to bypass input and, effectively, competition, from other transmission planning stakeholders.  FERC ordered the transmission owners to revise the OATT and Operating Agreement in compliance with Order No. 890. Continue Reading FERC Finds PJM Transmission Owner Supplemental Project Planning Process Violates Order No. 890 and PJM Operating Agreement

On February 2, 2018, FERC conditionally granted FirstEnergy Service Company (“FirstEnergy”) a limited waiver of certain market-based rate affiliate restrictions to allow for the establishment of a centralized regional transmission organization (“RTO”) interface group.  The affiliate restrictions protect captive customers from potential harm if a franchised public utility interacts with its affiliates in ways that would transfer benefits to the affiliate to the detriment of the captive customer.  FERC granted the waiver to FirstEnergy, with the condition that it must keep sufficient records to permit the Commission to audit whether FirstEnergy’s representations that it would not harm captive customers are true. Continue Reading FERC Conditionally Allows FirstEnergy Holding Company System to Establish a Centralized RTO Interface Group

On February 2, 2018, FERC directed Commission Staff to convene a technical conference to explore issues concerning interconnection issues that affect neighboring utilities or regions.  In particular, the technical conference is to address issues raised in a complaint by EDF Renewable Energy, Inc. (“EDF”) against the Midcontinent Independent System Operator, Inc. (“MISO”), Southwest Power Pool, Inc. (“SPP”), and PJM Interconnection, L.L.C. (“PJM) related to the Affected Systems coordination procedures contained in the MISO, SPP, and PJM tariffs, the MISO-PJM Joint Operating Agreement (“JOA”), and the MISO-SPP JOA, as well as the Affected Systems coordination issues raised in FERC’s Interconnection Reform Rulemaking proceeding in Docket No. RM17-8-000 (see December 20, 2016 edition of the WER). Continue Reading FERC Establishes Technical Conference on Inter-RTO Affected Systems Interconnection Issues

On January 26, 2018, a divided panel of the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated a series of FERC orders that removed from transmission owners in the Midcontinent Independent System Operator, Inc. (“MISO”) the ability to elect to fund the construction of network upgrades on their transmission systems to accommodate the interconnection of new generation.  The D.C. Circuit vacated FERC’s orders and remanded the case back to FERC for further proceedings. Continue Reading D.C. Circuit Vacates FERC Orders on Transmission Owner Funding for Network Upgrades in MISO

On January 8, 2018, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) ruled that FERC acted arbitrarily and capriciously in approving a 50 basis-point incentive adder to Pacific Gas & Electric Company’s (“PG&E”) return on equity (“ROE”) for its participation in the California Independent System Operator Corporation (“CAISO”).  In particular, the Ninth Circuit held that FERC did not follow its precedent by approving PG&E’s incentive adder while dismissing arguments that PG&E’s ongoing membership in CAISO was required by a California Public Utilities Commission (“CPUC”) order and thus was not voluntary. Continue Reading Ninth Circuit Holds Utilities Are Ineligible for RTO Membership Adder When Membership Is Involuntary

On December 21, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to direct the North American Electric Reliability Corporation (“NERC”) to modify the cybersecurity incident reporting requirements under the Critical Infrastructure Protection (“CIP”) Reliability Standards.  According to FERC, the proposal is intended to “improve awareness of existing and future cyber security threats and potential vulnerabilities.”
Continue Reading FERC Proposes to Improve Cybersecurity Incident Report Requirements in NOPR