The Federal Energy Regulatory Commission (“FERC”) will host its December Open Meeting on Tuesday, December 19, 2023 (originally scheduled for Thursday, December 21, 2023). The Sunshine Act Meeting Notice (“Notice”) issued December 12, 2023 indicates FERC’s intent to act on several noteworthy items, some of which will be of particular interest for renewable and battery storage developers. Among the items posted for action at the meeting are the proposed settlement of complaints against PJM Interconnection, LLC (“PJM”) relating to capacity performance penalties assessed on generators during Winter Storm Elliott, as well as on a complaint against Midcontinent Independent System Operator, Inc. (“MISO”) and related tariff revisions regarding MISO’s prohibition of wind, solar, and battery hybrid resource participation in the ancillary services market. FERC is also expected to issue orders on a 21 year-long consolidated proceeding concerning the termination of long-term contracts between a California state agency and wholesale energy suppliers that was an outcropping of the California energy crisis, and another long-pending proceeding involving the cancellation of formula rates and wind down of the companies involved in the development of a proposed major transmission facility between West Virginia and Maryland that was terminated in 2012.

The Notice also indicates that FERC may be gathering more information about upstream investors related to blanket transaction authorizations under Federal Power Act (“FPA”) section 203, and may act on two petitions for declaratory orders filed by battery energy storage developers seeking exemptions from the Public Utilities Holding Company Act, a non-conforming Interconnection Services Agreement and Interconnection Construction Services Agreement for a solar developer, a Southwest Power Pool (“SPP”) filing to create an alternative process to allow an entity to apply for a cost allocation exemption for certain transmission upgrades, and an SPP compliance filing regarding Order No. 881 transmission line ratings. Below we provide a high-level overview of each of these notable agenda items.

These agenda items come at the end of a busy fall for FERC, which is expected to shrink to from four to three members when Commissioner James Danly steps down as Congress adjourns. In the new year, we expect a majority-Democratic FERC to address regional and interregional transmission planning and cost allocation; consider proposals from transmission providers seeking to comply with FERC’s landmark Order No. 2023 interconnection rule; rule on proposals from several regional transmission organizations and independent system operators to modify their capacity accreditation processes and capacity market structures, perhaps adopting markets that focus more on seasonal and more immediate capacity needs, and continue to grapple with the country’s evolving generation mix and calls for more robust investment in the country’s transmission infrastructure.

Generator-Related Complaints and Other FPA Section 206 Proceedings:

1. PJM Interconnection L.L.C., Docket No. ER23-2975-000, and related Winter Storm Elliott complaint dockets
 
We expect FERC to rule on the proposed settlement reached by parties to the many complaints filed earlier this spring by generators requesting relief from PJM’s assessment of capacity performance penalties on generation facilities that allegedly did not perform as requested by PJM during Winter Storm Elliott. There are three different agenda items related to Winter Storm Elliott proceedings, indicating that FERC may issue multiple orders relating to the complaint proceedings and proposed settlement, which received widespread support but also one set of comments in opposition.

2. Solar Energy Industries Association v. Midcontinent Independent System Operator, Inc., Docket No. EL23-28-001, and Midcontinent Independent System Operator, Inc., Docket No. ER23-1195-002

The Solar Energy Industry Association (“SEIA”) filed a complaint against MISO in January 2023 regarding MISO’s prohibition on wind, solar, and battery hybrid resources from participating in its ancillary services market. FERC denied the complaint in August 2023, and SEIA sought rehearing, which was denied by operation of law in November 2023. FERC will likely issue an order addressing the arguments raised on rehearing and potentially modifying or setting aside the August denial. We also expect FERC to rule in the same order on rehearing arguments raise in a related tariff proceeding.

3. Public Utilities Commission of the State of California v. Sellers of Long-Term Contracts to the California Department of Water Resources, Docket Nos. EL02-60-007 and EL02-60-013, and California Electricity Oversight Board v. Sellers of Long-Term Contracts to the California Department of Water Resources, Docket Nos. EL02-62-006 and EL02-62-01

This 21 year-old consolidated proceeding concerns the proposed termination of long-term contracts between wholesale energy suppliers and the California Department of Water Resources entered into during the 2000-2001 California energy crisis. At issue is whether the terms of the contracts caused excessive burdens to California’s electric customers, and if so, the scope of the refunds due. We expect the Commission will act on the proceeding—aspects of which have been reviewed by the Supreme Court—at Tuesday’s open meeting.

4. PJM Interconnection, L.L.C., Docket Nos. EL24-26-000 & ER22-2931-000 

This proceeding involves PJM’s request for approval of a non-conforming Interconnection Services Agreement and Interconnection Construction Services Agreement for a SunEnergy1, LLC (“SunEnergy 1”) subsidiary project company, New Market Solar, LLC. SunEnergy1 protested PJM’s submission of the nonconforming agreements over a year ago and recently requested expedited action. Based on the agenda’s inclusion of a new “EL24” docket on this agenda item, we expect FERC to issue an order instituting a section 206 proceeding related to one or both nonconforming agreements.

Transmission Development and Cost Allocation:

5. Southwest Power Pool, Inc., Docket No. ER22-2339-001

FERC Order No. 881, issued in December 2021, requires regional transmission organizations and independent system operators—including SPP—to establish systems and procedures to allow transmission owners to use dynamic line ratings if they choose. We anticipate that FERC will issue an order responding to this SPP compliance filing, addressing whether SPP’s filing is consistent with Order No. 811.

6. Southwest Power Pool, Inc., Docket No. ER22-1846-004

FERC is expected to rule on rehearing requests of its July 13, 2023, decision to reject without prejudice an SPP FPA section 205 proposal to create a process by which the costs of a transmission facility “Byway,” that is a project with a voltage level between 100 kV and 300 kV, can be allocated on a postage-stamp basis across the SPP footprint on a case-by-case basis. FERC first accepted this proposal, and then rejected it based on arguments raised on rehearing. We expect that FERC will issue an order addressing arguments raised on rehearing of the July rejection order.

7. Potomac-Appalachian Transmission Highline, LLC and PJM Interconnection, L.L.C., Docket Nos. ER09-1256-000, et al.

Potomac-Appalachian Transmission Highline, LLC (“PATH”) submitted a motion to stay certain actions regarding the PATH Project—a proposed 275-mile 765 kV line from West Virginia to Maryland terminated by PJM in 2012—until the Commission issues a final order approving a settlement agreement regarding the cancellation of PATH companies’ formula transmission rate and the wind-down and termination of PATH companies. This order will likely either approve the settlement agreement or otherwise direct an end to PATH-related proceedings.

FPA Section 203 Transaction Approvals and Upstream Affiliation Issues:

8. Federal Power Act Section 203 Blanket Authorizations for Investment Companies, Docket No. AD24-6-000

FERC is instituting a new AD (administrative) docket with a caption that suggests the proceeding will center on FERC’s authority to adopt and administer blanket authorizations for investment companies under section 203 of the Federal Power Act. Although we do not know for certain, it is possible that this docket could call a technical conference or a document collection request or take some other administrative action inquiring into the significance or reporting obligations of upstream investors in jurisdictional electricity assets.

Public Utility Holding Company Act Waiver Petitions:

9. Greenbacker Renewable Energy Company LLC, Greenbacker Renewable Energy Company II, LLC, Docket No. EL24-4-00 and Summit Ridge Energy, LLC and Osaka Gas USA Corporation, Docket No. EL23-106-000

In September 2023, Greenbacker Renewable Energy Company LLC and Greenbacker Renewable Energy Company II, LLC (jointly) and Summit Ridge Energy, LLC and Osaka Gas USA Corporation (jointly) separately filed petitions seeking declaratory orders from FERC for exemption from regulatory requirements that might otherwise attach due to their ownership of interests in grid-charged battery energy storage systems (“BESS”) that will operate at the retail level (and therefore cannot qualify as exempt wholesale generators (“EWGs”) or qualifying facilities (“QFs”). The petitions argue that the upstream holding companies should receive exemption from the requirements under PUHCA like those afforded to QFs and EWGs. We expect FERC will act on these petitions at the open meeting.