Electric Power Supply Association v. FERC, No. 23-1808 (3d Cir. 2024)
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Several power providers and their associations challenged orders from the Federal Energy Regulatory Commission (FERC) that retroactively permitted a new auction rule to apply to a pending auction. The rule was implemented by PJM Interconnection L.L.C., the entity responsible for the auction, to determine the auction's results. The petitioners claimed FERC's orders violated the filed rate doctrine, which prohibits retroactive rates. The case background involves the Federal Power Act (FPA), which grants FERC exclusive jurisdiction over rates for the transmission and wholesale of electric energy in interstate commerce. The FPA requires all related rates, rules, and regulations to be "just and reasonable" and not unduly preferential.
The petitioners and FERC agreed that the filed rate was the PJM Open Access Transmission Tariff, which sets the procedures governing PJM’s capacity auctions. PJM administered a capacity auction in December 2022 for capacity in the June 2024 – May 2025 period. A dispute arose when PJM sought to adjust the Locational Deliverability Area (LDA) Reliability Requirement due to perceived anomalies in the auction results, which would have resulted in a high clearing price for a certain region. FERC approved the proposed adjustment, which was challenged by the petitioners.
The court agreed with the petitioners and held that the orders of FERC were retroactive and thus violated the filed rate doctrine. The court granted the petitions and vacated the orders in the relevant part. The court emphasized that the equities play no role in the application of the filed rate doctrine and that predictability is of paramount importance in electricity markets. It concluded that FERC’s disregard of the filed rate doctrine creates unpredictability in the markets and may ultimately harm consumers who buy electricity in those markets.
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