Summary
This D.C. Circuit opinion reviews a Federal Energy Regulatory Commission order denying Energy Harbor, LLC’s complaint regarding over $12 million in nonperformance penalties assessed by PJM Interconnection. The court addressed whether PJM’s Tariff excused nonperformance during an emergency when a generator faced both an approved maintenance outage and unexpected forced outages. Upholding FERC’s interpretation, the court held that the maintenance outage did not solely cause the performance shortfall because the facility possessed sufficient installed capacity to meet its expected output but failed due to additional forced outages. The petition for judicial review was ultimately denied.
Topics
Practice areas
Questions Presented
- Whether Section 10A(d) of PJM’s Tariff excuses nonperformance when a maintenance outage is not the sole cause of a performance shortfall
- Whether the D.C. Circuit should defer to FERC’s interpretation of the tariff after the overruling of Chevron
Holdings
- The exemption does not apply because the maintenance outage was not the sole cause of the shortfall; PJM’s interpretation is correct.
- The court affirmed that substantial deference to FERC’s reasonable interpretation remains appropriate under the APA.
Key quotations
““Section 10A(d) provides that a “Capacity Resource . . . shall not be considered in the calculation of a Performance Shortfall . . . to the extent such Capacity Resource . . . was unavailable ... solely because the resource on which such Capacity Resource is based was on a Generator Planned Outage or Generator Maintenance Outage approved by the Office of the Interconnection . . ..”” (at P 2)
Factual background
During a December 2022 winter storm, PJM assessed $12.1 million in penalties against Energy Harbor for failing to meet capacity commitments. The Sammis Plant was on a PJM‑approved maintenance outage, but also suffered forced outages. Energy Harbor argued the maintenance outage should excuse the shortfall under Section 10A(d) of the PJM Tariff.
Procedural history
Energy Harbor filed a complaint with FERC challenging PJM's penalty calculation; FERC denied the complaint and later denied rehearing. Energy Harbor then petitioned the D.C. Circuit for review.