Commissioner James Danly Statement
May 3, 2023
Docket No. EL23-40-000
I dissent from today’s issuance[1] because the Commission has failed to grapple with a core point raised by the Complainants. While it may be that the actual Planning Reserve Margin value (i.e., the number itself) does not necessarily need to be in Southwest Power Pool, Inc.’s (SPP) Open Access Transmission Tariff (Tariff), it nevertheless represents a rather important part of SPP’s rate. Complainants are quite right that the provisions that significantly affect rates, terms and conditions of service must be included in the Tariff.[2] The filed rate doctrine is clear: “utilities are forbidden to charge any rate other than the one on file with the Commission.”[3] Reliance on business practice manuals and external processes for implementation details are inapposite to the fundamentals of ratemaking and utility regulation. Had I been in the majority, I would have given greater attention to the central question: what must we require SPP to include in the Tariff versus what can the Commission allow to be consigned to business practice manuals or external processes?
Clear and unambiguous tariff provisions are essential to provide ratepayer protection, right wrongs, and provide relief from (the now, seemingly, inevitable) failures that arise when administrating regional transmission organization (RTOs) tariffs. This ensures both predictability and redressability. The more comprehensive the Tariff provisions, the greater the protection to ratepayers under section 309 of the Federal Power Act (FPA).[4] How much better for the ratepayer to be able to point to actual tariff violations, be able to cite to particular sections of the tariff, and be entitled to seek relief under FPA section 309. Instead, when important elements are omitted from a tariff, the aggrieved party must plead to the much higher burden of section 206 and the relief that they will be afforded, should they prevail, will be prospective only.[5] In this case, Complainants face an increase in the capacity reserve margin from 12 percent to 15 percent effective 2023.[6] This represents a truly significant increase of a major input to the rate, especially if that increase (or the timeline on which it is to be implemented) was unexpected. Their argument has obvious appeal—they should only be charged the rate on file.
Perhaps the lesson to be drawn from this proceeding is not to focus on whether the existing Tariff provisions accord with the rule of reason but whether responsible administration and regulation of RTOs is even possible. FPA sections 205 and 206[7] were established when vertically integrated, state-commission overseen, investor-owned utilities were the norm. The FPA was not established for the regulation of the complicated administrative market mechanisms that we have today in which the tariffs, such as they are, run to thousands of pages, do not include what could properly be described as critical rate elements, and are in a continuous state of flux as multiple, fundamental, inter-dependent elements of the market design are often considered in separate, parallel proceedings, each facing an uncertain and unshared fate before the Commission.[8] As the complexity and uncertainty of our markets increases, it becomes ever more difficult to implement rational policies and to assure ourselves, even in the face of a particular complaint, that a tariff remain just and reasonable.
The majority’s response, in part, to Complainants’ arguments that it has never required other regions to include the Planning Reserve Margin value[9] or more specific detail in the Tariff[10] is simply unresponsive.[11] I also do not find the majority’s attempt to distinguish precedent in the New York Independent System Operator’s and California Independent System Operator’s tariffs entirely convincing.[12]
The majority also fails to grapple with recent precedent it established in SPP in which it overturned an order and required additional, specific detail to be included in SPP’s Tariff, rather than include the details in the business practice manual and a external processes, regarding the Effective Load Carrying Capacity accreditation methodology for wind and solar resources.[13] I am hard pressed to identify the principled distinction between these two subjects that demands (or permits) disparate treatment.
For these reasons, I respectfully dissent.
[1] Am. Elec. Power Service Corp. v. Sw. Power Pool, Inc., 183 FERC ¶ 61,068 (2023) (SPP Order).
[2] See Cargill Power Mkts., LLC v. Pub. Serv. Co. of N.M., 132 FERC ¶ 61,079, at P 23 (2010) (explaining that the FPA “requires all practices that significantly affect rates, terms, and conditions of service to be on file with the Commission” so that customers have “proper notice” and “obtain services on a just and reasonable and not-unduly discriminatory basis”); Kern River Gas Transmission Co., 85 FERC ¶ 61,294, at 62,202 n.11 (1998) (requiring all of the terms and conditions that affect transportation service and rates be “clearly reflected in the pipeline’s tariff, that the Commission and the pipeline’s shippers have notice of the proposed changes, and that the Commission has an opportunity to review the proposal to ensure that it is just and reasonable” under comparable provision in the Natural Gas Act).
[3] W. Deptford Energy LLC v. FERC, 766 F.3d 10, 12 (D.C. Cir. 2014) (citations omitted).
[4] 16 U.S.C. § 825h.
[5] Id. § 824e(b) (stating “the burden of proof to show that any rate, charge, classification, rule, regulation, practice, or contract is unjust, unreasonable, unduly discriminatory, or preferential shall be upon . . . the complainant.”).
[6] Complaint at 2.
[7] Id. §§ 824d, 824e.
[8] See, e.g., PJM Interconnection, L.L.C., 182 FERC ¶ 61,109 (2023); see also PJM Interconnection, L.L.C., 171 FERC ¶ 61,153, order on reh’g, 173 FERC ¶ 61,123 (2020); PJM Interconnection, L.L.C., 173 FERC ¶ 61,134 (2020), order on reh’g, 174 FERC ¶ 61,180 (2021); PJM Interconnection, L.L.C., 177 FERC ¶ 61,209 (2021), order on clarification, 178 FERC ¶ 61,085 (2022), order on reh’g, 180 FERC ¶ 61,051 (2022), order on compliance, 180 FERC ¶ 61,135 (2022).
[9] SPP Order, 183 FERC ¶ 61,068 at P 43.
[10] Id. P 42 (“descriptions of the process through which capacity requirements are set [are] sufficient to satisfy the rule of reason.”).
[11] 5 U.S.C. § 706; Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983) (“[A]n agency changing its course must supply a reasoned analysis . . . .”) (quoting Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1970), cert. denied, 403 U.S. 923 (1971)).
[12] SPP Order, 183 FERC ¶ 61,068 at PP 42-43.
[13] Sw. Power Pool, Inc., 182 FERC ¶ 61,100 (2023); see also id. (Danly, Comm’r, dissenting).