FERC Dismisses Petition to Make Net Metering Jurisdictional

Akin Gump Strauss Hauer & Feld LLP

Akin Gump Strauss Hauer & Feld LLP

On July 16, 2020, the Federal Energy Regulatory Commission (FERC or the “Commission”) dismissed the petition for declaratory order (“Petition”) filed by the New England Ratepayers Association (NERA) asking FERC to assert jurisdiction over net metering, on the theory that net metering constitutes a sale for resale under the Federal Power Act (FPA). We summarized the Petition here.

The Petition caused considerable concern when it was filed at FERC in the spring, eventually spawning thousands of pages of comments—the vast majority of which supported the current state-regulated net metering regime. FERC acted very quickly on the Petition, issuing its order only two weeks after the June 30 deadline for reply comments.

FERC’s 19-page order does not address the merits of the Petition, and dedicates only three paragraphs to substantive issues. The Commission notes that declaratory orders are discretionary, and are intended to “terminate a controversy or remove uncertainty.”1 Moreover, FERC issues declaratory orders to address “specific facts and circumstances” rather than generic allegations of harm such as those made in the NERA Petition.2 The Commission points out that the MidAmerican3 and Sun Edison4 decisions that NERA sought to overturn both addressed specific net metering programs and specific parties. FERC also notes that, to the extent NERA was alleging that a particular state’s net metering program violates the Public Utility Regulatory Policies Act of 1978 (PURPA), the Petition does not meet the standards for enforcement under PURPA.5

Though unquestionably a relief for the small-scale solar industry, FERC’s order is unlikely to be the end of the story. NERA is a sophisticated and well-funded litigant that is likely to request rehearing of FERC’s order. Such litigation is likely to proceed at an accelerated pace, as FERC is no longer free to indefinitely toll the period in which it must respond to a rehearing request.6 If rehearing is denied (as would be likely), NERA has the resources to seek subsequent appellate review. However, FERC’s order provides only limited grounds for appeal as the dismissal is grounded in the discretionary nature of declaratory orders.

NERA may also go seeking “specific facts and circumstances” to bring before the Commission. Two Republican commissioners, Bernard McNamee and James Danly, wrote separate concurrences, both of which highlight the procedural and non-substantive nature of the Commission’s order. McNamee’s concurrence, in particular, seems to invite parties to file a FPA Section 206 complaint to bring a specific net metering case before the Commission for consideration. Danly’s concurrence is more measured, but expresses concern that, if the merits of the issue are not addressed by the Commission in the near future, then the federal district courts may be asked to address the issue, resulting in inconsistent treatment of net metering in different regions.

1 Order at P 35.

2 Id. P 36 (internal quotation marks omitted).

3 MidAmerican Energy Co., 94 FERC ¶ 61,340 (2001).

4 Sun Edison LLC, 129 FERC ¶ 61,146 (2009).

5 Order at P 37 (citing 16 U.S.C. § 824a–3(h)(2)(B) (2012)).

6 See Allegheny Defense Project v. FERC, No. 17-1098 (D.C. Cir. June 30, 2020). We discussed the implications of Allegheny Defense 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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