Wednesday, August 27, 2014

D.C. Circuit Holds that FERC Misapplied Filed Rate Doctrine to Interconnection Agreement

On August 26, the D.C. Circuit (Garland, Srinivasan, Millett) issued a decision in West Deptford Energy v. FERC, No. 12-1340.  The Federal Power Act, through what is known as the filed rate doctrine, requires regulated utilities to charge only rates that are on file with FERC.  In this case, however, there was a question of which of two rates should be treated as on file with the agency.  Petitioner West Deptford Energy submitted a request to interconnect new electric power generation facilities with PJM.  Under PJM’s tariff on file at the time, West Deptford would have had to reimburse other generators for certain upgrades necessitated by the proposed interconnection.  While West Deptford’s request was pending, however, PJM submitted tariff amendments to FERC; under these amendments, West Deptford would not have to pay for the upgrades.  In the process of approving West Deptford’s interconnection request, PJM determined that the prior tariff controlled and that West Deptford had to pay for the upgrades.  FERC sided with PJM.  West Deptford filed a petition for review challenging FERC’s decision, and the D.C. Circuit granted the petition.  Without holding that FERC had to apply the later tariff, the court held that FERC had acted arbitrarily and capriciously by failing to provide a reasoned explanation for its decision to apply the earlier tariff.  Neither PJM’s tariff amendments nor FERC’s correspondence with PJM regarding the amendments specified how the amendments would apply to pending interconnection requests.  FERC precedent seems to apply the tariff in effect when the interconnection agreement is executed or when an interconnection agreement is filed with FERC, not when a generator makes its interconnection request.  The court also held that FERC had erred by failing to address West Deptford’s argument that, if it was responsible for reimbursing other generators to pay for the upgrades, it was due offsets for amounts that those generators already had been collected.

—Todd Aagaard

http://lawprofessors.typepad.com/environmental_law/2014/08/dc-circuit-holds-that-ferc-misapplied-filed-rate-doctrine-to-interconnection-agreement.html

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