FERC Clarifies Jurisdiction Under Section 211A

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On July 15, 2021, FERC issued a declaratory order clarifying that FPA Section 211A does not grant FERC jurisdiction over an unregulated non-public utility solely as a result of the utility establishing different transmission rates by customer class or contract.

In January 2021, two irrigation districts in Washington State filed a petition for declaratory order with FERC seeking assistance in resolving an ongoing dispute with Public Utility District No. 2 of Grant County, Washington (Grant PUD) regarding the establishment of new transmission rates for Grant PUD. As a non-public utility, Grant PUD’s transmission rates are set pursuant to state law. The irrigation districts took the position that Grant PUD should establish separate rates for wheeling and general transmission services whereas Grant PUD took the position that a single transmission rate for all customer classes was necessary to avoid FERC’s jurisdiction under 211A. The irrigation districts sought confirmation from FERC that Grant PUD could charge different rates to wheeling customer classes without raising any Section 211A concerns. Grant PUD on the other hand asked FERC to deny the request arguing, among other things, that because it only had one transmission rate, the irrigation districts’ filing was premature and did not present the type of controversy or uncertainly that would merit action under FERC’s rules.

FERC granted the petition and confirmed that Section 211A does not prohibit unregulated utilities from establishing separate wheeling rate classes or contract rates, but clarified that FERC does have authority under 211A to require that any such rates are comparable to those that the non-public utility charges itself. FERC also explained that the uncertainty over its authority was sufficient to warrant declaratory relief even though there was general agreement that any such declaration would not fully resolve the parties’ ultimate dispute, i.e., establish the actual rate that Grant PUD would charge the irrigation districts for wheeling, which is a question of state law and would be established in a state regulatory proceeding. As FERC explained, however, it has discretion to address legal uncertainties whether they involve live disputes or are simply open questions regarding the FPA or FERC policies.

A copy of the order is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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