Justia Utilities Law Opinion Summaries

Articles Posted in US Court of Appeals for the District of Columbia Circuit
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The United States Court of Appeals for the District of Columbia Circuit examined a case involving the City of Lincoln, also known as Lincoln Electric, a public utility providing electricity to the Lincoln, Nebraska area. Lincoln Electric had invested in the Laramie River Station facilities (LRS) in eastern Wyoming as a source of generation and transmission, despite only serving customers in the Lincoln area.When Lincoln Electric joined the Southwest Power Pool (SPP) in 2009, it transferred control of all its facilities in the Lincoln area to SPP, but retained control of its LRS interest. In 2021, the SPP proposed that Lincoln Electric recover its LRS costs from Zone 19 customers, where LRS is physically located. Other co-owners of the LRS facilities recover their costs from Zone 19 customers.The Federal Energy Regulatory Commission (FERC) rejected the SPP proposal as unjust and unreasonable because Zone 19 customers neither caused Lincoln Electric's LRS investment nor benefited from it, thus violating the cost-causation principle. Lincoln Electric petitioned for review of the relevant FERC orders and the SPP intervened on Lincoln Electric's behalf.The court upheld FERC's decision, ruling that Lincoln Electric failed to demonstrate that the proposed rates were just and reasonable. The court concluded that cost allocation must reflect the costs actually caused by the customer who must pay them. In this case, Lincoln Electric's investment in the LRS was for the benefit of its own Zone 16 customers, not Zone 19 customers. As such, the court found that allocating Lincoln Electric's LRS costs to Zone 19 would violate the cost-causation principle. The petition for review was denied. View "City of Lincoln v. FERC" on Justia Law

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Congress requires transmission operators to charge reasonable rates, which must be submitted to the Federal Energy Regulatory Commission through a tariff before the rates can be levied on generators. Here, a generator, Hectate Energy, accuses a transmission grid operator, the New York Independent System Operator, of charging a rate that it had not filed with FERC. Hecate argues that the System Operator’s filed tariff was not detailed enough and that Hectate was surprised when the System Operator charged it $10 million in grid-upgrade costs to connect its power plant to the grid.FERC rejected Hectate's argument, finding that the tariff imposed by the New York Independent System Operator put Hectate on notice of the cost of grid-update costs.The D.C. Circuit agreed with FERC, denying Hectates' Petition for Review, finding the tariff was detailed enough and gave notice that the System Operator would include non-jurisdictional projects in its interconnection study to determine responsibility for upgrade costs. FERC’s order pointed to three cross-referenced sections of the tariff to find sufficient notice that the interconnection study would include information about non-jurisdictional projects. View "Hecate Energy Greene County 3 LLC v. FERC" on Justia Law

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Last year, the court ordered the Department of Energy to address three different categories of comments raised during its informal rulemaking establishing more stringent energy efficiency standards for commercial packaged boilers ("Final Rule"). In response, the Department of Energy published a supplement to the Final Rule.Petitioners, trade associations and natural gas utilities that asserted they were negatively affected by a Final Rule issued by the Department of Energy, claim that the Department of Energy's Final Rule again failed to support its reasoning and did not provide notice and comment as required under the Administrative Procedure Act.The D.C. Circuit granted Petitioners' request to vacate a Final Rule and Supplement imposed by the Department of Energy, finding that the Department failed to offer a sufficient explanation in response to comments challenging a key assumption in its analysis. View "American Public Gas Association v. DOE" on Justia Law

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LSP, an independent electric transmission developer, bids on proposals to build transmission projects throughout the U.S. LSP sought judicial review of a Federal Energy Regulatory Commission (FERC) decision under 16 U.S.C. 824e concerning ISO New England’s compliance with Commission Order 1000, which required “the removal from Commission-jurisdictional tariffs and agreements” of rights of first refusal to construct transmission facilities and directed incumbent transmission providers to engage in competitive selection of developers. FERC recognized an exception if the time needed to solicit and conduct competitive bidding would delay the project and thereby threaten system “reliability.” FERC found “insufficient evidence” that ISO was incorrectly implementing Order 1000.The D.C. Circuit denied LSP’s petition for judicial review, first holding that FERC’s ruling bears all the indicia of a substantive decision produced after a contested proceeding involving ISO and numerous intervenors and is subject to judicial review. The court found nothing irrational in FERC’s response to LSP’s general criticism of ISO’s use of more conservative assumptions regarding its system capacity and future management in determining when to apply the exception. Although the number of reliability projects exempted from competitive bidding exceeded those open to competition, the appropriate balance between competitive procurement and quick redress of reliability needs is a policy judgment for FERC. View "LSP Transmission Holdings II, LLC v. Federal Energy Regulatory Commission" on Justia Law

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This case stems from a dispute over how to allocate the costs of high-voltage facilities to transmit electricity within the mid-Atlantic planning region. At issue is a contested settlement covering high-voltage projects approved between 2007 and 2013. LIPA and Linden petitioned for judicial review and several transmission owners and state regulatory commissions, as well as PJM, have intervened in support of FERC.The DC Circuit rejected LIPA and Linden's contention that the settlement order and its hybrid allocations are arbitrary. Rather, each formula in the settlement is just and reasonable and is therefore reason enough to uphold it. Furthermore, the court noted that FERC reasonably concluded LIPA and Linden would not have done better through litigation. The court rejected the utilities' contention that the approval was inconsistent with the Seventh Circuit's decisions, with FERC's own precedent, and with an underlying cost-causation principle. The court agreed with Linden that, under the settlement, it need not make any of the payments set forth in the historical formula. Therefore, the court set aside FERC's ruling that Linden must pay Transmission Enhancement Charge adjustments and remanded for further proceedings. The court denied the petitions for review in all the respects. View "Long Island Power Authority v. Federal Energy Regulatory Commission" on Justia Law

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For seven years, NTE worked to build a natural gas-fueled power plant in Killingly, Connecticut to sell electricity on the New England grid. NTE worked with ISO, the independent system operator authorized by the Federal Energy Regulatory Commission (FERC) to manage the regional grid, to have the project “qualified” to bid for the right to sell electricity. NTE secured a “capacity supply obligation” (CSO) for the 2022 commitment period. NTE secured a guaranteed income stream for the first seven years of the plant’s operation.NTE subsequently encountered setbacks that prevented it from meeting its financing and construction goals. On November 4, 2021, NTE told ISO that it remained confident it could complete construction on time but ISO-NE asked FERC to terminate the Killingly plant’s CSO. In January 2022, FERC did so. In February, the Second Circuit issued an emergency stay of FERC’s order. FERC likely fell short of its obligation under the Administrative Procedure Act to explain its decision. Absent emergency relief, FERC’s order would have irreparably harmed NTE, preventing it from participating in an auction to sell future electricity capacity to New England consumers. Nothing in FERC’s reasoning suggests the risk that incumbents may have to reallocate electricity capacity amongst themselves outweighs the harm of delaying NTE’s project, which could benefit consumers through more efficient, less expensive electricity. View "In re: NTE Connecticut, LLC" on Justia Law

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The owners of New England electric generation facilities are paid through formula rates established by ISO New England’s (a regional transmission organization) open access transmission tariff. The owners challenged Federal Energy Regulatory Commission’s (FERC) orders approving Schedule 17, an amendment to the ISO tariff, establishing a new recovery mechanism for costs incurred by certain electric generation and transmission facilities to comply with mandatory reliability standards FERC had approved.FERC ruled that the owners could use Schedule 17 to recover only costs incurred after they filed and FERC approved a cost-based rate under the Federal Power Act (FPA), 16 U.S.C. 824d. FERC reasoned that recovery was limited to prospective costs, citing the filed rate doctrine, which forbids utilities from charging rates other than those properly filed with FERC, and its corollary, the rule against retroactive rate-making, which prohibits FERC from adjusting current rates to make up for a utility’s over- or under-collection in prior periods.The D.C. Circuit denied the petition for review. FERC’s application of the filed rate doctrine and the rule against retroactive rate-making to Schedule 17 was not arbitrary or capricious. Schedule 17 does not expressly permit recovery of mandatory reliability costs incurred prior to a facility’s individual FPA filing. View "Cogentrix Energy Power Management, LLC v. Federal Energy Regulatory Commission" on Justia Law

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The San Francisco Public Utilities Commission owns a power supply system in the Hetch Hetchy Valley and transmission lines but does not own distribution lines and relies on PG&E’s distribution system. The Commission is both a customer and a competitor of PG&E. The Federal Energy Regulatory Commission (FERC) approved PG&E’s Tariff, which stated the generally applicable terms for “open-access” wholesale distribution service. In 2019, San Francisco filed a complaint under the Federal Power Act (FPA), 16 U.S.C. 824e, 825e, 825h, challenging PG&E’s refusal to offer secondary-voltage service in lieu of more burdensome primary-voltage service to certain San Francisco sites and provide service to delivery points that San Francisco maintains are eligible for service under the Tariff’s grandfathering provision. PG&E maintained that it had not given customers the right to dictate the level of service to be received and that any denials of secondary-voltage service were supported by “technical, safety, reliability, and operational reasons.”FERC denied San Francisco’s complaint, ruling that PG&E should retain discretion to determine what level of service is most appropriate for a customer because the provider “is ultimately responsible for the safety and reliability of its distribution system.” The D.C. Circuit vacated and remanded, citing FERC’s own precedent and noting a “troubling pattern of inattentiveness to potential anticompetitive effects of PG&E’s administration of its open-access Tariff.” View "City and County of San Francisco v. Federal Energy Regulatory Commission" on Justia Law

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Duke generates electricity for Power, a “joint agency” of 32 North Carolina municipalities. Power pays Duke an Energy Charge that “reimburses Duke only for its fuel costs and variable operations and maintenance costs associated with producing the energy consumed by Power" and a Capacity Charge, designed to cover Duke’s fixed costs and provide a return on its infrastructure investments, calculated by determining its pro-rata share of the demand on Duke’s system during a one-hour “snapshot” of system usage taken during the peak hour on Duke’s system each month.Their agreement regulates activities Power may employ to modify its electricity use, including Demand-Side Management and Demand Response. Demand-Side Management involves end-users accepting an inducement to sign up for a program where Power can turn off and on their appliances around high-demand periods. Demand Response involves a supplier providing end-users information on the price of energy at a given time and those end users then modifying their consumption to avoid elevated prices.In 2019, Power petitioned the Federal Energy Regulatory Commission (FERC) arguing that the provisions that permit Demand-Side Management and Demand Response activities permit deploying battery storage technology to reduce metered demand during peak load periods and drawing from those batteries during the high-demand “snapshot” hour. Concerned that Power would reduce its Capacity Charge to zero, Duke opposed the petition. The D.C. Circuit affirmed FERC’s grant of Power’s petition, finding that the agreement permits Power to use battery storage technology as either Demand-Side Management or Demand Response. View "Duke Energy Progress, LLC v. Federal Energy Regulatory Commission" on Justia Law

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The DC Circuit granted a petition for review of two FERC orders that raised petitioners' electricity rates. The FERC orders validated accounting by Potomac-Appalachian Transmission Highline, LLC (PATH) under its formula rate, allowing it to pass through to ratepayers more than $6 million PATH spent for public relations and advocacy activities. The activities related to PATH's pursuit of Certificates of Public Convenience and Necessity (Certificates) to build its proposed electric power transmission line. Petitioners argue that the expenditures instead belong in a designated account which would exclude them from the formula rate. The court concluded that "Expenditures for Certain Civic, Political and Related Activities" include expenditures made for the purpose of indirect as well as direct influence. Accordingly, the court rejected PATH's assertion that account includes expenditures made for the purpose of directly influencing the decisions of public officials, but not the disputed expenditures, which were for indirect influence. View "Newman v. Federal Energy Regulatory Commission" on Justia Law