FERC Requires All Generators To File Rate Schedules To Provide Reactive Power Service, Even if the Service Is Uncompensated

by Akin Gump Strauss Hauer & Feld LLP

In a move that could have a significant impact on electric generators, the Federal Energy Regulatory Commission (FERC) recently clarified its policy with respect to the provision of reactive power service.  The provision of reactive power is used to maintain voltage on the bulk transmission system within defined limits.  Generators often provide reactive power to transmission providers pursuant to FERC’s pro forma Large Generator Interconnection Agreement, and such service is generally not compensated if the generator is operating within certain power output ranges. In an order dated October 17, 2013, FERC found that all existing and new generators that provide jurisdictional reactive power service must file rate schedules containing the rates, term and conditions of that service, even if the generator receives no compensation. 

FERC’s decision arose out of a long-running proceeding in which Chehalis Power Generating L.P. (Chehalis) had proposed an initial rate schedule establishing the rates for it to provide reactive power service to Bonneville Power Administration (BPA).  FERC concluded that Chehalis’s rate schedule was not an initial rate, because Chehalis had previously been providing that service to BPA pursuant to an interconnection agreement, albeit free of charge.  FERC concluded that Chehalis’s proposal was for a “change in rates” rather than an “initial rate,” and thus its changed rate was subject to the suspension and refund provisions of Section 205(e) of the Federal Power Act.  FERC emphasized that an initial rate involves a new customer and a new service, whereas Chehalis had already been providing reactive power service to BPA under the interconnection agreement. 

Chehalis appealed the FERC decision to the U.S. Court of Appeal for the D.C. Circuit (D.C. Circuit), which remanded the case to FERC on the single issue as to whether Chehalis’s rate schedule should have been filed with FERC.  On remand, FERC concluded that Chehalis’s rate for the service it provided to BPA should have been filed, making Chehalis’s rate  a “changed rate” subject to suspension and refund.

Chehalis again appealed the FERC decision to the D.C. Circuit.  On voluntary remand, FERC reaffirmed in the October 17 order that Chehalis should have filed a rate schedule governing its provision of reactive power service under the interconnection agreement, thus making its filing a changed rate rather than an initial rate.  However, FERC recognized that there had been some uncertainty with respect to its previous policy, and therefore clarified that, on a prospective basis, both existing and new generators providing jurisdictional reactive power services (including uncompensated services under an interconnection agreement) must do so pursuant to a FERC-filed rate schedule.  FERC also clarified that it would not impose sanctions for a generator’s failure, prior to the October 17 order, to have a rate schedule on file for reactive power service provided without compensation.

FERC directed its staff to conduct a workshop to explore the mechanics for generators to file the required rate schedules when there is no compensation. The details of the workshop will be announced at a later date.


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.

© Akin Gump Strauss Hauer & Feld LLP | Attorney Advertising

Written by:

Akin Gump Strauss Hauer & Feld LLP

Akin Gump Strauss Hauer & Feld LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.