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December 24, 2025

PJM Carbon Pricing Group Talks RPS, ZECs, RGGI

PJM stakeholders continued their talks last week over integrating carbon pricing while focusing on the impacts of states looking to join regional environmental collectives like the Regional Greenhouse Gas Initiative.

Jen Tribulski of PJM led a discussion of stakeholders’ interests during the June 30 Carbon Pricing Senior Task Force meeting.

PJM Carbon Pricing

Neal Fitch, NRG Energy | © RTO Insider

Neal Fitch of NRG Energy gave a presentation noting that carbon pricing is being expressed in direct programs through states that have already joined RGGI and also indirectly through renewable portfolio standards and zero-emission credits (ZECs). Fitch said the indirect carbon pricing programs involve a “fairly significant amount of money” that needs to be addressed, including $4.4 billion in total RPS costs from 2014 to 2018 compared to $1.4 billion raised in RGGI auctions over the same time period.

Fitch said PJM must ensure it considers all programs at the state level that are driving carbon costs while addressing the possibility of direct carbon pricing in the RTO. He said NRG would like to see debates on ways PJM could utilize existing state programs to transform them into a vehicle to achieve carbon-reduction goals at a lower cost through greater efficiency.

“We don’t want to lose sight that there are a lot of levers already in play regarding carbon pricing,” Fitch said.

Border adjustments and leakage have been some of the most hotly debated issues regarding carbon pricing. (See PJM Panel Weighs Impact of Pa., Va. Joining RGGI.) But Fitch said as more states decide to adopt carbon pricing, border adjustments become less of an issue because they are “remedied as states migrate toward a consensus position on carbon regulation.”

“As the progress and expansion of carbon regulation goes beyond one or two states, the need to address leakage and border adjustments remedies itself,” Fitch said.

PJM Carbon Pricing

Jason Barker, Exelon | © RTO Insider

Jason Barker of Exelon asked Fitch if NRG is asking that the task force not address border adjustments or leakage in future discussions.

Fitch said border adjustments and leakage remain “something to contemplate” and that he would want them fully addressed and vetted before moving too far ahead. He said stakeholders who find border adjustments to be a “constraint” when discussing carbon pricing may be more comfortable with carbon pricing as the borders go away with more states adopting environmental standards.

PJM Carbon Pricing

Michael Borgatti, Gabel Associates | © RTO Insider

Barker said one of the interests Exelon has for the task force is seeing how stakeholders can both enhance the value of the carbon programs states are undertaking while also recognizing time is an element in the discussions. Barker said Exelon doesn’t want to lose sight of what can be accomplished in the short term while pursuing broader solutions over the longer term.

“There have been decades of talk about carbon pricing, and it hasn’t happened other than in a state-by-state basis,” Barker said.

Michael Borgatti of Gabel Associates spoke on behalf of the American Wind Energy Association, the Solar Energy Industries Association and 27 other organizations who were signatories of a letter sent to the PJM Board of Managers on June 26 calling for continued discussions on carbon pricing.

FERC Opens Proceeding on ISO-NE New-entrant Rules

FERC last week established a paper hearing to explore the justness and reasonableness of ISO-NE’s new-entrant rules for its Forward Capacity Market (EL14-7-002, EL15-23-002, EL20-54).

The June 30 decision came on remand from the D.C. Circuit Court of Appeals, which ruled in February 2018 that the commission failed to adequately explain why it approved capacity market rules for ISO-NE in 2014 like those it had rejected in PJM for suppressing prices. (See DC Circuit Orders FERC to Review ISO-NE Auction Orders.)

ISO-NE New-entrant Rules
Before accepting a new generating resource for its FCM, ISO-NE tests to ensure they do not cause overloads that cannot be fixed in time for the capacity commitment period. | ISO-NE

The court ruling granted petitions for review by Exelon and the New England Power Generators Association on rules allowing new suppliers to lock in their first-year clearing prices for six additional years while requiring them to offer at $0 in years 2 through 7 (15-1071).

“In light of the time that has passed since the NEPGA and Exelon complaints were filed and the changes to the ISO-NE Forward Capacity Market during that time, we believe it is appropriate to provide parties an opportunity to refresh the record on which we will address the issues raised in the court’s remand,” the commission said.

It noted that capacity prices have been trending downward in ISO-NE auctions and that it has approved several changes to the FCM, including Tariff revisions to implement the Competitive Auctions with Sponsored Policy Resources construct, it said. (See ISO-NE Capacity Prices Hit Record Low.)

The commission issued a set of questions to guide the paper hearing and said it was instituting a new Section 206 proceeding “because certain of these questions may not have been directly presented in the original NEPGA and Exelon complaints.”

Relevant Questions

At the inception of the FCM in 2006, the commission accepted Tariff provisions that allowed a new resource to lock in for five years the capacity price that it receives in the first Forward Capacity Auction in which it participates. Under that rule, a new resource receives that initial clearing price for the four subsequent annual auctions (the lock-in period), even if the actual clearing price for those subsequent auctions is higher or lower.

Exelon and NEPGA had complained that the commission’s approval of the rules was at odds with its 2009 ruling rejecting a similar construct in PJM. The D.C. Circuit agreed, saying that FERC had “failed to square its decision with its past precedent.”

In last week’s order, FERC said it was concerned that any potential effects that the current new-entrant rules could have on the FCM clearing price may outweigh the certainty and other benefits that the commission considered when approving those provisions.

To evaluate the need for the price lock in its entirety, the paper hearing will first pose the following questions:

  • How many resources have taken advantage of the price lock to date?
  • Is a price lock still needed to incent new entry in ISO-NE?
  • Does the price lock lead to unreasonable price suppression in the entry year?
  • Does the price lock with the zero-price offer rule result in unreasonable price suppression in years 2-7?
  • Is the price lock unduly discriminatory?
  • If the price lock is retained, should the term be shortened and, if so, what would be a just and reasonable term?

Second, to evaluate retaining the price lock and adding an offer floor, the commission will ask how an offer floor would be implemented, whether it would require significant market redesign, and what the timeline would be for implementation.

Third, to evaluate whether to impose an alternative replacement rate, the commission seeks to address whether there are alternative approaches to the current price lock that would be sufficient to incent new entry, and how these alternative approaches would address any concerns related to unreasonable price suppression, undue discriminatory or preferential treatment.

PJM to Work with States on Policy Goals in New Group

PJM has created a new group to work with states to advance energy initiatives like offshore wind and grid security.

The State Policy Solutions group will combine PJM’s knowledge of planning, markets and operations with its interpretation of state laws and regulations to help government bodies implement energy policies.

PJM officials said the new group will lend the RTO’s “subject matter expertise” to help states reach energy goals and to help facilitate discussions among states or regional groups if efficiencies in policies make sense across multiple government bodies.

PJM policy goals
PJM CEO Manu Asthana | © RTO Insider

“Our states are key stakeholders, and we’re committed to partnering with them whenever possible as they contemplate and execute their policy goals,” CEO Manu Asthana said in a statement.

The State Policy Solutions group is initially focusing on five areas at its launch, PJM said, including offshore wind, resource adequacy, grid modernization, clean energy targets and grid security. The RTO said the areas were chosen because of their overlap with its main functions.

Tim Burdis, PJM’s lead strategist for state government policy, will manage the group, reporting to Asim Haque, the RTO’s vice president of state policy and member services.

PJM policy goals
Asim Haque, PJM | © RTO Insider

Haque, who served as chairman of the Public Utilities Commission of Ohio before coming to PJM in 2019, said the group is a response to evolving state energy policies.

Although the RTO has given technical assistance to states in the past, Haque said the new group will provide a more “holistic, end-to-end approach” through the RTO’s understanding of state laws, regulations, related cases and FERC orders.

“PJM will always champion its primary duties of keeping the lights on and running efficient markets,” Haque said. “At the same time, PJM can utilize its expertise in carrying out those functions to assist our states as they advance their policy objectives. This is an opportunity for us to innovate and partner together in an evolved RTO/multistate dynamic.”

Greg Poulos, executive director of the Consumer Advocates of the PJM States, said what the group will be tasked with doing is not totally clear to him or his organization, but he said the group “seems very promising” and that states’ access to PJM’s expertise will be helpful in decision-making on complicated issues.

PJM policy goals
Greg Poulos, CAPS | © RTO Insider

“Over the past few years, there have been complaints that PJM has not been responsive to the concerns of the states,” Poulos said. “I’m hoping this ushers in a period where PJM works to repair and develop those important relationships.”

State regulators and other stakeholders were dismayed when PJM announced last year that Denise Foster had unexpectedly resigned as head of the RTO’s State and Member Services Division and that her unit would be realigned. (See Stakeholders, States in Dark over PJM Personnel Moves.)

PJM has frequently found itself in the middle of state-federal jurisdictional disputes over energy policy. Illinois and New Jersey officials are considering pulling their utilities from the RTO’s capacity market because of FERC’s 2019 order expanding the minimum offer price rule.

The RTO is currently considering how it could incorporate carbon pricing for only some of its 14 member states (including D.C.). (See related story, PJM Carbon Pricing Group Talks RPS, ZECs, RGGI.)

Energy Harbor Settles with Solar Co. for $66M

Energy Harbor will pay almost $66 million to cancel a solar power purchase agreement signed by its predecessor, FirstEnergy Solutions (FES), clearing away another legal battle as it continues to emerge from bankruptcy.

On Saturday, Judge Alan M. Koschik, of the Bankruptcy Court for the Northern District of Ohio, approved a stipulation outlining the settlement between Energy Harbor and Maryland Solar Holdings.

The judge’s order came three days after FERC granted Energy Harbor’s request to hold in abeyance for 90 days a docket the commission had opened to consider whether FES could abrogate its contracts with Maryland Solar and the Ohio Valley Electric Corp. (OVEC) (EL20-35).

The commission said it agreed with Energy Harbor that the proceeding would be moot if the bankruptcy court accepted its settlements with Maryland Solar and one announced in May with OVEC.

Energy Harbor agreed to pay Maryland Solar $65.9 million less $1 million in cash collateral held by the solar company for the PPA signed by FES in 2011 for the purchase of renewable energy and related credits. Maryland Solar, which owns a 20-MW solar farm in Washington County, Md., had sought $79.8 million in the dispute.

Energy Harbor
Energy Harbor’s headquarters is the former Akron, Ohio, post office building. | © Google

FES changed its name to Energy Harbor upon emerging from bankruptcy in February, with former bondholders owning 50% of the equity.

Energy Harbor also assumed FES’ obligations with OVEC and agreed to pay the company $32.5 million in a settlement approved by the bankruptcy court on June 15. (See Energy Harbor to Pay OVEC $32.5M in Settlement.)

In March, FERC ordered a paper hearing to consider FES’ attempt to void the OVEC contract and PPA with Maryland Solar as part of its bankruptcy proceeding. The commission acted after the 6th U.S. Circuit Court of Appeals issued a mandate overruling the bankruptcy court’s May 2018 injunction preventing FERC from issuing any order requiring FES to continue complying with the contracts. The appellate court also reversed the bankruptcy court’s ruling allowing FES to reject the contracts.

In holding the proceeding in abeyance, FERC ordered Energy Harbor to file a report by Sept. 29 updating the commission on the status of the court proceedings.

FERC’s order opening the docket said the “jurisdictional contracts” included several wind PPAs signed by FES in addition to the OVEC and Maryland Solar contracts. But Energy Harbor’s June 15 motion to hold the FERC docket in abeyance said Maryland Solar and OVEC were “the sole counterparties to the jurisdictional contracts at issue in this proceeding.”

A company spokesman clarified that FES had entered into stipulations with all of the other counterparties during the Chapter 11 restructuring proceedings.

Texas Public Utility Commission Briefs: July 2, 2020

The Texas Public Utility Commission last week approved a new rule that allows utilities operating solely outside the ERCOT region to apply for a generation-cost recovery rider (GCRR) for capital investments in individual generation facilities (55031).

The rule applies primarily to El Paso Electric, Entergy Texas, Southwestern Electric Power Co. and Xcel Energy’s Southwestern Public Service. It stems from a bill passed (HB 1397) in last year’s state legislature.

PUC Chair DeAnn Walker, pointing to the abundance of renewable facilities already installed and coming online, modified the rule in a memo before the July 2 open meeting to clarify that a utility may include “more than one discrete generation facility” in the rider. Utilities will be allowed to amend their GCRRs to request inclusion of additional generators.

Texas Public Utility Commission
PUC Chair DeAnn Walker, the sole commissioner present, leads July 2’s open meeting.

“I feel like where we are with our future generation, most are going to be smaller projects, where you may need to have more than one included in the rider,” Walker told her fellow commissioners.

The commission agreed that if the rule is not working, they can always revisit the issue. Walker said the PUC’s earnings-monitoring process would allow them to determine whether any utilities were taking advantage of the rule.

Walker was the only commissioner present in the PUC’s meeting room. Commissioners Arthur D’Andrea and Shelly Botkin both called in from remote locations.

PUC Extends Customer Relief Program

The commissioners agreed to extend the state’s Electricity Relief Program from July 17 to Aug. 31, citing Gov. Greg Abbott’s decision to curtail certain economic activities in the face of rising coronavirus diagnoses and hospitalizations. An order will be drafted for the commission’s approval during its July 16 open meeting.

The PUC created the program in March to help retail providers’ unemployed customers by shielding them from disconnections for nonpayment and offering bill payment assistance.

“While we certainly wish we could snap our fingers and make this virus go away, it’s clearly with us for the long haul and we need to reflect that in our decisions,” Walker said.

The state reported a record 8,258 COVID-19 confirmed cases on July 4, bringing its total to 195,239. A record 8,181 Texans were hospitalized on Sunday. The state has reported 2,637 deaths.

The program is funded by a rider charge applied to customer bills within the ERCOT region.

Entergy, LCRA Get CCNs

In other actions, the PUC:

  • Granted Entergy Texas a certificate of convenience and necessity (CCN) to build, own and operate a 230-kV line and substation north of Houston that is needed to accommodate future load growth. Entergy has reached a settlement with all intervenors on a 9-mile route that is projected to cost $34.1 million. The substation is expected to cost an additional $23.3 million (49715).
  • Approved Lower Colorado River Authority’s request for a CCN for a new substation and a 138-kV line connecting the facility with the grid in the Texas Hill Country north of San Antonio. The 22.5-mile project, costing an estimated $64.3 million, is needed to address congestion and voltage issues, LCRA said (49523).

Hearing Ordered on $154M ATSI Rate Bid

FERC last week ordered hearing and settlement judge procedures on American Transmission Systems Inc.’s (ATSI) request to recover deferred and ongoing legacy costs related to the company’s move from MISO to PJM in 2011 (ER20-1740).

ATSI’s proposed revisions to its transmission formula rate, filed by PJM in May, sought $154 million in additional rates, including legacy MISO Transmission Expansion Plan costs, costs of ATSI’s integration into PJM and deferred vegetation management costs.

In 2011, the commission rejected ATSI’s first request for recovery of PJM integration costs and MISO exit fees, saying the company had failed to “provide sufficient information or support that would enable the commission to find that it is just and reasonable for ATSI’s transmission customers to bear the costs arising from the decision to switch RTOs.”

FERC upheld the denial on rehearing in 2016. It said its ruling was without prejudice, allowing ATSI to file a new request that included a detailed cost-benefit analysis showing that the benefits to wholesale transmission customers exceed the costs of the switch to PJM. (See FERC Rejects ATSI Bid for Cost Recovery on Switch from MISO to PJM.)

ATSI Rate Bid
American Transmission Systems Inc. is a unit of FirstEnergy. | FirstEnergy

In justifying its new rate request, ATSI, a unit of FirstEnergy, said its move to PJM has generated about $4 billion in benefits, dwarfing the $154 million it seeks to recover.

But American Municipal Power (AMP), Buckeye Power, Industrial Energy Users of Ohio (IEU) and the federal energy advocate for the Public Utilities Commission of Ohio protested the request.

AMP and Buckeye said the request should be rejected because of the four-year delay in refiling for the RTO transition costs since the commission’s 2016 rehearing order. AMP said utilities should not have unlimited discretion on how long it will carry deferred costs on its books. AMP, Buckeye and IEU also contended that ATSI’s cost-benefit analysis did not accurately calculate the impact on Ohio retail customers.

IEU and AMP also challenged ATSI’s request for $18.7 million in deferred vegetation management costs incurred from 2013 to 2016, saying the company failed to demonstrate that they were “enhanced” or prudently incurred.

Citing the disputes, the commission’s order accepted ATSI’s proposed Tariff revisions and suspended them for five months to become effective Dec. 1, subject to refund.

Developers Seek 1-Mile Spacing for Vineyard Wind

Stakeholders at a virtual public hearing on Thursday praised the Bureau of Ocean Energy Management for working through the pandemic and urged the agency to approve the 800-MW Vineyard Wind offshore wind project along with the 1-nautical-mile turbine spacing advocated by developers and recommended by the U.S. Coast Guard.

“I’d like to go on record in supporting the 1-mile distancing between towers,” said Brad Lima, recently retired as chief academic officer of the Massachusetts Maritime Academy. “There was one statement in the [May 14] Coast Guard report that stood out: ‘Anything that can be done to reduce traffic scenarios is a prudent decision.’ … It’s quite evident based on the number of companies which have won leases for the Atlantic Coast sites that offshore wind is where power generation wants to be.”

BOEM’s supplemental environmental impact statement (SEIS) for the Vineyard Wind project, released June 9, included a proposal by the Responsible Offshore Development Association (RODA), a fishing industry group, calling for six “transit lanes” at least 4 nautical miles wide for a projected 22 GW of projects from the coasts of New England to Virginia. (See BOEM Issues Revised EIS for Vineyard Wind.)

The proposed transit corridor would provide a path for vessels traveling from New Bedford, Mass., and other southern New England ports to fishing grounds in Georges Bank, east of Cape Cod. Only one of the lanes intersects the Vineyard Wind 1 wind development area in federal waters south of Massachusetts.

The report also reflects changes to the Vineyard project since the draft EIS: replacing 696-feet-tall, 10-MW turbines with 837-feet-tall, 14-MW turbines. The SEIS found that the cumulative effect of the 22 GW of projects could have major impacts on navigation and vessel traffic, commercial fisheries, and military and national security uses.

Cumulative Impacts

“Global climate change presents a serious threat to the commonwealth’s environment, residents, communities and economy,” said Lisa Engler, director of the Massachusetts Office of Coastal Zone Management (CZM). “Gov. [Charlie] Baker has expressed the need for action. The magnitude of the impacts from climate change requires all of us to put politics aside and act together quickly and decisively.

“We still have the ability to check the severity of future impacts by aggressively reducing greenhouse gas emissions and adapting to the changes,” Engler said. “The cumulative analysis included in the SEIS ensures that potential impacts beyond this individual project are evaluated.”

Engler said the state’s review, which included the Department of Environmental Protection, Energy Facilities Siting Board, Environmental Policy Act Office, Department of Public Utilities and the CZM, is complete.

The total project capacity still remains at 800 MW, and a change to the turbine capacity would not result in a change to the footprint or to the 8-MW minimum turbine capacity, said BOEM environmental coordinator Jennifer Bucatari, who presented the agency’s summary of the SEIS. The project will comprise up to 100 wind turbines.

Vineyard Wind also submitted changes expanding the onshore substation, with a total area of ground disturbance of 7.7 acres, which is 1.8 acres greater than the area analyzed in the draft EIS, she said.

As for the various transit lane proposals and the turbine locations they would displace, “under the current cumulative scenario, displacement of all these turbine locations is not feasible, and therefore the addition of all six transit lanes would lead to the elimination of some of the turbines that could have occurred within these lanes,” Bucatari said.

Competitor Concerns

David Hardy, COO of Ørsted North America Offshore, praised BOEM’s work on the supplemental EIS. “It is no small feat to forecast the myriad impacts the development of a new ocean-based resource will have on the human and natural environment, both positive and negative,” he said.

Ørsted has been awarded more than 2,900 MW of offtake rights, with the states of Connecticut, Maryland, New Jersey, New York, Rhode Island and Virginia having all awarded their first offshore projects to the company.

Hardy said Ørsted “strongly” supported the developers’ consensus proposal of 1-nautical-mile turbine spacing, with an east-west layout for simpler navigation.

He said RODA’s proposed 4-mile spacing “would result in the loss of over 50 wind turbine locations from our current three projects: South Fork, Revolution Wind and Sunrise Wind. … This equates to a nearly 25% loss in the total wind turbine locations for our state” power purchase agreements.

The SEIS should reflect a more favorable rating of offshore wind as a domestic economic development engine consistent with ongoing and planned investments, Hardy said, noting Ørsted is planning to spend $15 billion over the next decade in the U.S.

“For many of the cumulative impact parameters considered in the SEIS, BOEM chose not to incorporate widely accepted or legally mandated mitigation strategies; thus the bottom-line impact of the 22-GW buildout must be considered a worst-case scenario and not as representative of as-constructed impacts,” Hardy said.

Where BOEM comes out on the Vineyard project will likely determine the fate of offshore wind in the whole country, said Joe Martens, director of the New York Offshore Wind Alliance and former commissioner of the New York Department of Environmental Conservation.

“A plain reading of the SEIS could lead to the conclusion that if the Vineyard Wind project is not advanced, other projects in various stages in the pipeline inevitably will,” Martens said. “I don’t think this is the case. … The [Vineyard] developers have gone above and beyond the extensive federal, state and local requirements for offshore wind.”

The Vineyard project is in effect a “litmus test” for the industry, he said, urging its approval on both environmental and economic grounds. “All eyes are on this project.”

Communities Supportive

The project has been thoroughly vetted by all the “top notch” environmental groups and should be approved to provide more renewable energy for the state, said Eileen Mathieu, board member of Sustainable Marblehead, a volunteer community organization in the town of Marblehead, Mass.

“In Marblehead, our municipal light department … is eager to be able to purchase reasonably priced electricity from renewable sources,” Mathieu said. “However, local resources are very constrained, so that right now we only have 12% renewable energy in our portfolio and 26% nuclear.”

Marblehead buys its power through the Massachusetts Municipal Wholesale Electric Co., which “needs wind options to provide its 22 municipal light plant members, and currently it has none,” Mathieu said.

“We strongly support this project as the first large-scale OSW project in the region,” said Kai Salem, policy advocate for the Green Energy Consumers Alliance.

Fred Hopps of Beverly, Mass., founder of the town’s clean energy advisory committee — and a former resident of Copenhagen, Denmark — gave “a thousand thanks to the Danes for practically single-handedly keeping offshore wind energy alive.”

BOEM will hold two more web-based public hearings on the SEIS for Vineyard Wind, on July 7 and 9, with the public comment period open through July 27 on a dedicated website. The agency expects to publish its final EIS in November and to issue a final decision in December.

Vineyard Wind is a joint venture between Copenhagen Infrastructure Partners and Avangrid Renewables.

FERC Seeks 90-Day Delay on Tolling Ruling

FERC has asked the D.C. Circuit Court of Appeals to give it 90 days to respond to the court’s June 30 order barring the commission’s use of tolling orders to delay judicial review of its rulings under the Natural Gas Act.

The commission’s motion Monday said the delay would give it time to respond to the order overturning “the commission’s decades-old, judicially sanctioned rehearing process” and consider whether to seek a review by the Supreme Court.

The court ordered its clerk to issue a mandate in the case on Tuesday, but the court had not filed the mandate nor responded to FERC’s motion as of late that afternoon. “We have nothing for you at this time,” commission spokeswoman Mary O’Driscoll said.

No More Stopping the Clock

The D.C. Circuit’s 10-1 ruling concluded that FERC’s use of tolling orders to stop the 30-day clock for acting on rehearing requests improperly prevents litigants from appealing commission rulings indefinitely even as it allows gas pipeline companies to seize property under eminent domain and begin construction (Allegheny Defense Project, et al. v. FERC, 17-1098). (See D.C. Circuit Rejects FERC on Tolling Orders.)

The court said it had erred since 1969 when it first ruled that issuing a tolling order meant that FERC had “acted upon” the request under the language of the NGA and that parties must wait until the commission’s review of the request is complete before seeking judicial relief.

FERC tolling
E. Barrett Prettyman Federal Courthouse, home of the D.C. Circuit Court of Appeals | HSU Builders

FERC routinely issues tolling orders to buy itself more time to consider rehearing requests because both the NGA and the Federal Power Act deem such requests denied if it does not act on them within 30 days.

In the face of increased criticism of its use of tolling orders, FERC on June 9 issued a rulemaking saying it will no longer permit gas pipeline developers to begin construction until it acts on the merits of any rehearing requests (Order 871, RM20-15). (See FERC Revises Pipeline Policy on Landowner Concerns.)

The new rule followed Chairman Neil Chatterjee’s September 2019 pledge that FERC would seek to reduce tolling orders and act on landowner rehearing requests within 30 days. In February, the chairman announced the creation of a new rehearing section within the Office of the General Counsel to expedite action.

In its motion, however, FERC noted that the impact of the court’s June decision “extends well beyond landowner cases and affects all requests for rehearing under the Natural Gas Act and presumably those under the Federal Power Act as well.”

It said tolling orders “allow the commission to manage its large case load,” noting the commission averages more than 1,100 orders and 285 rehearing requests annually.

Circuit Split?

FERC said it needed time to analyze the court’s conclusion that while an order granting rehearing solely for the purpose of further consideration does not prevent a rehearing request from being deemed denied, the NGA does not require the commission to resolve the merits of rehearing requests within 30 days. The court wrote that the NGA’s reference to acting on a rehearing request requires “some substantive engagement with the application” but not necessarily a “deci[sion] [on] the rehearing application.”

The court declined, however, to address whether FERC could issue interim orders that grant rehearing for further consideration coupled with a request for supplemental briefing or further hearing processes.

“A stay of the court’s mandate would afford the commission time to consider how to revise its processes and allocate its resources so that it can fulfill its statutory role on rehearing in the absence of these interim orders,” FERC said.

The commission said the D.C. Circuit previously read the act as requiring it to actually decide the merits of rehearing requests within 30 days. “In addition, every other court of appeals to consider the issue has determined that the term ‘act’ encompasses tolling orders that grant rehearing for further consideration,” FERC said.

It noted Judge Karen LeCraft Henderson’s dissent, which said the decision “creates a circuit split that could force the Supreme Court to weigh in.

“Whether the court’s conclusion as to the plain language of Natural Gas Act Section 717r(a) warrants Supreme Court review is something that the commission and the solicitor general will need time to consider without the added burden of the court’s decision immediately taking effect,” FERC said.

A stay would not harm rehearing petitioners because of its commitment to bar construction during the rehearing process and because district courts can hold eminent domain proceedings in abeyance while rehearing is pending, it said.

In addition to filing the motion for more time, FERC also is seeking a legislative response to the order. On July 2, Chatterjee, a Republican, and Commissioner Richard Glick, a Democrat, issued a statement asking Congress “to consider providing FERC with a reasonable amount of additional time to act on rehearing requests involving orders under both the Natural Gas Act and the Federal Power Act.”

FERC Approves SERC’s Bylaw Changes

FERC has approved a set of amendments to SERC Reliability’s bylaws, jointly submitted by the regional entity and NERC last year, aimed at creating “a more strategic, efficient and effective governance body” (RR20-2).

The new bylaws, approved July 1, will take effect Jan. 1, 2021, and will implement a number of structural changes, including:

  • transitioning SERC’s Board of Directors to a hybrid board containing 15 sector representatives and at least three independent directors (with a maximum of five);
  • requiring that a majority of the board, as well as a majority of the independent directors, be present to have a quorum for meetings;
  • eliminating the use of alternates and proxies for directors and independent directors;
  • formalizing SERC’s membership body by transitioning the existing board structure into a members group, which will include a representative from each member company and meet at least annually to advise the board on the business plan and budget, elect independent directors and approve bylaw changes as needed;
  • changing the Board Compliance Committee into a Board Risk Committee; and
  • adding a Human Resources and Compensation Committee, Nominating and Governance Committee and Finance and Audit Committee.

NERC’s Board of Trustees approved the revised bylaws at its meeting last November. At the time, NERC Chair Roy Thilly called the changes “a very positive development,” and Trustee Fred Gorbet said they would “[move] SERC to the front of the pack in terms of good governance.” (See “SERC Bylaw Changes OK’d,” NERC Board of Trustees Briefs: Nov. 5, 2019.)

Consumer Group Demand Voice in SERC

The proposal by NERC and SERC did not go entirely unopposed. Earlier this year, consumer advocacy group Public Citizen filed a protest requesting further amendments to the planned changes.

Public Citizen supported the desire for greater board independence but felt the RE’s plan did not go far enough to ensure “effective reliability and cybersecurity governance” because the resulting board structure would still lack representation by consumer advocates. The group asked that FERC require SERC to reserve at least one seat on the board for such a representative, that the RE also be made to include household consumer advocates in its broader membership and that at least one advocate should serve on the new members group.

SERC Bylaw Changes
SERC CEO Jason Blake and General Counsel Holly Hawkins briefing the NERC board on SERC’s revised bylaws in November. | © ERO Insider

In their response to Public Citizen, NERC and SERC reminded the commission that in its Order 672, it had given REs “flexibility … to find a governance structure appropriate to their regions” and that it would not “prescribe limits on board composition [or] representation of industry segments.” The organizations noted that consumer advocates could join the members group and pointed out that they also “have numerous opportunities for involvement at SERC outside of the membership body.”

The commission sided with NERC and SERC, agreeing that Order 672 prohibits it from creating specific conditions for board composition and that consumer advocates can participate in SERC’s decision-making process without the RE being obligated to allow them on its board.

With the new bylaws accepted, SERC will now begin its search for qualified independent director candidates to fill the new board seats, along with beginning transition activities to implement the other governance changes. SERC’s goal is for all changes to be in place when the new Regional Delegation Agreement, approved by NERC’s board at its May meeting, takes effect. (See “Other Approvals,” NERC Board of Trustees/MRC Briefs: May 14, 2020.)

UPDATED: PJM Files EOL Proposal over TO Protest

[UPDATED July 6 to reflect PJM’s comments detailing its objections to the proposal.]

PJM filed the joint stakeholders’ end-of-life (EOL) proposal with FERC on Thursday, turning aside the protests of most of its transmission owners, who claim moving EOL projects under the RTO’s planning authority violates their rights.

The 279-page filing notes that the Operating Agreement amendments, initiated by American Municipal Power (AMP) and Old Dominion Electric Cooperative (ODEC), were approved by 69% of the Members Committee on June 18 despite the RTO’s opposition (ER20-2308). (See PJM Stakeholders Endorse End-of-Life Proposal.)

“While PJM did not support these amendments in the stakeholder process, PJM submits them as the party assigned responsibility under the Operating Agreement to ‘administer and implement’ the Operating Agreement and to file changes to the Operating Agreement under [Federal Power Act] Section 205.”

The filing leaves FERC to decide between the stakeholders’ proposal and PJM’s plan, which was endorsed by the Transmission Owners Agreement-Administrative Committee (TOA-AC) in a June 12 filing proposing amendments to Tariff Attachment M-3 (ER20-2046). It would require TOs to have a formal program for EOL determinations and to identify potential EOL projects five years in advance. Projects that “overlap” with Regional Transmission Expansion Plan (RTEP) violations would be included in a competitive window seeking regional solutions. The RTO’s proposal failed to win consensus, with a sector-weighted vote of 36% at the May 28 Markets and Reliability Committee meeting.

PJM end of life
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ODEC and AMP have filed a motion to have the TOs’ filing dismissed on procedural grounds.

In filing the joint stakeholders’ proposal, PJM rebuffed the TOs, who argued in a June 26 letter that the proposal violates their rights under the Consolidated Transmission Owners Agreement. (See TOs Demand PJM Reject EOL Proposal.)

However, the RTO also filed comments detailing its objections to the joint stakeholders’ proposal.

The TOs and PJM contend the stakeholders’ proposal also violates FERC precedents and Order 890’s rules regarding transmission asset management. PJM has said decisions on when a facility is at the end of its useful life or otherwise needs to be replaced “are the sole responsibility of the transmission owner.”

PJM asked FERC to act within 61 days and proposed Jan. 1, 2021, as the effective date for the OA changes, if it accepts them. The RTO said the date would coincide with the beginning of the next cycle of the RTEP.

The joint stakeholders say their proposal complies with commission precedent by continuing to give TOs exclusive authority to determine whether a transmission asset has reached its EOL while making the replacement of such assets PJM’s responsibility through the RTEP.

The proposal would:

  • modify OA Schedule 6 to create a process for evaluating and replacing EOL assets under the RTEP, removing the planning from Attachment M-3 of the Tariff;
  • require TOs to develop an EOL program, including criteria, for facilities approaching their EOL and submit a binding notification to PJM of facilities that will reach their EOL within six years;
  • require TOs to provide PJM a 10-year, forward-looking list of facilities’ EOL conditions;
  • exclude the planning of EOL facilities from the RTEP reliability exemption for transmission facilities under 200 kV; and
  • amend the OA definitions and Schedule 6 to remove EOL assets from evaluation as supplemental projects under Attachment M-3 and evaluate all EOL facilities as a separate category under Schedule 6.

PJM told FERC the changes “should be implemented prospectively … as there are no transition provisions in the joint stakeholder proposal for current EOL determinations less than six years out.”

PJM Comments

In separate comments filed later Thursday afternoon, PJM said the joint stakeholders’ proposal violates its governing documents and commission precedent on the RTO’s and the TOs’ roles in the planning of supplemental projects, including EOL facilities, and the planning of asset-management projects.

It noted that the stakeholder process “was markedly dominated by legal debates, including debates as to the meaning of certain governing documents and the scope of authority ascribed to PJM and the PJM transmission owners under those documents.”

“These legal issues, as well as related policy issues, are not ones that necessarily lend themselves well to final resolution in a stakeholder process,” PJM continued. “It is for this reason that PJM is filing these comments and urges the commission to provide clear resolution on the legal and policy issues raised by the joint stakeholder proposal.”

The RTO said the proposal that the EOL notifications be binding on the TOs “unreasonably restrict transmission owners’ flexibility regarding their end-of-life decisions over their transmission assets. More specifically, this lack of flexibility potentially impedes a transmission owner’s ability to modify its end-of-life decisions due to changes to system conditions or unforeseen circumstances that can impact an asset’s life. Instead, the proposal assigns the responsibility to PJM to determine whether to escalate or delay replacement of the transmission owner’s asset.”

It said although the proposal says that “‘determination of EOL is still a TO determination,’ the proposed revisions specific to EOL conditions seem to effectively assign that responsibility to PJM.”

PJM also cited an apparent inconsistency between exempting from the competitive window process EOL notifications on substation equipment while exempting facilities below 200 kV.