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

On June 29, 2018, FERC rejected proposals by Calpine Corporation (“Calpine”) and PJM Interconnection, L.L.C. (“PJM”) to address what they view as shortcomings in PJM’s capacity markets resulting from what they characterize as state subsidy programs that suppress capacity prices (the “June 29 Order”).  Continue Reading FERC Rejects PJM’s Proposed Tariff Revisions and Initiates Section 206 Proceeding

On July 2, 2018, FERC denied ISO New England Inc.’s (“ISO-NE”) request for waiver of its Transmission, Markets, and Services Tariff (“Tariff”) and instituted a Federal Power Act (“FPA”) section 206 proceeding because, according to FERC, the Tariff may be unjust and unreasonable.  Specifically, ISO-NE requested waiver of certain provisions in its Tariff in order to delay the retirement of two generating units owned by Exelon Generation Company, LLC (“Exelon”) for fuel security purposes.  FERC denied the waiver request and preliminarily found that the Tariff did not sufficiently address specific regional fuel security concerns.  Continue Reading FERC Finds ISO-NE’s Tariff May Not Adequately Address Fuel Security Concerns

On June 29, 2018, FERC approved the California Independent System Operator, Inc.’s (“CAISO”) revisions to its congestion revenue rights (“CRR”) auction intended to address the shortfall between CRR auction revenues and amounts owed by CAISO to holders of auctioned CRRs.  Specifically, CAISO proposed to (1) require CAISO transmission owners to submit all known transmission maintenance outages for the next year by July 1, rather than October 15; and (2) limit the allowable source and sink pairs eligible for the CRR auction to pairs associated with supply delivery and to exclude non-delivery CRR pairs. Continue Reading FERC Approves Changes to CAISO’s Congestion Revenue Rights Auction