The Nickel Report

On November 19, 2020, the Federal Energy Regulatory Commission (“Commission”) issued Opinion No. 569-B, its latest order addressing evaluations of whether a public utility’s return on equity (“ROE”) is just and reasonable under Section 206 of the Federal Power Act (“FPA”). [1]  As described herein, the Commission largely reaffirmed the methodology established in its prior related opinions.  See here.

On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or “Court”) issued an en banc rehearing order holding that the Natural Gas Act (“NGA”) does not permit the Federal Energy Regulatory Commission (“FERC”) to issue tolling orders for the sole purpose of preventing rehearing requests from being denied by operation of law.  See Allegheny Defense Project, et al. v. FERC, No. 17-1098 (“Allegheny”).  The decision upends a practice that has been used by FERC for decades to delay addressing the merits of requests for rehearing.  Because the NGA and the Federal Power Act (“FPA”) have essentially identical rehearing provisions, Allegheny’s holding is very likely to be extended to rehearing requests under the FPA.

Fifty years ago, the Supreme Court held that in the Federal Power Act (FPA), Congress had drawn a “bright line, easily ascertained, between federal and state jurisdiction…by making [federal] jurisdiction plenary and extending it to all wholesale sales in interstate commerce except those which Congress has made explicitly subject to regulation by the States.” FPC v. Southern California Edison Co. (Colton), 376 U.S. 205, 206-07 (1964). Several recent federal court decisions, including two decisions addressing the implementation of Zero Emissions Credits (ZECs) by New York and Illinois, highlight just how blurred that “bright line” has become in an era where Federal Energy Regulatory Commission (FERC) regulation relies primarily on markets, rather than cost-of-service ratemaking, to ensure just, reasonable and not unduly discriminatory electricity prices. For good measure, these decisions also break new ground on the justiciability of FPA preemption claims brought by private parties in federal court.