Commissioner James Danly Statement
March 2, 2023
Docket Nos. ER22-379-003, et al.
I dissent from today’s order[1] overturning the Commission’s August 5, 2022 order,[2] which conditionally accepted Southwest Power Pool, Inc.’s (SPP) proposed revisions to Attachment AA of the SPP Open Access Transmission Tariff (Tariff)[3] and proposal to adopt an Effective Load Carrying Capacity (ELCC) capacity accreditation methodology for wind and solar resources.[4] It also dismisses as moot SPP’s compliance filing in response to the August 2022 Order that contains updated Tariff sheets with additional detail on its use of the ELCC methodology.[5]
I dissent from this order because the reasoning upon which it is based fails to address the merits at all. SPP’s proposal is just and reasonable, and rehearing should not be granted here. There was no reason not to. Were there procedural defects, we should have cured them in the course of this proceeding’s interminable back-and-forth. Instead, having repeatedly returned to the filer for more information, we now declare that which we asked for insufficient, and grant rehearing, implicitly terminating decades of (admittedly questionable) FERC practice without even acknowledging it.
I also dissent on procedural grounds. As always, when discussing a procedural failure, real or imagined, a recitation of the facts is necessary.
SPP submitted a filing pursuant to section 205 of the Federal Power Act (FPA) to incorporate its capacity accreditation methodology provisions in its SPP Planning Criteria and a new SPP Business Practice manual that included details of the process by which SPP staff would study data provided by resources.
SPP proposed to modify its existing Section 7.8 of Attachment AA of the SPP Tariff as follows:
7.8 A resource qualified in accordance with Section 7.1, 7.2, 7.4, or 7.7 of this Attachment AA shall be capable of supplying its accredited capacity, as have its accredited capacity determined in accordance with SPP Planning Criteria and SPP Business Practices, for a minimum of four (4) continuous hours. The requirement set forth in Section 7.8 shall not apply to run-of-theriver hydroelectric, wind, or solar resources.
7.8.1 Qualified resources shall be capable of supplying their accredited capacity for a minimum of four (4) continuous hours.
7.8.2 The requirement set forth in Section 7.8.1 shall not apply to run-of-the-river hydroelectric, wind, or solar resources. Qualified run-of-the-river hydroelectric, wind, or solar resources shall be capable of supplying their accredited capacity based on historical performance in accordance with the SPP Planning Criteria and SPP Business Practices.[6]
Subsequently, SPP provided additional information regarding its proposal in responses[7] to two deficiency letters.[8] Responses to deficiency letters are considered amendments or supplemental filings to a filing party’s initial FPA section 205 filing.[9] Notices of filings are issued with a comment date and the statutory 60-day clock for Commission action is reset. In addition, on March 30, 2022, the Commission Secretary issued notice for a conference call to be held on April 6, 2022 regarding responses to the First Deficiency Letter. Clean Energy Advocates filed a motion to intervene, protest and comments on December 1, 2021. They then filed a protest regarding the first deficiency response on April 4, 2022, a protest regarding the second deficiency response on June 29, 2022, a request for rehearing of the August 5, 2022 order on September 2, 2022, and a protest to the compliance filing on September 27, 2022.
As relevant here, in response to Question 2 posed in the Second Deficiency Letter, SPP explained that “[f]or ELCC accreditation, the respective 35% and 20% thresholds for Tier 1 wind and solar resources are not measured in relation to Peak Demand or Net Peak Demand as those terms are defined in the SPP Tariff. Instead, the thresholds for Tier 1 are measured using the individual [Load Responsibility Entity’s (LRE)] actual average seasonal net peak load from the previous three years.”[10] SPP further explained that “[t]he Tier 1 allocation will be a seasonal designation because the individual LRE net peak load values can vary between seasons. The ELCC accreditation to individual resources is a seasonal value. Currently, the separately assigned seasons are for the summer and winter months, as defined in the SPP Tariff.”[11] SPP, therefore, explained its use of the term seasonal net peak load, even though it did not propose to define it in its Tariff.
In the August 5, 2022 order, we accepted SPP’s proposal subject to condition that SPP revise its Tariff to include some of the additional detail it provided through its transmittal letter, deficiency responses, and the noticed conference call. Specifically, we directed SPP to include the following additional detail in its compliance filing: “(1) an explanation of its ELCC methodology,[12] including its tier allocation process and base case and change cases,[13] with a level of detail similar to that provided in NYISO;[14] and (2) a definition of seasonal net peak load.”[15]
Clean Energy Advocates contend that there are procedural infirmities with our underlying order, claiming that SPP was required to file its rate proposal under FPA section 205 and was required to afford parties adequate notice of the filing.[16] Contrary to their arguments, the two deficiency responses filed by SPP, consistent with Commission precedent, were amendments to its initial FPA section 205 rate filing.[17] Clean Energy Advocates filed protests in response to every filing SPP made including the initial filing, deficiency responses, and the compliance filing in this proceeding. Clearly, Clean Energy Advocates not only had notice but also took advantage of their opportunity to be heard.
In today’s order, the majority reverses course, stating that, although we accepted SPP’s filing under the rule of reason and subject to condition, we did so absent a proposed definition of seasonal net peak load. They conclude that we therefore failed to provide the required notice to interested parties in violation of FPA section 205 and its implementing regulations.[18] To reiterate, there are no merits determinations at all. In fact, the majority summarily finds that it need not even address the remainder of the arguments advanced by Clean Energy Advocates on rehearing (e.g., their undue discrimination claims).
As to the new definition, the Commission itself directed that the term be defined in the Tariff.[19] In its compliance filing, SPP stated that the term seasonal net peak load[20] is distinguished from the existing defined term “Net Peak Demand,” which refers to a forecasted amount rather than data based on events that have actually occurred.[21] In its second deficiency response, SPP explained that ELCC is a seasonal value.[22] The new definition essentially combines the existing definitions of Peak Demand,[23] Net Peak Demand,[24] Summer Season[25] and Winter Season,[26] into one new definition, and each of these terms was identified either in a question in a deficiency letter or in one of SPP’s responses. Contrary to the language in the majority’s order[27] and the concurrence by Commissioner Clements,[28] it cannot be said that SPP did not explain its use of the term in its deficiency response nor can it be said that there was insufficient notice of the existing Tariff provisions that SPP combined to form the new definition. And lest any reader suffer a lapse of memory, for FERC to direct 205 filers to submit tariff language reflecting a deficiency response upon compliance is hardly novel. In fact, it is routine.[29] This order, and the procedural maneuvers by which it has come to issue, fall squarely within existing Commission precedent, right or wrong.
That does not mean I like it. I have long argued against the use of deficiency letters as a delay tactic.[30] I have also questioned their use as a means by which to cure deficient tariff filings.[31] Simply put, FPA section 205[32] does not contemplate a back-and-forth exchange between a filing utility and the Commission. Needless to say, I am sympathetic to the process concerns raised in the protests. Should the Commission decide to reconsider the use of deficiency letters, I would enthusiastically support reforms to our practice.
All this aside, SPP has proposed a well-pleaded, just and reasonable Tariff. The Commission provided adequate notice (at least under Commission precedent) at every stage to the litigants, even with respect to the definition the Commission directed be filed. And there is no denying that we often approve Tariff filings piecemeal.[33] Let there be no doubt, we are departing from long-standing precedent without acknowledging we are doing so, a black letter Administrative Procedure Act violation.[34] I am therefore compelled to dissent.
I must pause to ask: whence comes this newfound pang of conscience, especially in the face of decades of practice? What are the implications going forward? Will we no longer accept compliance filings following deficiency responses? Will we keep issuing deficiency letters until all new language to be included in a Tariff has been filed? Will we simply reject initial filings and deny any opportunity to cure other than starting anew? We owe regulated entities an answer. And if this order does mark a pivot from earlier practice, I am all for it. But we must announce our changes in policy, not hide them.
There is another due process concern. SPP is clearly being treated differently in this case than other Regional Transmission Organizations are when deficiency letters are required to fix deficient tariff filings. No doubt today’s order will come as a shock to SPP. They answered every question we asked and did so in what they reasonably believed to be the ordinary course of Commission practice, answering questions and preparing to cure them in its compliance filing as has happened so many times before. I sympathize.
Today’s order could never have issued absent the Commission’s abuse of deficiency letters. I eagerly await the courts’ instruction on their proper employment. Eventually they will be challenged. Such judicial guidance is far from unthinkable. After all, the courts recently addressed another procedural scheme employed by the Commission. As everyone is aware, we suffered a severe rebuke from the D.C. Circuit for our abuse of tolling orders.[35]
Potential procedural defects aside, I leave SPP with a word of warning: beware of issues lying in wait. The majority declines to address the substantive arguments raised by Clean Energy Advocates. I strongly encourage SPP to address all of them when it submits its new FPA section 205 filing. Otherwise, this already protracted litigation will continue even longer.
We should not be granting rehearing and reversing course. If we saw a procedural defect, we should have acted to cure it and then denied rehearing. The Commission’s underlying order in these proceedings upholds the rule of reason and complies with statutory requirements of the FPA.
For these reasons, I respectfully dissent.
[1] Sw. Power Pool, Inc., 182 FERC ¶ 61,100 (2023).
[2] Sw. Power Pool, Inc., 180 FERC ¶ 61,074 (2022) (August 2022 Order).
[3] SPP Tariff, Attach. AA (0.0.0).
[4] Sw. Power Pool, Inc., 182 FERC ¶ 61,100 at P 2.
[5] Id. P 3.
[6] Transmittal at 4 & n.11; Proposed SPP Tariff at Attach. AA at § 7.8.
[7] See SPP, March 14, 2022 Response to First Deficiency Letter; SPP, June 8, 2022 Response to Second Deficiency Letter.
[8] First Deficiency Letter, February 11, 2022 (First Deficiency Letter); Second Deficiency Letter May 10, 2022 (Second Deficiency Letter).
[9] First Deficiency Letter at 6 (citing Duke Power Co., 57 FERC ¶ 61,215, at 61,713 (1991) (“[T]he Commission will consider any amendment or supplemental filing filed after a utility’s initial filing . . . to establish a new filing date for the filing in question.”)); Second Deficiency Letter at 5 (citing Duke Power Co., 57 FERC ¶ 61,215 at 61,713 (“[T]he Commission will consider any amendment or supplemental filing filed after a utility’s initial filing . . . to establish a new filing date for the filing in question.”)).
[10] SPP June 8, 2022 Response to Second Deficiency Letter at 6-7.
[11] Id.
[12] August 2022 Order, 180 FERC ¶ 61,074 at P 31 & n.40 (SPP First Deficiency Response, Attachment 1 at 6 (“[N]et planning capability for wind and solar facilities will be established using Effective Load Carrying Capability (ELCC) methodology.”)).
[13] Id. at P 31 & n.41 ((“Wind and solar resources will be studied in three tiers based on meeting the requirements [in the SPP Planning Criteria.]”); SPP Second Deficiency Response at 4 (The base case “is defined as a system load supplied by all other resource types in the SPP footprint that are not being evaluated in the instant analysis.”); id. (explaining that each tier has its own change case and includes resources in that tier and any higher priority tiers)).
[14] August 2022 Order, 180 FERC ¶ 61,074 at P 31 & n.42 (SPP Second Deficiency Response at 7).
[15] Id. P 31 & n.43 (“We note that Commission staff issued two deficiency letters and conducted a publicly noticed conference call to obtain enough information for the Commission to rule on SPP’s filing. We expect SPP, in its compliance filing, to provide sufficient detail in its tariff, consistent with the directives of this order, to allow the Commission to act in a subsequent order without the need for additional record development.”).
[16] Clean Energy Advocates September 27, 2022 Protest of Compliance Filing, at 6.
[17] See SPP March 14, 2022 Response to First Deficiency Letter; SPP June 8, 2022 Response to Second Deficiency Letter.
[18] August 2022 Order, 180 FERC ¶ 61,074 at P 35.
[19] Id. P 31.
[20] SPP September 6, 2022 Compliance Filing, at Attach. AA, § 2 (“The actual demand including a) transmission losses for energy, b) the impacts of Non-Controllable and Non-Dispatchable Behind-The-Meter Generation, c) the impacts of Non-Controllable and Non-Dispatchable Demand Response Programs, and d) the impacts of Demand Response Programs measured over a one clock hour period during either the Summer Season or Winter Season.”).
[21] Id., Transmittal Letter at 3.
[22] SPP June 8, 2022 Response to Second Deficiency Letter at 7.
[23] Attach. AA, § 2 (“The highest demand including a) transmission losses for energy, b) the projected impacts of Non-Controllable and Non-Dispatchable Behind-The-Meter Generation, and c) the projected impacts of Non-Controllable and Non-Dispatchable Demand Response Programs measured over a one clock hour period.”).
[24] Id. (“The forecasted Peak Demand less the a) projected impacts of a Demand Response Program and b) adjusted to reflect the contract amount of Firm Power with another entity as specified in Section 8.2 of this Attachment AA.”); see also id. Attach. AA § 8.2 (“When the purchaser and seller are both LREs, a power purchase agreement that qualifies as Firm Power shall result in a Net Peak Demand adjustment of the obligation for capacity and planning reserves from the purchaser to the seller. The purchaser shall deduct the purchased contract amount from its Net Peak Demand and the seller shall add the amount to its Net Peak Demand. The responsibility to maintain the Resource Adequacy Requirement and the Winter Season obligation shall transfer from the purchaser to the seller.”).
[25] Id. at Attach. AA, § 2 (“June 1st through September 30th of each year.”).
[26] Id. (“December 1st through March 31st of each year.”).
[27] Sw. Power Pool, Inc., 182 FERC ¶ 61,100 at P 35 n.86.
[28] Id. (Clements, concurring at P 1 n.1).
[29] See, e.g., PJM Interconnection, L.L.C., 181 FERC ¶ 61,162, at P 82 (2022) (“PJM stated in its Deficiency Letter Response that New Service Requests that do not contribute to the need for any network upgrades and do not require subsequent studies may accelerate to a final interconnection-related agreement. However, this language does not appear in the proposed Tariff. . . . Therefore, we direct PJM . . . to submit a compliance filing to include language in the Tariff memorializing PJM’s representation that only New Service Requests with no network upgrade cost assignment and that do not require further studies are eligible for acceleration, consistent with PJM's stated intent in its Deficiency Letter Response.”) (citation omitted); Wabash Valley Power Ass’n, Inc., 172 FERC ¶ 61,215, at P 23 (2020) (“[W]e accept the Distributed Generation Policy as just and reasonable, effective June 29, 2020, subject to the condition that Wabash make a compliance filing within 30 days of the date of this order revising the Distributed Generation Policy to add its clarification, provided in its Deficiency Letter Response, regarding the limited applicability of the Distributed Generation Policy to members who have chosen to retain their [Public Utility Regulatory Policies Act of 1978] purchase obligations.”) (citations omitted); PacifiCorp, 171 FERC ¶ 61,112, at P 67 (2020) (“[C]onsistent with PacifiCorp’s offer in response to the Deficiency Letter, we direct PacifiCorp to submit a compliance filing within 45 days of the date of this order proposing revisions, consistent with the proposal in its Deficiency Response, to allow interconnection customers to be studied for both [Network Resource Interconnection Service] and [Energy Resource Interconnection Resource] in the initial Cluster Study.”); PJM Interconnection, L.L.C., 138 FERC ¶ 61,020, at P 55 (2012) (“In response to the deficiency letter, PJM has clarified that the incentive factor, or Z, does not apply to any black start cost recovery other than those units that have elected to forego recovery of new or additional Black Start Capital Costs and commit to provide black start service for a term of two years as set forth in paragraph, or section, 5 of Schedule 6A. Since PJM’s Tariff does not state this, the Commission requires that PJM, as part of its compliance filing revise its Tariff to specify that the incentive factor (Z) does not apply to any black start cost recovery other than those units that have elected to forego recovery of new or additional Black Start Capital Costs and commit to provide black start service for a term of two years as set forth in paragraph, or section, 5 of Schedule 6A.”).
[30] See Statement of James P. Danly, Docket Nos. ER21-1111-002, et al. (Oct. 20, 2021).
[31] The issuance of deficiency letters is a practice employed for many years at the direction of many different Chairmen. I understand well the temptation to employ such a convenient procedural mechanism. I sparingly directed the issuance of deficiency letters myself. See, e.g., PJM Interconnection, L.L.C., December 22, 2020 Deficiency Letter, Docket No. ER21-278-000 (deficiency letter regarding an October 30, 2020 filing submitted pursuant to section 205 of the FPA noting that, pending receipt of the information requested to be provided 30 days from the date of the letter, a filing date will to be assigned to the filing).
[32] 16 U.S.C. § 824d.
[33] See Calpine Corp. v. PJM Interconnection, L.L.C., 163 FERC ¶ 61,236 (2018) (June 2018 Order), order establishing just & reasonable rate, 169 FERC ¶ 61,239 (2019) (December 2019 Order), order on reh’g & clarification, 171 FERC ¶ 61,034 (Order Denying Rehearing of June 2018 Order), order on reh’g & clarification, 171 FERC ¶ 61,035 (Rehearing Order of December 2019 Order), order on reh’g & compliance, 173 FERC ¶ 61,061 (2020) (October 2020 Rehearing Order), order on compliance & clarification, 174 FERC ¶ 61,036 (January 2021 Compliance & Clarification Order), order setting aside prior order, in part, 174 FERC ¶ 61,109 (2021) (Order Setting Aside Prior Order) (collectively, the Expanded MOPR).
[34] 5 U.S.C. § 706; FCC v. Fox Television Stations, Inc., 556 US. 502, 515 (2009) (“To be sure, the requirement that an agency provide reasoned explanation for its action would ordinarily demand that it display awareness that it is changing position. An agency may not, for example, depart from a prior policy sub silentio or simply disregard rules that are still on the books.”); 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)).
[35] See Allegheny Def. Project v. FERC, 964 F.3d 1, 11 (D.C. Cir. 2020) (“[W]e turn to first principles and ask whether the Natural Gas Act allows the Commission to issue tolling orders for the sole purposes of preventing rehearing from being deemed denied by its inaction and the statutory right to judicial review attaching. As a matter of plain statutory text and structure, the Commission lacks that authority.”).