On Friday, parties challenging FERC Order No. 841 filed non-binding statements of issues to be raised in the litigation. APPA, NRECA, EEI, and AMP (utilities) filed jointly, NARUC filed its own statement. The two filings are similar, but the utilities's filing is more succinct:
Issue 1: Did FERC act in excess of its statutory authority by deciding that it alone has jurisdiction to determine whether energy storage resources located on a distribution line or behind a retail meter may participate in wholesale electric markets?
Issue 2: Because of the impact of the Order 841 on the reliability, operations, and costs of local distribution systems and retail electric service, and because the FPA reserves these matters for state and local regulation [1/2]
[Issue 2, cont] did FERC act arbitrarily and capriciously, abuse its discretion, or otherwise act not in accordance with law by declining to give States an opportunity to opt out of the energy storage resource participation model created by the Order 841?
Issue 1 is about FERC's authority under federal law. Utilities are asking the court to draw a line that prohibits FERC from approving RTO tariffs that set rates for DERs, unless a local regulator permits DERs to participate in wholesale markets.
A FERC loss on Issue 1 will have repercussions for DER participation in wholesale markets. A broad ruling by the court could doom FERC's proposed DER aggregation rule. A narrower ruling might limit any future DER rule to states that are "wholesale DER friendly"
A FERC loss on Issue 2 would effectively remand distribution-level storage's participation back to FERC. FERC could issue an order that draws from the existing record to more fully explain why it's not providing an opt out. Or it could take comments on the issue first.
Whether or not there is an appetite at FERC to do either of those things will depend on who is sitting on the Commission. A loss on Issue 2 could have the effect of killing wholesale storage or DERs, even though it wouldn't change FERC's legal authority.
The challengers and FERC also jointly filed a proposed briefing schedule:
Correction to earlier Tweet: this lawsuit won't kill "wholesale storage." Order 841 is almost entirely safe and the only aspect challenged here is about distribution-level storage and whether FERC can require RTOs to accept bids from such resources.
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After skimming 50 filings, I've filled in the scorecard. Many other entities are opposing this rule on other grounds. The chart highlights arguments that I see as most damaging to FERC's long-term ability to regulate transmission.
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Quick explanation of the top 3 rows:
Major Questions Doctrine was the product of a 2022 US Supreme Court case, WV v. EPA. Along with @PolicyIntegrity, I rebutted claims about MQD and this rule here - eelp.law.harvard.edu/wp-content/upl…
Row 2:
30 years ago, FERC started to set industry-wide transmission rules. Courts approved. Now, FERC's opponents are resurrecting the claim that FERC can only regulate utility-by-utility (or RTO-by-RTO) and can't set industry-wide rules in a single proceeding.
This meeting is starting with a staff presentation about the siting rule, Order No. 1977, leaving Order No. 1920 for the end. This is clearly an effort to juice ratings.
Scorching hot FERC take from 1976:
The Supreme Court's statement that the purpose of the Power and Gas Acts is to encourage plentiful supplies at reasonable prices is wrong and should be discarded. The Court's conclusion is poorly supported by precedent and history.
Above, the conclusion is repeated by states suing to end DOE's LNG pause and was said yesterday by future Commissioner See at the confirmation hearing.
Here's why it's wrong and why this matters:
Neither law is about maximizing energy production. Both laws are primarily about consumer protection. One element of protecting consumers is ensuring that new gas service (i.e., new pipelines) is needed. Neither law regulates energy production --- states primarily do that.
PJM utilities propose to grant themselves even more control over regional transmission development and elevate themselves over PJM in key regional decisions.
Here is the contract they are presenting to PJM for its acquiescence -- pjm.com/-/media/commit…
PJM is a regional transmission operator premised on a contract between transmission-owning utilities and PJM itself. The contract grants PJM certain rights to operate the transmission system and splits control over regional market and transmission rules/plans bt the parties.
The utilities' changes would: 1. Put PJM officially in charge of regional transmission planning rules, thus transferring control over those rules from PJM's members (generators, utilities, distributors, etc) to the PJM Board/staff.
How is utility control over transmission blocking clean energy and raising costs?
Here’s a look at allegations by renewables or transmission developers that utilities or RTOs are acting anti-competitively.
The complaints are about interconnection, planning, rates, and more!
In some cases, facts are not seriously in dispute. The issue is whether the utility or RTO is violating rules. Ultimately, this is a legal call, and FERC’s answer will not necessarily find that the utility/RTO is not acting anti-competitively.
Alright, let's go!
1. Invenergy v. PSCo [owned by Xcel]
Bottom Line: “Put simply, it very much looks like PSCo [Xcel] is trying to advantage its own generation via its control of transmission and the interconnection process.”
Why isn’t the power industry building more transmission? Adopting advanced transmission technologies? Connecting new projects faster?
In Replacing the Utility Transmission Syndicate’s Control, I diagnose the fundamental issue: regional governance.
🧵papers.ssrn.com/sol3/papers.cf…
Power sector rules determine who can generate and transmit energy and influence the mix of resources on the grid. Having authority to change the rules is hugely consequential. My paper is about decisionmaking structures + processes used to change industry rules (aka governance).
[Wait, don’t go yet – governance is interesting, or at least important...I promise...]
I argue that regional power sector governance is impeding innovation that could challenge incumbent firms, business models, and technologies.