Summary
The United States Court of Appeals for the D.C. Circuit reviewed petitions for review challenging Federal Energy Regulatory Commission (FERC) orders that denied New York transmission owners' requests to fund interconnection upgrades and earn a return on those investments. The court held that FERC properly dismissed the owners' Section 205 filing because their contract with the NYISO waived unilateral filing rights except for recovering incurred costs or returns on existing investments, neither of which applied here. Additionally, the court found that FERC reasonably concluded the owners failed to meet their burden under Section 206 to prove that existing rates were unjust, unreasonable, or discriminatory. The petitions for review were ultimately denied.
Topics
Practice areas
Questions Presented
- Whether FERC's dismissal of the petitioners' Section 205 filing was arbitrary and capricious.
- Whether FERC's dismissal of the petitioners' Section 206 complaint was arbitrary and capricious.
- Whether the NYISO‑TO contract waiver of Section 205 rights should be given deference.
Holdings
- FERC acted reasonably in dismissing the Section 205 filing because the petitioners had contractually waived their unilateral filing rights and the filing did not seek recovery of incurred costs or a reasonable return on existing investments.
- FERC acted reasonably in dismissing the Section 206 complaint because the petitioners failed to demonstrate that the existing rates were unjust, unreasonable, unduly discriminatory, or preferential.
Key quotations
“FERC concluded that the owners failed to demonstrate that the existing funding mechanism is unjust, unreasonable, unduly discriminatory, or preferential.” (at 531)
“We deny the owners’ petitions for review.” (at 531)
Factual background
The petitioners own portions of New York's electric‑transmission grid and seek the ability to finance interconnection upgrades and earn a return on those investments. Under the Open Access Transmission Tariff (OATT) the upgrades must be funded by the generator, not the transmission owner. The petitioners argue that the current funding scheme forces them to bear uncompensated risks and that FERC’s denial of their requests is unjust and unreasonable.
Procedural history
The petitioners, owners of New York transmission assets, filed Section 205 and Section 206 petitions with FERC in April 2021. FERC denied both petitions, and after rehearing denied the requests. The petitioners appealed to the D.C. Circuit, which reviewed the agency's actions for arbitrary and capricious error.