[Federal Register Volume 90, Number 80 (Monday, April 28, 2025)]
[Rules and Regulations]
[Pages 17692-17728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-06941]
[[Page 17691]]
Vol. 90
Monday,
No. 80
April 28, 2025
Part II
Department of Energy
-----------------------------------------------------------------------
Federal Energy Regulatory Commission
-----------------------------------------------------------------------
18 CFR Part 35
Building for the Future Through Electric Regional Transmission Planning
and Cost Allocation; Final Rule
Federal Register / Vol. 90 , No. 80 / Monday, April 28, 2025 / Rules
and Regulations
[[Page 17692]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM21-17-003; Order No. 1920-B]
Building for the Future Through Electric Regional Transmission
Planning and Cost Allocation
AGENCY: Federal Energy Regulatory Commission.
ACTION: Order on rehearing and clarification.
-----------------------------------------------------------------------
SUMMARY: In this order, the Federal Energy Regulatory Commission
addresses arguments raised on rehearing, grants clarification, in part,
and denies clarification, in part, of Order No. 1920-A, which addressed
arguments raised on rehearing of, set aside, in part, and clarified
Order No. 1920. Order No. 1920 required transmission providers, inter
alia, to conduct Long-Term Regional Transmission Planning to ensure the
identification, evaluation, and selection, as well as the allocation of
the costs, of more efficient or cost-effective regional transmission
solutions to address Long-Term Transmission Needs.
DATES: The effective date of the document published on December 6, 2024
(89 FR 97174), is confirmed: January 6, 2025.
FOR FURTHER INFORMATION CONTACT:
Patrick T. Metz (Legal Information), Office of the General Counsel, 888
First Street NE, Washington, DC 20426, (202) 502-8197,
patrick.metz@ferc.gov
Michael Kellermann (Legal Information), Office of the General Counsel,
888 First Street NE, Washington, DC 20426, (202) 502-8491,
michael.kellermann@ferc.gov
David Borden (Technical Information), Office of Energy Policy and
Innovation, 888 First Street NE, Washington, DC 20426, (202) 502-8734,
david.borden@ferc.gov
Noah Lichtenstein (Technical Information), Office of Energy Market
Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-8696,
noah.lichtenstein@ferc.gov
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph
Nos.
I. Introduction............................................. 1.
II. Long-Term Regional Transmission Planning................ 6.
A. Planning for the Long-Term Transmission Needs of 6.
Unenrolled Non-Jurisdictional Transmission Providers...
1. Order Nos. 1920 and 1920-A....................... 6.
2. Rehearing Requests............................... 9.
3. Commission Determination......................... 21.
III. Regional Transmission Cost Allocation.................. 23.
A. Requirements Concerning Relevant State Entities' 23.
Agreed-Upon Cost Allocation Methods....................
1. Order Nos. 1920 and 1920-A....................... 23.
2. Challenges to Order No. 1920-A................... 30.
B. Consultation With Relevant State Entities After the 105.
Engagement Period......................................
1. Order Nos. 1920 and 1920-A....................... 105.
2. Challenges to Order No. 1920-A................... 108.
C. Definition of Relevant State Entities................ 131.
1. Order Nos. 1920 and 1920-A....................... 131.
2. Rehearing Requests............................... 134.
3. Commission Determination......................... 138.
D. Other Cost Allocation Issues......................... 143.
1. Order Nos. 1920 and 1920-A....................... 143.
2. Rehearing Requests............................... 148.
3. Commission Determination......................... 152.
IV. Document Availability................................... 155.
V. Effective Date........................................... 158.
I. Introduction
1. In Order No. 1920,\1\ the Federal Energy Regulatory Commission
(Commission) revised the pro forma Open Access Transmission Tariff
(OATT) to adopt reforms to its existing electric transmission planning
and cost allocation requirements pursuant to section 206 of the Federal
Power Act (FPA).\2\ The Commission found that existing regional
transmission planning and cost allocation processes are unjust,
unreasonable, and unduly discriminatory or preferential because, inter
alia, the Commission's existing transmission planning and cost
allocation requirements do not require transmission providers \3\ to:
(1) perform a sufficiently long-term assessment of transmission needs
that identifies Long-Term Transmission Needs; \4\ (2) adequately
account on a forward-looking basis for known determinants of
[[Page 17693]]
Long-Term Transmission Needs; and (3) consider the broader set of
benefits of regional transmission facilities planned to meet those
Long-Term Transmission Needs.\5\ Building on Order Nos. 890 \6\ and
1000,\7\ Order No. 1920 addresses these deficiencies by establishing
requirements to ensure that Commission-jurisdictional rates remain just
and reasonable and not unduly discriminatory or preferential,
including, inter alia, a requirement that transmission providers in
each transmission planning region participate in a regional
transmission planning process that includes Long-Term Regional
Transmission Planning,\8\ which will ensure the identification,
evaluation, and selection of more efficient or cost-effective regional
transmission facilities to address Long-Term Transmission Needs, as
well as the just and reasonable allocation of the costs of those
facilities.\9\
---------------------------------------------------------------------------
\1\ Bldg. for the Future Through Elec. Reg'l Transmission Plan.
& Cost Allocation, Order No. 1920, 89 FR 49280 (June 11, 2024), 187
FERC ] 61,068, order on reh'g & clarification, Order No. 1920-A, 89
FR 97174 (Dec. 6, 2024), 189 FERC ] 61,126 (2024).
\2\ 16 U.S.C. 824e.
\3\ FPA Section 201(e), 16 U.S.C. 824(e), defines ``public
utility'' to mean ``any person who owns or operates facilities
subject to the jurisdiction of the Commission under this
subchapter.'' As stated in the Order No. 888 pro forma OATT,
``transmission provider'' is a ``public utility (or its Designated
Agent) that owns, controls, or operates facilities used for the
transmission of electric energy in interstate commerce and provides
transmission service under the Tariff.'' Promoting Wholesale
Competition Through Open Access Non-Discriminatory Transmission
Servs. by Pub. Utils.; Recovery of Stranded Costs by Pub. Utils. &
Transmitting Utils., Order No. 888, 61 FR 21540 (May 10, 1996), FERC
Stats. & Regs. ] 31,036 (1996) (cross-referenced at 75 FERC ]
61,080), order on reh'g, Order No. 888-A, 62 FR 12274 (Mar. 14,
1997), FERC Stats. & Regs. ] 31,048 (cross-referenced at 78 FERC ]
61,220), order on reh'g, Order No. 888-B, 81 FERC ] 61,248 (1997),
order on reh'g, Order No. 888-C, 82 FERC ] 61,046 (1998), aff'd in
relevant part sub nom. Transmission Access Pol'y Study Grp. v. FERC,
225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. N. Y. v. FERC, 535
U.S. 1 (2002); pro forma OATT section I.1 (Definitions). The term
``transmission provider'' includes a public utility transmission
owner when the transmission owner is separate from the transmission
provider, as is the case in regional transmission organizations
(RTO) and independent system operators (ISO).
\4\ For purposes of Order No. 1920, Long-Term Transmission Needs
are transmission needs identified through Long-Term Regional
Transmission Planning by, among other things and as discussed in
Order Nos. 1920 and 1920-A, running scenarios and considering the
enumerated categories of factors. Order No. 1920, 187 FERC ] 61,068
at P 299; Order No. 1920-A, 189 FERC ] 61,126 at P 20 n.16.
\5\ Order No. 1920, 187 FERC ] 61,068 at P 1.
\6\ Preventing Undue Discrimination & Preference in Transmission
Serv., Order No. 890, 72 FR 12266 (Mar. 15, 2007), 118 FERC ] 61,119
(2007), order on reh'g, Order No. 890-A, 73 FR 2984 (Jan. 16, 2008),
FERC Stats. & Regs. ] 31,261 (2007) (cross-referenced at 118 FERC ]
61,119), order on reh'g and clarification, Order No. 890-B, 73 FR
39092 (July 8, 2008), 123 FERC ] 61,299 (2008), order on reh'g,
Order No. 890-C, 74 FR 12540 (Mar. 25, 2009), 126 FERC ] 61,228
(2009), order on clarification, Order No. 890-D, 74 FR 61511 (Nov.
25, 2009), 129 FERC ] 61,126 (2009).
\7\ Transmission Plan. & Cost Allocation by Transmission Owning
& Operating Pub. Utils., Order No. 1000, 76 FR 49842 (Aug. 11,
2011), 136 FERC ] 61,051 (2011), Order No. 1000-A, 77 FR 32184 (May
31, 2012), 139 FERC ] 61,132 (2012), order on reh'g & clarification,
Order No. 1000-B, 141 FERC ] 61,044 (2012), aff'd sub nom. S.C. Pub.
Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014) (South Carolina).
\8\ For purposes of Order No. 1920, Long-Term Regional
Transmission Planning means regional transmission planning on a
sufficiently long-term, forward-looking, and comprehensive basis to
identify Long-Term Transmission Needs, identify transmission
facilities that meet such needs, measure the benefits of those
transmission facilities, and evaluate those transmission facilities
for potential selection in the regional transmission plan for
purposes of cost allocation as the more efficient or cost-effective
regional transmission facilities to meet Long-Term Transmission
Needs. Order No. 1920, 187 FERC ] 61,068 at PP 38, 250-252; Order
No. 1920-A, 189 FERC ] 61,126 at P 21 n.17.
\9\ Order No. 1920, 187 FERC ] 61,068 at PP 1-2.
---------------------------------------------------------------------------
2. In Order No. 1920-A, the Commission largely sustained the
reforms adopted in Order No. 1920 while refining and improving those
reforms to address concerns raised in response to Order No. 1920 and to
ensure that states have a robust role in Long-Term Regional
Transmission Planning and in the cost allocation processes established
in the final rule. Specifically, and as relevant here, the Commission
set aside, in part, and clarified, in part, Order No. 1920 to provide
that: (1) transmission providers may not plan for the needs of a non-
jurisdictional transmission provider if that non-jurisdictional
transmission provider has not enrolled in the transmission planning
region and thereby has not agreed to any cost allocation method
applicable to selected Long-Term Regional Transmission Facilities; \10\
(2) when Relevant State Entities \11\ agree on a Long-Term Regional
Transmission Cost Allocation Method(s) \12\ and/or State Agreement
Process \13\ resulting from the Engagement Period,\14\ transmission
providers must include that method(s) and/or process in the transmittal
or as an attachment to their Order No. 1920 regional transmission
planning and cost allocation compliance filings, along with any
information that Relevant State Entities provide to transmission
providers regarding the state negotiations during the Engagement
Period, even if transmission providers propose a different Long-Term
Regional Transmission Cost Allocation Method or do not propose to adopt
a State Agreement Process; \15\ (3) the Commission will consider the
entire record--including the Relevant State Entities' agreed-upon Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process and the transmission provider's proposal--when
setting the replacement rate in Order No. 1920 regional transmission
planning and cost allocation compliance proceedings; \16\ and (4)
transmission providers must consult with Relevant State Entities prior
to amending the Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process or, if Relevant State Entities
seek, consistent with their chosen method to reach agreement, for the
transmission providers to amend that method or process.\17\ As further
relevant here, the Commission disagreed with certain arguments raised
on rehearing of Order No. 1920 and continued to: (1) find that the
Commission made adequate findings and marshalled sufficient evidence
under the first prong of FPA section 206 to establish that existing
Commission-jurisdictional regional transmission planning and cost
allocation processes are unjust and unreasonable; \18\ and (2) define
Relevant State Entities as any state entity responsible for electric
utility regulation or siting electric transmission facilities within
the state or portion of a state located in the transmission planning
region, including any state entity as may be designated for that
purpose by the law of such state.\19\
---------------------------------------------------------------------------
\10\ Order No. 1920-A, 189 FERC ] 61,126 at P 323. For purposes
of Order No. 1920, a Long-Term Regional Transmission Facility is a
regional transmission facility, as defined in Order No. 1000, that
is identified as part of Long-Term Regional Transmission Planning to
address Long-Term Transmission Needs. Order No. 1920, 187 FERC ]
61,068 at PP 41, 250; Order No. 1920-A, 189 FERC ] 61,126 at P 21
n.18.
\11\ For purposes of Order No. 1920, a Relevant State Entity is
any state entity responsible for electric utility regulation or
siting electric transmission facilities within the state or portion
of a state located in the transmission planning region, including
any state entity as may be designated for that purpose by the law of
such state. Order No. 1920, 187 FERC ] 61,068 at PP 44, 1355; Order
No. 1920-A, 189 FERC ] 61,126 at P 23 & n.23.
\12\ For purposes of Order No. 1920, a Long-Term Regional
Transmission Cost Allocation Method is an ex ante regional cost
allocation method for one or more Long-Term Regional Transmission
Facilities (or a portfolio of such Facilities) that are selected in
the regional transmission plan for purposes of cost allocation.
Order No. 1920, 187 FERC ] 61,068 at P 1291; Order No. 1920-A, 189
FERC ] 61,126 at P 612 n.1539.
\13\ For purposes of Order No. 1920, a State Agreement Process
is a process by which one or more Relevant State Entities may
voluntarily agree to a cost allocation method for Long-Term Regional
Transmission Facilities (or a portfolio of such Facilities) before
or no later than six months after they are selected in the regional
transmission plan for purposes of cost allocation. Order No. 1920,
187 FERC ] 61,068 at P 45; Order No. 1920-A, 189 FERC ] 61,126 at P
24 n.28.
\14\ For purposes of Order No. 1920, an Engagement Period is a
six-month time period during which transmission providers must: (1)
provide notice of the starting and end dates for the six-month time
period; (2) post contact information that Relevant State Entities
may use to communicate with transmission providers about any
agreement among Relevant State Entities on a Long-Term Regional
Transmission Cost Allocation Method(s) and/or a State Agreement
Process, as well as a deadline for communicating such agreement; and
(3) provide a forum for negotiation of a Long-Term Regional
Transmission Cost Allocation Method(s) and/or a State Agreement
Process that enables robust participation by Relevant State
Entities. Order No. 1920, 187 FERC ] 61,068 at PP 5, 1354; Order No.
1920-A, 189 FERC ] 61,126 at P 24.
\15\ Order No. 1920-A, 189 FERC ] 61,126 at P 651.
\16\ Id. P 659.
\17\ Id. P 691.
\18\ See id. PP 72-86.
\19\ See id. P 685.
---------------------------------------------------------------------------
3. Seven petitioners have sought further rehearing and
clarification of the Commission's determinations in Order No. 1920-
A,\20\ and the Commission received two additional filings.\21\
[[Page 17694]]
Pursuant to Allegheny Defense Project v. FERC,\22\ the rehearing
requests filed in this proceeding may be deemed denied by operation of
law. However, as permitted by FPA section 313(a),\23\ we are modifying
the discussion in Order No. 1920-A and continue to reach the same
result in this proceeding, as discussed below.\24\ That is, in this
order, we do not change the outcome of Order No. 1920-A.\25\ This order
also does not amend the Commission's regulations or the provisions of
Attachment K to the pro forma OATT.
---------------------------------------------------------------------------
\20\ Appendix A includes a list of petitioners submitting
requests for rehearing and/or clarification of Order No. 1920-A.
\21\ On February 5, 2025, NRECA sent a letter to Chairman Mark
Christie addressing Order No. 1920-A. On February 12, 2025,
Developers Advocating Transmission Advancements submitted a late-
filed pleading and white paper in response to the 2021 Advanced
Notice of Proposed Rulemaking. To the extent that they intend to
seek rehearing, these pleadings are untimely and we therefore reject
them. 16 U.S.C. 825l(a); 18 CFR 385.713(b) (2024). They also do not
include a separate section entitled ``Statement of Issues'' listing
each issue presented to the Commission in a separately enumerated
paragraph, as required by Rule 713(c)(2) of the Commission's Rules
of Practice and Procedure. 18 CFR 385.713(c)(2). Below, we address
NRECA's rehearing request, which raised similar issues to those
NRECA raised in its letter. See infra Definition of Relevant State
Entities section.
\22\ 964 F.3d 1 (D.C. Cir. 2020) (en banc).
\23\ 16 U.S.C. 825l(a) (``Until the record in a proceeding shall
have been filed in a court of appeals, as provided in subsection
(b), the Commission may at any time, upon reasonable notice and in
such manner as it shall deem proper, modify or set aside, in whole
or in part, any finding or order made or issued by it under the
provisions of this chapter.'').
\24\ Allegheny Def. Project, 964 F.3d at 16-17.
\25\ See Smith Lake Improvement & Stakeholders Ass'n v. FERC,
809 F.3d 55, 56-57 (D.C. Cir. 2015).
---------------------------------------------------------------------------
4. We also grant, in part, and deny, in part, the requests for
clarification. Specifically, we clarify one aspect of the Commission's
discussion in Order No. 1920-A to explain that, consistent with Order
No. 1000, transmission providers are not required to plan for the Long-
Term Transmission Needs of unenrolled non-jurisdictional transmission
providers, but voluntary arrangements for regional transmission
planning and cost allocation that comply with the FPA and the
Commission's cost causation precedent are not prohibited.\26\ In
addition, we sustain the requirement in Order No. 1920-A that
transmission providers include Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process resulting from the Engagement Period, and associated
information provided to transmission providers regarding the state
negotiations during the Engagement Period, in transmission providers'
transmittal or as an attachment to their Order No. 1920 regional
transmission planning and cost allocation compliance filings.\27\ We
further sustain the requirement that transmission providers consult
with Relevant State Entities: (1) prior to amending the Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process; or (2) if Relevant State Entities seek, consistent with their
chosen method to reach agreement, for the transmission provider to
amend that method or process.\28\ We are not persuaded, however, by
NRECA's request to expand the definition of Relevant State Entity to
include any entity that establishes or regulates electric rates under
state law.\29\ Finally, we reject as procedurally barred Indicated PJM
TOs' and SPP TOs' arguments that the Commission's findings under the
first prong of FPA section 206 were insufficient to support its
exercise of authority in Order No. 1920.\30\
---------------------------------------------------------------------------
\26\ See Order No. 1920-A, 189 FERC ] 61,068 at P 323; infra
Planning for the Long-Term Transmission Needs of Unenrolled Non-
Jurisdictional Transmission Providers section.
\27\ Order No. 1920-A, 189 FERC ] 61,126 at PP 651, 655; infra
Requirements Concerning Relevant State Entities' Agreed-upon Cost
Allocation Methods section.
\28\ Order No. 1920-A, 189 FERC ] 61,126 at P 691; infra
Consultation with Relevant State Entities After the Engagement
Period section.
\29\ Order No. 1920-A, 189 FERC ] 61,126 at P 701; infra
Definition of Relevant State Entities section.
\30\ Order No. 1920-A, 189 FERC ] 61,126 at PP 72-86; infra
Other Cost Allocation Issues section.
---------------------------------------------------------------------------
5. We continue to find that these reforms, as refined and improved
in Order No. 1920-A, ensure that transmission providers will conduct
sufficiently long-term, forward looking, and comprehensive transmission
planning and cost allocation processes to meet the demands of the
modern transmission grid, while facilitating meaningful participation
by the states, consistent with the jurisdictional boundaries delineated
in the FPA.
II. Long-Term Regional Transmission Planning
A. Planning for the Long-Term Transmission Needs of Unenrolled Non-
Jurisdictional Transmission Providers
1. Order Nos. 1920 and 1920-A
6. In Order No. 1920, the Commission required transmission
providers in each transmission planning region to participate in a
regional transmission planning process that includes Long-Term Regional
Transmission Planning, meaning regional transmission planning on a
sufficiently long-term, forward-looking, and comprehensive basis to
identify Long-Term Transmission Needs, identify transmission facilities
that meet such needs, measure the benefits of those transmission
facilities, and evaluate those transmission facilities for potential
selection in the regional transmission plan for purposes of cost
allocation as the more efficient or cost-effective transmission
facilities to meet Long-Term Transmission Needs.\31\ To identify Long-
Term Transmission Needs and to identify and evaluate transmission
facilities that meet such needs, transmission providers must develop a
set of at least three plausible and diverse Long-Term Scenarios,\32\
each of which must: (1) incorporate seven specific categories of
factors that represent known determinants of Long-Term Transmission
Needs; and (2) account for factors within each such category that the
transmission provider determines are likely to affect Long-Term
Transmission Needs.\33\ Factor Category Three comprises state-approved
integrated resource plans and expected supply obligations for load-
serving entities.\34\
---------------------------------------------------------------------------
\31\ Order No. 1920, 187 FERC ] 61,068 at P 224; see also Order
No. 1920-A, 189 FERC ] 61,126 at P 138.
\32\ Order No. 1920 defines Long-Term Scenarios as scenarios
that incorporate various assumptions using best available data
inputs about the future electric power system over a sufficiently
long-term, forward-looking transmission planning horizon to identify
Long-Term Transmission Needs and enable the identification and
evaluation of transmission facilities to meet such transmission
needs. Order No. 1920, 187 FERC ] 61,068 at PP 40, 302.
\33\ Id. PP 298, 409, 415.
\34\ Id. P 447; see also Order No. 1920-A, 189 FERC ] 61,126 at
PP 139, 263, 279.
---------------------------------------------------------------------------
7. In Order No. 1920-A, the Commission clarified that, for purposes
of complying with the requirements of Order No. 1920, transmission
providers must plan for the needs of non-jurisdictional entities that
are among the transmission providers' transmission customers as they
would plan for the needs of any other transmission customer. For
example, each Long-Term Scenario must account for and be consistent
with factors within Factor Category Three once transmission providers
in a transmission planning region have determined that such factors are
likely to affect Long-Term Transmission Needs. This includes any non-
jurisdictional transmission customer's resource planning and
procurement processes that have been approved by that entity's
respective governing authority.\35\
---------------------------------------------------------------------------
\35\ Order No. 1920-A, 189 FERC ] 61,126 at P 323 (citing Order
No. 1920, 187 FERC ] 61,068 at PP 507, 510). The Commission issued
this clarification in response to a request to clarify that the
resource planning and procurement processes of non-jurisdictional
transmission providers that have been approved by their respective
governing authorities should be included in Factor Category Three.
Id. P 315 (citing SERTP Sponsors June 12, 2024 Rehearing Request at
5).
---------------------------------------------------------------------------
8. The Commission further clarified in Order No. 1920-A that
``transmission providers may not plan for the needs of a non-
jurisdictional utility transmission provider if that non-jurisdictional
transmission provider has not enrolled in the transmission planning
region and thereby has not agreed to any cost allocation method
applicable to selected Long-Term Regional Transmission Facilities.''
\36\ The Commission stated
[[Page 17695]]
that, if transmission providers were to plan for and consider non-
jurisdictional transmission providers' Long-Term Transmission Needs
without a way to ensure the non-jurisdictional transmission provider
contributes to the costs of the resulting Long-Term Regional
Transmission Facilities, the resulting cost allocation could violate
the cost causation principle and result in free-ridership.\37\
---------------------------------------------------------------------------
\36\ Id. P 323 (citing Order No. 1000-A, 139 FERC ] 61,132 at P
276).
\37\ Id. (citing El Paso Elec. Co. v. FERC, 76 F.4th 352, 363-66
(5th Cir. 2023) (El Paso)).
---------------------------------------------------------------------------
2. Rehearing Requests
9. NRECA and WestConnect CTOs request rehearing and/or
clarification of the statement in Order No. 1920-A that ``transmission
providers may not plan for the needs of a non-jurisdictional utility
transmission provider if that non-jurisdictional transmission provider
has not enrolled in the transmission planning region and thereby has
not agreed to any cost allocation method applicable to selected Long-
Term Regional Transmission Facilities.'' \38\ In particular, NRECA and
WestConnect CTOs assert that this statement could be read to prohibit
transmission providers from voluntarily agreeing to plan for the needs
of unenrolled non-jurisdictional transmission providers.\39\
---------------------------------------------------------------------------
\38\ NRECA Rehearing Request at 3 (quoting Order No. 1920-A, 189
FERC ] 61,126 at P 323); WestConnect CTOs Rehearing Request at 1
(same).
\39\ NRECA Rehearing Request at 3, 17; WestConnect CTOs
Rehearing Request at 1-5 (asserting that Order No. 1920-A,
misinterpreting El Paso, establishes a prohibition on voluntary
planning with unenrolled non-jurisdictional transmission providers).
---------------------------------------------------------------------------
10. NRECA asks the Commission to clarify that Order No. 1920-A does
not change the Commission's existing regulations and policy, and thus
transmission providers in a transmission planning region continue to
have the discretion to plan for the needs of a non-jurisdictional
transmission provider that has not enrolled in the regional
transmission planning process.\40\ NRECA asserts that its requested
interpretation of Order No. 1920-A is supported by the Commission's own
citation to the language in Order No. 1000-A, stating that the regional
transmission planning process is not required to plan for the
transmission needs of a non-jurisdictional, unenrolled transmission
provider.\41\ NRECA states that the Commission has interpreted Order
No. 1000-A as neither prohibiting nor compelling regional transmission
planning processes from planning for the transmission needs of
unenrolled non-jurisdictional transmission providers, i.e., non-
jurisdictional transmission providers that have not agreed to accept
any applicable cost allocation method for selected regional
transmission facilities.\42\
---------------------------------------------------------------------------
\40\ NRECA Rehearing Request at 3; see also id. at 16 (``NRECA
requests that the Commission clarify that `may not plan' means `is
not required to plan' rather than `is not permitted to plan.' ''
(emphasis in original)).
\41\ Id. at 16 (citing Order No. 1920-A, 189 FERC ] 61,126 at P
323 n.914 (citing Order No. 1000-A, 139 FERC ] 61,132 at P 276)).
\42\ Id. at 16, 17 (citing Pub. Serv. Co. of Colo., 148 FERC ]
61,213 (2014), order on reh'g, 151 FERC ] 61,128 (2015), vacated &
remanded, El Paso Elec. Co. v. FERC, 832 F.3d 495 (5th Cir. 2016)).
---------------------------------------------------------------------------
11. NRECA also argues that its requested interpretation of Order
No. 1920-A is consistent with the next sentence of Order No. 1920-A,
which states that, ``[i]f the transmission provider were to plan for
and consider non-jurisdictional transmission providers' Long-Term
Transmission Needs without a way to ensure the non-jurisdictional
transmission provider contributes to the costs of the resulting Long-
Term Regional Transmission Facilities, the resulting cost allocation
could violate the cost causation principle and result in free-
ridership.'' \43\ NRECA asserts that this rationale supports Order No.
1000-A's statement that the public utility transmission providers in a
transmission planning region are not compelled to plan for the
transmission needs of an unenrolled non-jurisdictional transmission
provider that has not agreed to accept any applicable cost allocation
method for selected regional transmission facilities, but does not
justify prohibiting voluntary planning for such needs if transmission
providers in a transmission planning region can ensure that they will
not be required to subsidize transmission projects that benefit the
unenrolled non-jurisdictional transmission providers.\44\
---------------------------------------------------------------------------
\43\ Id. at 16 (citing Order No. 1920-A, 189 FERC ] 61,126 at P
323).
\44\ Id. at 16-17.
---------------------------------------------------------------------------
12. NRECA and WestConnect CTOs each argue that the court in El Paso
did not hold that the FPA requires the Commission to prohibit
transmission providers in a transmission planning region from
voluntarily planning for unenrolled non-jurisdictional transmission
providers' needs.\45\ NRECA states that the El Paso court had no reason
for such a holding in reviewing an Order No. 1000 regional compliance
filing but simply quoted with approval the Commission's `` `clear'
statement'' in Order No. 1000-A.\46\ Thus, NRECA contends, Order No.
1000-A and El Paso allow transmission providers in a transmission
planning region to agree to plan for the transmission needs of
unenrolled non-jurisdictional transmission providers if they have
assurance that the enrolled transmission providers will not be required
to subsidize transmission projects that benefit the unenrolled non-
jurisdictional transmission providers.\47\
---------------------------------------------------------------------------
\45\ Id. at 17 (citing El Paso, 76 F.4th at 363); WestConnect
CTOs Rehearing Request at 4 (asserting that El Paso holds only that
public utilities may not be required to plan for the transmission
needs of unenrolled non-jurisdictional utilities that do not accept
the allocation of costs related to regional transmission projects
from which they benefit (citing El Paso, 76 F.4th at 362-63)).
\46\ NRECA Rehearing Request at 17 (quoting El Paso, 76 F.4th at
363).
\47\ Id.
---------------------------------------------------------------------------
13. WestConnect CTOs assert that the issue on which the
transmission providers prevailed in El Paso was their objection to
being forced to subsidize transmission projects from which unenrolled
non-jurisdictional transmission providers who did not commit to the
allocation of costs might nonetheless benefit. WestConnect CTOs assert
that members of WestConnect believed that the risk of subsidization
could be sufficiently minimized to allow their long history of
beneficial coordinated transmission planning to continue without
enrollment of the WestConnect unenrolled non-jurisdictional
transmission providers.\48\ WestConnect CTOs argue that, contrary to
the Commission's statement in Order No. 1920-A, it is untrue that
transmission providers cannot ensure that an unenrolled non-
jurisdictional transmission provider contributes to the cost of a
regional transmission project from which it benefits without enrolling
in the transmission planning region.\49\ WestConnect CTOs assert that
prohibiting joint regional transmission planning is based on a false
binary choice--that non-jurisdictional transmission providers are not
required to enroll in a transmission planning region and can only
participate if they enroll.\50\ WestConnect CTOs represent that the
WestConnect transmission planning region's transmission providers
remain open to considering a modified coordinating transmission owner
framework that provides them reasonable assurance that they will not
have to subsidize their non-
[[Page 17696]]
jurisdictional counterparts without requiring their enrollment.\51\
---------------------------------------------------------------------------
\48\ WestConnect CTOs Rehearing Request at 6 (citing Ariz. Pub.
Serv. Co., 181 FERC ] 61,223, at P 14 (2022)).
\49\ Id. at 5 (citing Order No. 1920-A, 189 FERC ] 61,126 at P
323).
\50\ Id. at 6; see also id. at 9 n.17 (citing Pub. Serv. Co. of
Colo., WestConnect CTOs Request for Clarification, Docket No. ER13-
75-014, et al., at n.2 (filed Nov. 18, 2024)).
\51\ Id. at 5 (citing Pub. Serv. Co. of Colo., WestConnect CTOs
Request for Clarification, Docket No. ER13-75-014, et al. (filed
Nov. 18, 2024)).
---------------------------------------------------------------------------
14. WestConnect CTOs further state that banning the possibility of
voluntary arrangements for joint regional transmission planning with
unenrolled non-jurisdictional transmission providers violates FPA
section 202(a), under which the Commission is ``affirmatively not only
`empowered,' but `directed to divide the country into regional
districts for the voluntary interconnection and coordination of
facilities for the generation, transmission, and sale of electric
energy.' '' \52\
---------------------------------------------------------------------------
\52\ Id. (quoting 16 U.S.C. 824a(a) (emphasis added)).
---------------------------------------------------------------------------
15. WestConnect CTOs and NRECA argue that a ban on regional
transmission planning by public utilities and unenrolled non-
jurisdictional transmission providers would be an unacknowledged,
unexplained, and hence arbitrary departure from Order No. 1000
precedent.\53\ WestConnect CTOs argue that the Commission's
misinterpretation of El Paso is counterproductive to the Commission's
professed goal of Order Nos. 1000 and 1920--to encourage and enhance
regional transmission planning.\54\
---------------------------------------------------------------------------
\53\ Id. at 2-3, 6; NRECA Rehearing Request at 4-5, 18 (citing 5
U.S.C. 706(2)(A) (other citations omitted)).
\54\ WestConnect CTOs Rehearing Request at 6; see also id. at 6-
7 (asserting that, in Order No. 1000 compliance proceedings,
WestConnect transmission providers explained that non-jurisdictional
transmission providers' enrollment was not a prerequisite to their
participation in regional transmission planning and would run
contrary to the goals of Order No. 1000) (``It was precisely because
of the presence of a large number of both public utility and non-
jurisdictional utility transmission owners in the WestConnect region
that the [j]urisdictional [u]tilities strove to create a compliance
structure that would be superior to one in which non-jurisdictional
utilities unwilling to subject themselves to Order No. 1000 cost
allocation would be excluded from the region's planning process
entirely.'' (quoting Pub. Serv. Co. of Colo., Motion for Leave to
Answer and Answer of the WestConnect Jurisdictional Utilities,
Docket No. ER13-75-003 et al., at 13-14 (filed Nov. 8, 2013))).
---------------------------------------------------------------------------
16. WestConnect CTOs state that the Commission has noted that it
``accepted the WestConnect public utility transmission providers'
proposed participation framework [(i.e., the coordinating transmission
owner framework)] under which non-public utility transmission providers
could participate in WestConnect as either enrolled transmission owners
or coordinating transmission owners.'' \55\ WestConnect CTOs also state
that the Commission expressly held that Order No. 1000 ``does not
preclude the enrolled public utility transmission providers in a
transmission planning region from conducting transmission planning for
unenrolled non-public utility transmission providers if the enrolled
public utility transmission providers elect to do so.'' \56\
WestConnect CTOs argue that this holding underpinned the development of
WestConnect's existing coordinating transmission owner framework and
was not challenged or addressed in El Paso. On the contrary,
WestConnect CTOs argue, El Paso does not alter--and could not have
altered--Order No. 1000's holdings, which were affirmed by the U.S.
Court of Appeals for the D.C. Circuit (D.C. Circuit).\57\
---------------------------------------------------------------------------
\55\ Id. at 7 (quoting Pub. Serv. Co. of Colo., 189 FERC ]
61,028, at P 6 (2024) (WestConnect Remand Order), order on reh'g,
190 FERC ] 61,128 (2025) (Remand Rehearing Order)).
\56\ Id. at 7-8 (quoting Pub. Serv. Co. of Colo., 148 FERC ]
61,213 at P 55).
\57\ Id. at 8 (citing South Carolina, 762 F.3d 41).
---------------------------------------------------------------------------
17. WestConnect CTOs argue that the Commission's prohibition on
transmission providers planning for the needs of unenrolled non-
jurisdictional transmission providers fails to acknowledge, explain, or
consider WestConnect CTOs' substantial reliance interest in the
Commission's prior approval of the coordinating transmission owner
framework.\58\
---------------------------------------------------------------------------
\58\ Id. (citing FCC v. Fox Television Stations, Inc., 556 U.S.
502, 515 (2009); Dep't of Homeland Sec. v. Regents of the Univ. of
Cal., 591 U.S. 1, 30 (2020)).
---------------------------------------------------------------------------
18. WestConnect CTOs further note that, in Order No. 1000, the
Commission required that the scope of a transmission planning region
``be governed by the integrated nature of the regional power grid.''
\59\ WestConnect CTOs allege that the Commission stated that without
the participation of non-jurisdictional transmission providers
interspersed throughout the WestConnect transmission planning region
that make up half of its membership, WestConnect would be like ``swiss
cheese.'' \60\ WestConnect CTOs state that one of the reasons
coordinating transmission owners supported WestConnect's coordinating
transmission owner framework was the institutional difficulties non-
jurisdictional transmission providers face in agreeing to enrollment
rather than case-by-case acceptance of cost allocation for regional
transmission projects.\61\ WestConnect CTOs argue that Order No. 1920-A
does not acknowledge or explain how transmission providers barred from
joint regional transmission planning with unenrolled non-jurisdictional
transmission providers can meet Order No. 1000's integration
requirement in a transmission planning region like WestConnect.\62\
---------------------------------------------------------------------------
\59\ Id. (citing WestConnect Remand Order, 189 FERC ] 61,028 at
P 23 & n.49).
\60\ Id. at 8-9 (citing Pub. Serv. Co. of Colo., 142 FERC ]
61,206, at P 349 (2013), order on reh'g, 148 FERC ] 61,213, order on
reh'g, 151 FERC ] 61,128, vacated & remanded, El Paso Elec. Co. v.
FERC, 832 F.3d 495). The order that WestConnect CTOs cite does not
contain this statement.
\61\ Id. at 9.
\62\ Id.
---------------------------------------------------------------------------
19. WestConnect CTOs state that while the Commission found in its
order on remand from El Paso that WestConnect remains an integrated
transmission planning region even without participation of coordinating
transmission owners, the Commission does not incorporate or reference
that finding in Order No. 1920-A.\63\ Nevertheless, WestConnect CTOs
object to the Commission's determination in its order on remand from El
Paso regarding the continued integration of the WestConnect
transmission planning region.\64\
---------------------------------------------------------------------------
\63\ Id. at 9 n.17 (citing WestConnect Remand Order, 189 FERC ]
61,028 at P 23).
\64\ Id. (quoting Pub. Serv. Co. of Colo., WestConnect CTOs
Request for Clarification, Docket No. ER13-75-013, et al. (filed
Nov. 18, 2024) (internal quotations omitted)).
---------------------------------------------------------------------------
20. WestConnect CTOs assert that the ban on use of a coordinating
transmission owner framework would all but ensure the failure of
regional transmission planning in WestConnect, contrary to the
objectives of Order Nos. 1000 and 1920. WestConnect CTOs contend that
the Commission's failure to acknowledge its departure from existing
policy or explain how a mandatory enrollment requirement would be
consistent with Order No. 1000's integration requirement was
arbitrary.\65\
---------------------------------------------------------------------------
\65\ Id. at 9 (citing FCC v. Fox Television Stations, Inc., 556
U.S. at 515).
---------------------------------------------------------------------------
3. Commission Determination
21. We agree with rehearing petitioners that Order No. 1920-A does
not modify the requirements of Order No. 1000 with respect to planning
for the needs of unenrolled non-jurisdictional transmission
providers.\66\ Although Order No. 1000 does not require a coordinating
transmission owner framework, Order No. 1000 and El Paso do not
explicitly foreclose the possibility that a voluntary arrangement for
regional transmission planning and cost allocation that includes
unenrolled non-jurisdictional transmission providers could comply with
the FPA's mandate for just and reasonable rates and the Commission's
cost causation
[[Page 17697]]
precedent.\67\ Accordingly, we clarify the Commission's statement in
Order No. 1920-A that transmission providers may not plan for the needs
of a non-jurisdictional transmission provider if that non-
jurisdictional transmission provider has not enrolled in the
transmission planning region and thereby has not agreed to any cost
allocation method applicable to selected Long-Term Regional
Transmission Facilities.\68\ Specifically, we agree with NRECA that
transmission providers are not required to plan for the Long-Term
Transmission Needs of unenrolled non-jurisdictional transmission
providers.\69\ In El Paso, the U.S. Court of Appeals for the Fifth
Circuit held that the Commission's orders accepting WestConnect's
coordinating transmission owner framework were incompatible with the
FPA and with the application of the cost causation principle in Order
No. 1000 because they permitted non-public utility transmission
providers to cause transmission costs to be incurred through the
WestConnect regional transmission planning process without bearing cost
responsibility.\70\ The Commission will evaluate any voluntary
arrangement for regional transmission planning and cost allocation that
includes unenrolled non-jurisdictional transmission providers if and
when it comes before the Commission, and that is unaffected by Order
No. 1920-A. We emphasize that any transmission provider proposing to
include unenrolled non-jurisdictional transmission providers in
regional transmission planning and cost allocation, including Long-Term
Regional Transmission Planning, must demonstrate that its proposed
arrangement will not result in free ridership in violation of the cost
causation principle and otherwise complies with the requirements of
Order No. 1000, Order No. 1920, El Paso, and the FPA.\71\
---------------------------------------------------------------------------
\66\ See NRECA Rehearing Request at 3, 17; WestConnect CTOs
Rehearing Request at 8.
\67\ See Remand Rehearing Order, 190 FERC ] 61,128 at P 28.
\68\ Order No. 1920-A, 189 FERC ] 61,068 at P 323. We find moot
WestConnect CTOs' arguments that the relevant language in Order No.
1920-A violates the Commission's obligations under FPA section
202(a) and the objectives of Order No. 1000 as well as NRECA's
argument that this language conflicts with other statements in Order
No. 1920-A. See WestConnect CTOs Rehearing Request at 4-5, 9; NRECA
Rehearing Request at 16-17. Our clarification of Order No. 1920-A in
relevant part resolves these claims.
\69\ See Order No. 1000-A, 139 FERC ] 61,132 at P 276 (``[T]he
regional transmission planning process is not required to plan for
the transmission needs of such a non-public utility transmission
provider that has not made the choice to join a transmission
planning region.''); see also El Paso, 76 F.4th at 362-63 (quoting
the same).
\70\ El Paso, 76 F.4th at 365-66; id. at 363 (discussing cost
causation concerns).
\71\ Id. at 361-62; WestConnect Remand Order, 189 FERC ] 61,028
at PP 15-17.
---------------------------------------------------------------------------
22. To the extent that WestConnect CTOs request that the Commission
address in this order the appropriate geographic scope of the
WestConnect transmission planning region or any other transmission
planning region,\72\ we decline to address such a request here because
it is outside the scope of this proceeding.\73\ We further note that
the Commission responded to these concerns in the Remand Rehearing
Order and continued to find that the WestConnect transmission planning
region complies with Order No. 1000's requirement that the scope of a
transmission planning region should be governed by the integrated
nature of the regional power grid.\74\
---------------------------------------------------------------------------
\72\ See WestConnect CTOs Rehearing Request at 9 n.17.
\73\ The Commission has declined to evaluate the appropriate
geographic scope of any particular transmission planning region in
our transmission planning rules. See Order No. 1000, 136 FERC ]
61,051 at P 160; Order No. 890, 118 FERC ] 61,119 at P 527. Instead,
it is Commission practice to evaluate the proper scope of
transmission planning regions in individual compliance or FPA
section 205 proceedings. See, e.g., Sw. Power Pool, Inc., 144 FERC ]
61,059, at P 31 (2013); Louisville Gas & Elec. Co., 144 FERC ]
61,054, at PP 28, 30 (2013), order on reh'g, Duke Energy Carolinas,
LLC, 147 FERC ] 61,241, at PP 46, 48 (2014); Me. Pub. Serv. Co., 142
FERC ] 61,129, at P 21 (2013); S. Co. Servs., Inc., 124 FERC ]
61,265, at P 71 (2008). See also PacifiCorp, 170 FERC ] 61,298, at P
29 (2020) (evaluating scope of transmission planning region proposed
pursuant to FPA section 205).
\74\ See Remand Rehearing Order, 190 FERC ] 61,128 at PP 30-32.
---------------------------------------------------------------------------
III. Regional Transmission Cost Allocation
A. Requirements Concerning Relevant State Entities' Agreed-Upon Cost
Allocation Methods
1. Order Nos. 1920 and 1920-A
a. Inclusion in Transmission Providers' Compliance Filings of Relevant
State Entities' Agreed-Upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process
23. In Order No. 1920, the Commission: (1) required transmission
providers in each transmission planning region to revise their OATTs to
include one or more Long-Term Regional Transmission Cost Allocation
Method(s) for Long-Term Regional Transmission Facilities that are
selected; and (2) permitted transmission providers to additionally
revise their OATTs to include a State Agreement Process, if Relevant
State Entities indicate that they have agreed to such a process.\75\
---------------------------------------------------------------------------
\75\ Order No. 1920, 187 FERC ] 61,068 at P 1291.
---------------------------------------------------------------------------
24. The Commission also established in Order No. 1920 a six-month
Engagement Period, during which transmission providers must, among
other things, provide a forum for the negotiation of a Long-Term
Regional Transmission Cost Allocation Method(s) and/or a State
Agreement Process that enables meaningful participation by Relevant
State Entities, and the Commission required transmission providers to
explain on compliance how they complied with the six-month Engagement
Period requirements.\76\ The Commission found that, if the Relevant
State Entities participating in an Engagement Period agree on a Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process and provide that Method(s) and/or State Agreement
Process to the transmission providers no later than the deadline for
communicating agreement,\77\ the transmission providers may file the
agreed-to Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process on compliance. The Commission noted,
however, that the ultimate decision as to whether to file a Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process to which Relevant State Entities have agreed will continue to
lie with the transmission providers.\78\ The Commission did not impose
any obligation on transmission providers to file a cost allocation
method for Long-Term Regional Transmission Facilities with which they
disagree, even if such a method were proposed to the transmission
providers pursuant to a Commission-approved State Agreement Process,
unless the transmission providers have clearly indicated their assent
to do so as part of a Commission-approved State Agreement Process in
their OATT.\79\
---------------------------------------------------------------------------
\76\ Id. PP 1354, 1357.
\77\ Order No. 1920 requires that transmission providers in each
transmission planning region provide notice, such as on their OASIS
or other public website, of the deadline for Relevant State Entities
to communicate their agreement on a Long-Term Regional Transmission
Cost Allocation Method(s) and/or a State Agreement Process, and this
deadline must be no earlier than the end date of the Engagement
Period. Id. P 1356.
\78\ Id. PP 1359, 1363.
\79\ Id. P 1429.
---------------------------------------------------------------------------
25. In Order No. 1920-A, the Commission set aside Order No. 1920,
in part, and required that, when Relevant State Entities notify
transmission providers by the deadline for communicating agreement that
they agree on a Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process
[[Page 17698]]
resulting from the Engagement Period, the transmission providers must
include that method or process in the transmittal or as an attachment
to their compliance filing, even if the transmission providers propose
a different Long-Term Regional Transmission Cost Allocation Method or
do not propose to adopt a State Agreement Process.\80\ The Commission
further directed transmission providers to include in the transmittal
or as an attachment to their compliance filings any information that
Relevant State Entities provide to them regarding the state
negotiations during the Engagement Period.\81\ As part of this
requirement, the Commission clarified that transmission providers must
include any and all supporting evidence and/or justification related to
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process that Relevant
State Entities request that transmission providers include in their
compliance filing.\82\
---------------------------------------------------------------------------
\80\ Order No. 1920-A, 189 FERC ] 61,126 at P 651. The
Commission clarified that, under this approach, the transmission
providers decide what to submit as their actual Order No. 1920
compliance proposal, including relevant tariff language and
supporting evidence or arguments, whether they decide to propose the
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process or a
different Long-Term Regional Transmission Cost Allocation Method.
The requirement to include Relevant State Entities' Long-Term
Regional Transmission Cost Allocation Method and/or State Agreement
Process as an addition to the compliance filing does not constitute
a ``proposal'' from the transmission provider. Id. P 654 n.1651.
\81\ Id. P 651.
\82\ Id. P 655. However, the Commission declined to require
transmission providers to independently characterize this
information. For example, the Commission did not require
transmission providers to separately characterize Relevant State
Entities' agreement or independently justify Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process. Id.
---------------------------------------------------------------------------
26. The Commission found that the additional requirements adopted
in Order No. 1920-A will allow the Commission to better evaluate
whether transmission providers have complied with Order No. 1920's
requirement to provide a forum for negotiation that enables meaningful
participation by Relevant State Entities during the Engagement
Period.\83\ The Commission recognized that it is critical to the
success of the Long-Term Regional Transmission Planning reforms that
states have an opportunity to have a significant role in the
establishment of just and reasonable Long-Term Regional Transmission
Cost Allocation Methods and State Agreement Processes.\84\ The
Commission found that Order No. 1920, as modified in Order No. 1920-A,
strikes a reasonable balance between, on the one hand, recognizing the
rights and responsibilities of the Commission and transmission
providers over regional transmission planning and, on the other, the
states' critical interests in the resulting Long-Term Regional
Transmission Facilities and how the costs associated with those
facilities will be allocated.\85\
---------------------------------------------------------------------------
\83\ Id. P 657 (citing Order No. 1920, 187 FERC ] 61,068 at P
1357).
\84\ Id. P 649 (citing Order No. 1920, 187 FERC ] 61,068 at P
1415).
\85\ Id. P 660.
---------------------------------------------------------------------------
27. Furthermore, noting that it was directing these facilitation
and informational requirements on compliance pursuant to the
Commission's authority under FPA section 206, the Commission found that
these reforms do not implicate or infringe upon transmission providers'
filing rights under FPA section 205.\86\ The Commission reiterated its
determination in Order No. 1920 that existing regional transmission
planning and cost allocation requirements are unjust, unreasonable, and
unduly discriminatory or preferential under FPA section 206,\87\ and
that the Commission therefore has both the authority and responsibility
to ``determine the just and reasonable . . . practice . . . to be
thereafter observed and in force,'' consistent with the Commission's
findings in Order No. 1920.\88\ The Commission explained that, pursuant
to its authority under FPA section 206, the Commission required
transmission providers to submit on compliance an ex ante cost
allocation method. The Commission further explained that this
compliance filing, submitted pursuant to FPA section 206, is not an FPA
section 205 filing \89\ and is thus distinct from any FPA section 205
filing that a transmission provider might file in the future following
compliance to propose a change to its cost allocation method(s) for
Long-Term Regional Transmission Facilities.\90\
---------------------------------------------------------------------------
\86\ Id. P 657.
\87\ See id. at P 652 (citing Order No. 1920, 187 FERC ] 61,068
at PP 113-114).
\88\ Id. (quoting 16 U.S.C. 824e(a)).
\89\ Id. (citing ISO New England Inc., 165 FERC ] 61,202 (2018),
order on reh'g, 173 FERC ] 61,204, at P 8 (2020)).
\90\ Id. (citing Order No. 1920, 187 FERC ] 61,068 at P 1430).
---------------------------------------------------------------------------
b. Commission Consideration of Relevant State Entities' Agreed-Upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Processes
28. In Order No. 1920-A, the Commission noted that, when acting
under FPA section 206, the Commission's statutory burden is to
``establish a just and reasonable and not unduly discriminatory
replacement rate that is supported by substantial evidence.'' \91\ The
Commission further noted that the statute does not necessarily require
the Commission to adopt the transmission provider's proposal on
compliance, even if that proposal complies with the final rule's
requirements. Rather, the Commission need only select a replacement
rate that complies with the final rule and that is adequately supported
in the record, and then intelligibly explain the reasons for its
choice.\92\
---------------------------------------------------------------------------
\91\ Id. P 658 (emphasis in original) (citing 16 U.S.C. 824e; 16
U.S.C. 825l(b)).
\92\ Id. (citing Entergy Ark., LLC v. FERC, 40 F.4th 689, 701-02
(D.C. Cir. 2022) (Entergy) (noting that the Commission ``is not
required to choose the best solution, only a reasonable one'' (first
quoting Petal Gas Storage, LLC v. FERC, 496 F.3d 695, 703 (D.C. Cir.
2007); and then quoting FERC v. Elec. Power Supply Ass'n, 577 U.S.
260, 295 (2016) (EPSA)))).
---------------------------------------------------------------------------
29. The Commission recognized that, while it generally does not
consider alternate compliance proposals other than those filed by the
relevant public utility,\93\ there are ``good reasons'' for considering
such alternatives with respect to cost allocation under Order No.
1920.\94\ The Commission explained that states play a unique role in
Long-Term Regional Transmission Planning, as their laws, regulations,
and policies drive the need for Long-Term Regional Transmission
Facilities, and they typically will have responsibility to consider and
approve the siting, permitting, and construction of Long-Term Regional
Transmission Facilities selected in a regional transmission plan. As
such, states affect whether Long-Term Regional Transmission Facilities
are timely, efficiently, and cost-effectively developed such that
customers actually receive the benefits associated with the selection
of more efficient or cost-effective transmission solutions.\95\ The
Commission further found that given the inherent uncertainty involved
in planning to
[[Page 17699]]
meet Long-Term Transmission Needs, state-developed cost allocation
methods and State Agreement Processes take on heightened
importance.\96\ The Commission explained that this means that it will
consider the entire record--including the Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process and the transmission provider's
proposal--when setting the replacement rate. Specifically, the
Commission found that it is not required to accept a cost allocation
proposal from a transmission provider on compliance simply because it
may comply with Order No. 1920 but may adopt any cost allocation method
proposed by the Relevant State Entities and submitted on compliance so
long as it complies with Order No. 1920.\97\
---------------------------------------------------------------------------
\93\ Id. P 659 (citing PJM Interconnection, L.L.C., 173 FERC ]
61,134, at P 117 n.175 (2020); PJM Interconnection, L.L.C., 119 FERC
] 61,318, at P 115 (2007); ANR Pipeline Co., 110 FERC ] 61,069, at P
49 (2005)).
\94\ Id. (quoting FCC v. Fox Television Stations, Inc., 556 U.S.
at 515).
\95\ Id. (citing Order No. 1920, 187 FERC ] 61,068 at PP 124,
126, 268, 1293, 1362-1364, 1404, 1407, 1410-1411, 1415, 1477, 1515).
\96\ Id. (citing Order No. 1920, 187 FERC ] 61,068 at P 227).
\97\ Id.
---------------------------------------------------------------------------
2. Challenges to Order No. 1920-A
a. Statutory Filing Rights Under the FPA
i. Rehearing Requests
30. Several of the rehearing requests argue that Order No. 1920-A
unlawfully impinges on transmission providers' FPA section 205 filing
rights by requiring transmission providers to include, in their
transmittal or as an attachment to their compliance filings, Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process.\98\ Multiple
rehearing petitioners assert that this requirement in Order No. 1920-A
is inconsistent with the division of authority set forth in the FPA,
which provides public utilities with unilateral and exclusive FPA
section 205 filing rights to propose rates, terms, and conditions of
service, and provides the Commission with the authority to modify
existing rates under FPA section 206 after finding that the existing
rate is unjust, unreasonable, or unduly discriminatory or
preferential.\99\
---------------------------------------------------------------------------
\98\ See, e.g., SPP TOs Rehearing Request at 7, 12-15
(alternately describing Order No. 1920-A as requiring transmission
providers to include Relevant State Entities' preferred Long-Term
Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process in their compliance filings, or as granting
``preferential filing privileges'' to Relevant State Entities);
Indicated PJM TOs Rehearing Request at 6 (describing Order No. 1920-
A as ``granting filing rights'' to Relevant State Entities); MISO
TOs Rehearing Request at 20 (describing Order No. 1920-A a
``giv[ing] filing rights to Relevant State Entities'').
\99\ See, e.g., MISO TOs Rehearing Request at 5-7 (arguing that
Order No. 1920-A disrupts the balance between the filing rights
afforded to public utilities under FPA section 205 versus those
afforded to the Commission under FPA section 206); id. at 7-8; SPP
TOs Rehearing Request at 3; id. at 4-5 (``The FPA's distinction
between section 205 and 206 filing rights is well-established and
binding on the Commission.''); EEI Rehearing Request at 7-8; WIRES
Rehearing Request at 7-8, 10-11; Indicated PJM TOs Rehearing Request
at 3-4.
---------------------------------------------------------------------------
31. Rehearing petitioners contend that requiring transmission
providers to include Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process in transmission providers' compliance filings unlawfully
conditions or encumbers transmission providers' FPA section 205 filing
rights. MISO TOs state that this requirement disrupts the balance set
by FPA sections 205 and 206--allowing FPA section 206 to usurp FPA
section 205--and encroaches on transmission providers' FPA section 205
filing rights.\100\ MISO TOs and SPP TOs argue that states may not
force public utilities to make FPA section 205 filings or require them
to relinquish their filing rights to other entities.\101\ Indicated PJM
TOs assert that this requirement ``effectively forces utilities to cede
their filing rights to others, contravening the statutory directive by
Congress in [FPA] section 205 that grants utilities the exclusive right
to propose their rates and terms of service.'' \102\
---------------------------------------------------------------------------
\100\ See, e.g., MISO TOs Rehearing Request at 6-7; id. at 10-
11; (``[T]he Commission uses its FPA section 206 authority to
mandate a broad encroachment on transmission providers' FPA section
205 filing rights. Given this encumbrance, transmission providers
will be unable to exercise the full breadth of their FPA section 205
rights.''); id. at 24-27 (arguing also that even if FPA sections 205
and 206 are ambiguous as to whether the Commission has this
authority, a reviewing court will no longer afford the Commission's
interpretation deference).
\101\ Id. at 18 (citing Mass. Dep't of Pub. Utils v. FERC, 729
F.2d 886, 886-87 (1st Cir. 1984) (Massachusetts Department of Public
Utilities)); SPP TOs Rehearing Request at 4-5 (asserting that
``states may not force public utilities to make section 205
filings''); see also id. at 5-6 (arguing that circumstances in which
public utilities voluntarily cede statutory filing rights to others
are distinct from those in which the Commission attempts to encroach
on those rights).
\102\ Indicated PJM TOs Rehearing Request at 2; id. at 10-11.
See also EEI Rehearing Request at 6-8 (arguing that this requires
utilities to file cost allocation methods they are opposed to and
that the Commission did not identify text in the FPA authorizing
this approach); WIRES Rehearing Request at 2, 15 (same).
---------------------------------------------------------------------------
32. Some rehearing petitioners assert that the Commission
misconstrues the structure of FPA sections 205 and 206, and
particularly the rights afforded to public utilities under FPA section
205. For instance, they argue that FPA section 205 is intended for the
benefit of the public utility, granting it the proactive right to
initiate rate changes, in contrast to the passive role played by the
Commission under that provision.\103\ Rehearing petitioners also assert
that the FPA section 205 rights of public utilities to initiate rate
changes are exclusive and unilateral.\104\ Rehearing petitioners
further contend that public utilities are the entities entitled to
submit filings under FPA section 205 to set their rates and initiate
rate changes.\105\
---------------------------------------------------------------------------
\103\ See, e.g., MISO TOs Rehearing Request at 5-6 (citing Emera
Me. v. FERC, 854 F.3d 9, 24 (D.C. Cir. 2017) (Emera Maine)); id. at
8-9, 11, 20, 25; Indicated PJM TOs Rehearing Request at 3-4, 19
n.69; see also SPP TOs Rehearing Request at 3.
\104\ See, e.g., Indicated PJM TOs Rehearing Request at 2-3, 10,
16; MISO TOs Rehearing Request at 5, 8, 12-15; SPP TOs Rehearing
Request at 5; EEI Rehearing Request at 6-8, 12-13; WIRES Rehearing
Request at 6.
\105\ See, e.g., WIRES Rehearing Request at 6, 8; EEI Rehearing
Request at 10-11, 11 n.34; SPP TOs Rehearing Request at 9, 16 n.43,
19, 21; Indicated PJM TOs Rehearing Request at 7.
---------------------------------------------------------------------------
33. In addition, petitioners cite precedent that, they contend,
reflects the fact that the Commission cannot diminish public utilities'
FPA section 205 filing rights and, therefore, Order No. 1920-A's
requirement for transmission providers to submit Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process with their compliance filings
is unlawful. Many of the rehearing requests argue that the requirement
to include Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process
in transmission providers' compliance filings is contrary to Atlantic
City Electric. Co. v. FERC.\106\ They assert that Atlantic City I holds
that public utilities--and only public utilities--have FPA section 205
filing rights to propose rate changes and that public utilities cannot
be involuntarily divested of those rights as a result of an FPA section
206 compliance directive.\107\ Several rehearing
[[Page 17700]]
petitioners point to other decisions that, they contend, rejected
attempts by the Commission to limit or compromise public utilities'
(or, in the parallel context of the Natural Gas Act (NGA),\108\
natural-gas companies') statutory authority to file rates.\109\ A
number of the rehearing requests also rely on Massachusetts Department
of Public Utilities,\110\ asserting that ``states may not force public
utilities to make section 205 filings'' or require utilities to submit
```regulator-compelled' utility-proposed changes.'' \111\
---------------------------------------------------------------------------
\106\ 295 F.3d 1 (D.C. Cir. 2002) (Atlantic City I); see also
Atl. City Elec. Co. v. FERC, 329 F.3d 856 (D.C. Cir. 2003) (Atlantic
City II) (granting a petition for review seeking to enforce the
mandate of Atlantic City I in response to the Commission's order on
remand after Atlantic City I).
\107\ See MISO TOs Rehearing Request at 11-15 (discussing
Atlantic City I and Atlantic City II, and asserting that these cases
``stand as foundational determinations about the lawful statutory
framework created by Congress vesting certain rights in public
utilities under FPA section 205 and other rights in the Commission
under section 206, and denying the Commission authority to
overextend its authority under FPA section 206 when directing public
utilities on compliance''); Indicated PJM TOs Rehearing Request at
2, 6, 11-12 (arguing that the requirement to include Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process in the
transmittal or as an attachment to transmission providers'
compliance filing forces transmission providers to cede their
exclusive rights to Relevant State Entities and grants Relevant
State Entities rights not provided by the FPA); SPP TOs Rehearing
Request at 4-5, 9, 11-16; EEI Rehearing Request at 8-9 (``The
precedent in Atlantic City II, is clear--the Commission cannot
condition or encumber a utility's right under FPA section 205 to
initiate rate changes, even as a result of an FPA section 206
compliance directive.''); WIRES Rehearing Request at 5-6, 8, 10.
\108\ 15 U.S.C. 717, et seq.
\109\ See, e.g., SPP TOs Rehearing Request at 5 (citing NRG
Power Mktg., LLC v. FERC, 862 F.3d 108 (D.C. Cir. 2017) (NRG Power
Mktg.); Pub. Serv. Comm'n of N.Y. v. FERC, 866 F.2d 487, 488-89
(D.C. Cir. 1989) (NYPSC); W. Res., Inc. v. FERC, 9 F.3d 1568, 1578
(D.C. Cir. 1993) (Western Resources); Consumers Energy Co. v. FERC,
226 F.3d 777, 780 (6th Cir. 2000); Louisiana v. FPC, 503 F.2d 844,
861 (5th Cir. 1974)); MISO TOs Rehearing Request at 9, 16 (citing
NRG Power Mktg., 862 F.3d 108; Emera Maine, 854 F.3d 9; PJM Power
Providers Grp. v. FERC, 88 F.4th 250, 270 n.122 (3d Cir. 2023)).
\110\ 729 F.2d at 888.
\111\ SPP TOs Rehearing Request at 4-5; EEI Rehearing Request at
8 n.27; Indicated PJM TOs Rehearing Request at 6, 10; see also MISO
TOs Rehearing Request at 9, 18, 25.
---------------------------------------------------------------------------
34. MISO TOs assert that Order No. 1920-A contravenes restrictions
on the Commission's FPA section 206 authority because, by requiring
attachment of Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process
to transmission providers' compliance filings, it requires transmission
providers to relinquish their right to file rate changes under FPA
section 205 to Relevant State Entities.\112\ MISO TOs argue that the
Commission in Order No. 1920 acknowledged that it could not encumber
these filing rights by initially allowing transmission providers to
determine which Long-Term Regional Transmission Cost Allocation
Method(s) to file as part of their compliance filings.\113\ Indicated
PJM TOs assert that FPA section 206 ``does not authorize the Commission
to provide [Relevant State Entities] with the statutory authority
reserved solely to public utilities, nor does it authorize the
Commission to require public utilities to cede those rights to
[Relevant State Entities] by forcing them to submit proposals and
materials prepared by those [Relevant State Entities] that the public
utilities do not support.'' \114\ EEI argues that, ``[b]y requiring the
public utilities to file the Relevant State Entities' proposals, the
Commission is requiring those public utilities to cede their statutory
rights to make filings under the FPA to the Relevant State Entities and
to provide those entities with statutory rights that Congress did not
intend them to have.'' \115\ SPP TOs argue that Order No. 1920-A gives
``preferential filing privileges to states that the FPA does not
authorize the Commission to grant,'' and thereby diminishes the FPA
section 205 filing rights of public utilities.\116\ WIRES states that
the Commission does not have statutory authority to require a public
utility to file another entity's rate proposal, and that Order No.
1920-A does not reflect a ``mere change in the filing process'' but
rather a substantive change that the Commission is not authorized to
make.\117\ WIRES further argues that Order No. 1920-A effectively
elevates states to the equivalent of public utilities in requiring that
their proposals be included in the compliance filing, which will be
assessed under the same just and reasonable standard articulated in FPA
section 205.\118\
---------------------------------------------------------------------------
\112\ MISO TOs Rehearing Request at 16-19 (arguing that this
effectively forces transmission providers to make FPA section 205
filings that are not their own; also characterizing this as
involuntarily transferring to Relevant State Entities the right to
make FPA section 205 filings to make rate changes (citing Atlantic
City I, 295 F.3d at 9-11; Atlantic City II, 329 F.3d at 858-59; NRG
Power Mktg., 862 F.3d at 114; PJM Power Providers Grp., 88 F.4th at
270 n.122; Emera Maine, 854 F.3d at 24)).
\113\ See id. at 16-17 (noting that, under Order No. 1920,
filing a Relevant State Entity's proposed Long-Term Regional
Transmission Cost Allocation Method was voluntary).
\114\ Indicated PJM TOs Rehearing Request at 11-12 (citing 16
U.S.C. 824d; Atlantic City I, 295 F.2d at 9-11; Massachusetts
Department of Public Utilities, 729 F.2d at 888).
\115\ EEI Rehearing Request at 8 (citing Atlantic City II, 329
F.3d at 858-59) (arguing that the Commission ``acknowledges this
when it concedes that it generally does not consider alternate
compliance proposals other than those filed by the relevant public
utility'' (quotation marks omitted)); see id. at 9-12 (arguing that
under the FPA the Commission may not, in setting a replacement rate,
divest public utilities of their filing rights and give them to
Relevant State Entities).
\116\ SPP TOs Rehearing Request at 13; see id. at 14 (``The FPA
does not contemplate any party, including states, being allowed to
make compliance filings on a regulated public utility's behalf. Nor
does it authorize third parties to somehow join or commandeer a
public utility's compliance filing.''); id. at 17 (``The fact that
states are unable to file cost allocation methods themselves and
must instead either comment on transmission providers' proposals or
file section 206 complaints is exactly what the FPA requires.''
(quotation marks omitted)).
\117\ WIRES Rehearing Request at 11-12; id. at 13 (``[B]y
requiring a transmission provider to include in its compliance
filing a state-agreed upon method or process, the transmission
provider is forced to share its statutory filing rights with another
entity under a just and reasonable standard.'').
\118\ See id. at 13-14 (arguing that the Commission has not
previously taken the approach set forth in Order No. 1920-A and
that, as the Commission recognizes, transmission planning is the
tariff obligation of transmission providers); see also id. at 10-11
(``Procedurally, the public utility's obligation under compliance is
the same as that under FPA section 205, i.e., the public utility
must submit a just and reasonable rate.''); id. at 15-16 (``Whether
a filing is submitted under FPA section 205 or 206, the public
utility's filing is equally subject to a just and reasonable
standard, as both statutory provisions ultimately rely on the same
standard.''); cf. SPP TOs Rehearing Request at 30 (claiming that
``[t]he Commission failed to acknowledge that it was changing policy
when it decided to afford public utility and state proposals equal
status when the Commission's previous approach was to favor
compliance proposals by the regulated entities that were the actual
subject of compliance mandates'').
---------------------------------------------------------------------------
35. Many rehearing petitioners also contest the Commission's
explanation for why this compliance filing requirement was statutorily
permissible. MISO TOs assert that the Commission's explanation that a
Relevant State Entity's proposed method or process does not constitute
a ``proposal'' is an ``empty formalism with no grounding in the
statutory text'' that does not change the impact of the requirement on
transmission providers' FPA section 205 filing rights.\119\ WIRES
similarly argues that, despite this clarification and the fact that
transmission providers are not required to characterize or justify the
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process,\120\ the
compliance requirement remains unlawful because neither states nor
Relevant State Entities are public utilities entitled to make FPA
section 205 filings.\121\
---------------------------------------------------------------------------
\119\ MISO TOs Rehearing Request at 19 (quoting Order No. 1920-
A, 189 FERC ] 61,126 at P 654 n.1651).
\120\ WIRES Rehearing Request at 13 (quoting Order No. 1920-A,
189 FERC ] 61,126 at PP 654 n.1651, 655).
\121\ See id.
---------------------------------------------------------------------------
36. MISO TOs argue that the Commission's distinction between FPA
section 205 filings and compliance filings under FPA section 206 is a
``hollow explanation'' that does not allow the Commission to give
filing rights to Relevant State Entities in violation of the FPA or
require public utilities to cede their filing rights under FPA section
205.\122\ SPP TOs acknowledge that Commission precedent distinguishes
between FPA section 205 filings and compliance filings under FPA
section 206,\123\ but
[[Page 17701]]
still contend that Order No. 1920-A's mandates are unlawful because
they are forced encroachments on public utility filing rights under the
FPA, which may only be relinquished voluntarily.\124\ EEI also
recognizes that a compliance filing under FPA section 206 is not a
change initiated by a public utility but rather one directed by the
Commission,\125\ but asserts that, even if the Commission were to act
pursuant to FPA section 206 or via rulemaking, whatever rate or
regulation the Commission establishes may not usurp the rights of
public utilities to file proposed rates.\126\
---------------------------------------------------------------------------
\122\ MISO TOs Rehearing Request at 19-20.
\123\ SPP TOs Rehearing Request at 3-4 (citing N.Y. Indep. Sys.
Operator, Inc., 131 FERC ] 61,242, at P 32 (2010); PJM
Interconnection, L.L.C., 85 FERC ] 61,111, at 61,413 (1998); PJM
Interconnection, L.L.C., 142 FERC ] 61,214, at PP 5-7, 21 (2013)).
\124\ See id. at 4-5 (``Courts have firmly rebuffed various
attempts to alter the FPA framework, especially when the purpose was
to weaken public utilities' ability to independently exercise their
statutory filing rights.''); id at 6.
\125\ EEI Rehearing Request at 8-9 (citing S. Co. Servs, Inc.,
61 FERC ] 61,339, at 62,328-29 (1992), order on reh'g, 63 FERC ]
61,217 (1993)).
\126\ Id. at 9 (citing Atlantic City I, 295 F.3d at 10-11).
---------------------------------------------------------------------------
37. SPP TOs argue that the Commission has rejected attempts to use
compliance filings to bypass the FPA's filing requirements and
circumvent FPA notice requirements, and that the Commission has
recognized that it could not circumvent these requirements even by
invoking FPA section 309.\127\ They contend that the Commission's
approach could lead it to improperly ``bypass'' FPA sections 205 and
206 in future cases, e.g., in complaint proceedings, by authorizing
``favored parties to include their preferred alternative remedies in
other parties' compliance filings without first having to make the
first step showings under FPA section 206 that are normally required of
complainants or protestors.'' \128\ SPP TOs claim that Order No. 1920-
A's attempt to weaken FPA sections 205 and 206's statutory constraints
wrongly attempts to resolve a ``major question'' under the statute in
ways that Congress did not authorize and could not have foreseen.\129\
---------------------------------------------------------------------------
\127\ SPP TOs Rehearing Request at 15 (citing 16 U.S.C. 825h;
PJM Interconnection, L.L.C., 178 FERC ] 61,083, at P 29 (2022)).
\128\ Id. at 15 & n.39 (``The states or third parties would not
have to show that the existing rates were unjust and unreasonable as
they would under section 206.'').
\129\ SPP TOs Rehearing Request at 17-18 (citing Biden v. Neb.,
143 S. Ct. 2355, 2374 (2023); W. Va. v. EPA, 597 U.S. 697, 724
(2022)).
---------------------------------------------------------------------------
38. Indicated PJM TOs argue that Order No. 1920-A's requirement to
include Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process
in transmission providers' compliance filings intrudes into the
decision making processes of public utilities as to whether to submit a
filing under FPA section 205.\130\ Indicated PJM TOs state that these
are ``internal decisions by the public utility determined by its
governing authority'' that are beyond the Commission's authority to
regulate and contrary to the ``passive role'' assigned to the
Commission under FPA section 205.\131\ They assert that this
requirement is a ``direct intervention into a public utility's decision
regarding what to file even before the filing is made'' and not a
``practice affecting a rate'' subject to Commission regulation.\132\
Indicated PJM TOs further assert that Commission precedent addressing
RTO/ISO governance is not relevant, as the two cases addressing
participation in the bodies that vote on rate proposals were decided
prior to the Supreme Court's decision in Loper Bright Enterprises v.
Raimondo, did not ``advance[ ] to judicial review,'' and did not
``address[ ] the D.C. Circuit's decision in CAISO.'' \133\
---------------------------------------------------------------------------
\130\ Indicated PJM TOs Rehearing Request at 2-3, 6-7, 12-15.
\131\ Id. at 12-15 (also arguing that under EPSA, 577 U.S. 260
and Cal. Indep. Sys. Operator Corp. v. FERC, 372 F.3d 395, 403 (D.C.
Cir. 2004) (CAISO), the Commission's authority is limited to
regulating practices directly affecting jurisdictional rates and
does not extend to regulating how a public utility makes decisions).
\132\ Id. at 14 (citing Atlantic City I, 295 F.3d at 10).
\133\ Id. at 15 (citing PJM Interconnection, L.L.C., 154 FERC ]
61,147, order on reh'g, 157 FERC ] 61,229 (2016); New England Power
Pool Participants Comm., 166 FERC ] 61,062 (2019)).
---------------------------------------------------------------------------
39. EEI, SPP TOs, and WIRES assert that there are other avenues for
parties to be heard with respect to cost allocation, such that
infringing on transmission providers' FPA section 205 rights is not
necessary or justified. EEI argues that parties may file protests to a
transmission provider's compliance filing if they wish to advocate for
an alternative approach.\134\ SPP TOs argue that, because states are
not authorized to file cost allocation proposals, they are limited to
commenting on or protesting transmission providers' proposals or filing
FPA section 206 complaints.\135\ WIRES argues that there are ways of
evaluating whether transmission providers have provided state
regulators with a formal opportunity to develop a Long-Term Regional
Transmission Cost Allocation Method other than compelling transmission
providers to include Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process in their compliance filing, but that Order No. 1920-A adopts an
adversarial approach of dueling compliance proposals.\136\
---------------------------------------------------------------------------
\134\ EEI Rehearing Request at 9-10 (arguing that ``[t]he
Commission fails to explain what procedural infirmity would be
created by requiring Relevant State Entities and other stakeholders
to provide comments and feedback on these filings throughout the
traditional regulatory process'' and that the approach adopted in
Order No. 1920-A could lead to confusion as to which proposal to
provide feedback on); see also id. at 12.
\135\ SPP TOs Rehearing Request at 17-18; see also id. at 15-16,
18-19.
\136\ WIRES Rehearing Request at 14.
---------------------------------------------------------------------------
40. MISO TOs assert that, under Order No. 1920-A, the Commission is
particularly likely to accept Relevant State Entities' Long-Term
Regional Transmission Cost Allocation Methods rather than transmission
providers proposals because they assert that Order No. 1920-A provides
that Relevant State Entities' proposals ``will be afforded heightened
preference over transmission providers' own proposals.'' \137\ MISO TOs
argue that accepting Relevant State Entities' cost allocation method
over the transmission provider's proposed cost allocation method would
``subvert[ ] future FPA section 205 filings related to that rate scheme
in a manner that disfavors the transmission provider's FPA section 205
proposals.'' \138\
---------------------------------------------------------------------------
\137\ MISO TOs Rehearing Request at 7; see id. at 24-25 (citing
Order No. 1920-A, 189 FERC ] 61,126 at P 659); id. at 9, 33-37.
\138\ Id. at 24-25.
---------------------------------------------------------------------------
41. Indicated PJM TOs and SPP TOs argue that, in claiming that the
Commission need not accept a transmission provider's proposal on
compliance even if the proposal complies with the final rule's
requirements, the Commission's reliance on Entergy Arkansas, LLC v.
FERC is misplaced.\139\ They contend that Entergy is inapposite because
the Commission there rejected MISO's compliance filing before selecting
a different replacement rate.\140\ SPP TOs argue that the Commission
can accept a proposed replacement rate from a third party (including
Relevant State Entities) only after finding that the transmission
provider's compliance filing does not comport with the Commission's
directives.\141\
---------------------------------------------------------------------------
\139\ Indicated PJM TOs Rehearing Request at 22-23 (citing
Entergy, 40 F.4th 701-02); SPP TOs Rehearing Request at 18-19 n.49
(same); see Order No. 1920-A, 189 FERC ] 61,126 at P 658 & n.1656.
\140\ Indicated PJM TOs Rehearing Request at 22-23; SPP TOs
Rehearing Request at 18-19 & n.49 (``[S]tates, like every other
third party, should have to show that a public utility's proposed
replacement rate does not satisfy compliance directives before their
preferred alternatives are considered.'').
\141\ SPP TOs Rehearing Request at 14-15.
---------------------------------------------------------------------------
42. Indicated PJM TOs assert that the preference the Commission has
articulated in its precedent for accepting public utilities' compliant,
just and reasonable proposals rather than
[[Page 17702]]
competing proposals \142\ is, in fact, mandated by the FPA.\143\
Indicated PJM TOs state that FPA sections 205 and 206 are part of a
single statutory structure under which rates are initially established
by the utility, such that the Commission must give preference to
compliance proposals by public utilities over those by other
entities.\144\
---------------------------------------------------------------------------
\142\ See infra P 74 (summarizing arguments that the Commission
departed from this precedent without adequate explanation).
\143\ Indicated PJM TOs Rehearing Request at 17-18 (arguing that
``[t]he statutory structure of the FPA requires the Commission give
preference to the proposal submitted on compliance by public
utilities'' and the Commission ``cannot simply choose the one it
likes best'' (citing United Gas Pipe Line Co. v. Mobile Gas Serv.
Corp., 350 U.S. 332, 340-41 (1956))); see id. at 20 (``This
preference for the public utility's proposal is the only
interpretation that conforms with the statutory text of the FPA.'').
\144\ See id. at 17.
---------------------------------------------------------------------------
43. Indicated PJM TOs also assert that Order No. 1920-A ``did not
prescribe a specific replacement rate,'' instead maintaining a ``light
touch'' and providing flexibility to transmission providers as to their
compliance filings on cost allocation, and therefore ``forwent its
opportunity to establish a specific replacement rate pursuant to
section 206.'' \145\ Indicated PJM TOs further maintain that the
Commission's approach in Order Nos. 1920 and 1920-A is inconsistent
with FPA section 206, which Indicated PJM TOs state requires that the
replacement be ``fixed by rule or by a later order on compliance, but
not by both.'' \146\ As a result, Indicated PJM TOs claim that ``any
later filing made by the public utility to ensure that the public
utility is compliant with the Commission's rules is made pursuant to
section 205'' \147\ such that the Commission's ``only recourse is to
consider whether the rate submitted by the public utility on compliance
is just and reasonable.'' \148\ WIRES similarly argues that the
Commission did not ``take the initiative in setting the replacement
rates'' but instead directed transmission providers on compliance to
submit just and reasonable cost allocation methods consistent with the
requirements of Order No. 1920, such that ``the public utility need
only propose a just and reasonable replacement rate in compliance with
the Commission order.'' \149\
---------------------------------------------------------------------------
\145\ Id. at 27-28.
\146\ Id. at 27 n.102 (citing 16 U.S.C. 824e(a); Indep. Energy
Producers Ass'n v. Cal. Indep. Sys. Operator Corp., 128 FERC ]
61,165, at PP 21-26 (2009)).
\147\ Id. at 27-28 n.102.
\148\ Id. at 28; see also, e.g., id. at 3-4 (``Unless the
Commission prescribes the specific replacement rate, the Commission
must accept the utility's filing if it is just and reasonable, even
if the Commission prefers a different rate.''); id. at 5, 7-8.
\149\ WIRES Rehearing Request at 10-11.
---------------------------------------------------------------------------
44. SPP TOs argue that certain Commission precedent cited in Order
No. 1920-A \150\ does not support--and, in fact, undermines--the
requirement that transmission providers submit Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process with transmission providers' compliance
filings.\151\
---------------------------------------------------------------------------
\150\ Order No. 1920-A, 189 FERC ] 61,126 at P 658 & n.1657
(citing PJM Interconnection, L.L.C., 173 FERC ] 61,134 at P 117
n.175; PJM Interconnection, L.L.C., 119 FERC ] 61,318 at P 115; ANR
Pipeline Co., 110 FERC ] 61,069 at P 49) (reflecting that the
Commission typically does not consider alternative proposals on
compliance).
\151\ See SPP TOs Rehearing Request at 16-17 & n.43 (arguing
that these cases involved acceptance of and/or giving greater weight
to transmission providers' compliance filings or settlement
proposals).
---------------------------------------------------------------------------
ii. Commission Determination
45. For the reasons below and those stated in Order No. 1920-A, we
sustain the Commission's determination in Order No. 1920-A requiring
transmission providers to include Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process resulting from the Engagement Period, and associated
information provided to transmission providers regarding the state
negotiations during the Engagement Period, in transmission providers'
transmittal or as an attachment to their Order No. 1920 regional
transmission planning and cost allocation compliance filings.\152\ We
further sustain the Commission's determination that, pursuant to its
FPA section 206 authority, it will consider the entire record--
including any agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process and the
transmission providers' proposal--when setting the replacement
rate.\153\
---------------------------------------------------------------------------
\152\ Order No. 1920-A, 189 FERC ] 61,126 at PP 651, 654-655.
\153\ Id. P 659. As discussed further below, pursuant to FPA
section 205, transmission providers retain their discretion over
whether to make and the contents of any future FPA section 205
filings, and Order No. 1920-A's requirements do not affect that
discretion. See infra PP 69, 118.
---------------------------------------------------------------------------
(a) The Statutory Text and Structure, and Applicable Precedent, Support
the Commission's Order No. 1920-A Approach
46. Order No. 1920-A requires that transmission providers include
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process and associated
information in the transmittal or as an attachment to their Order No.
1920 compliance filings and provides for the Commission's consideration
of the entire record, which includes proposals from transmission
providers and attachments to transmission providers' filings, when
finalizing the replacement rate. The challenges raised on rehearing to
both of these aspects of Order No. 1920-A incorrectly treat filings to
comply with Order Nos. 1920 and 1920-A as arising under or implicating
FPA section 205, which sets forth public utilities' filing rights and
obligations. Rather, these aspects of Order No. 1920-A arise from FPA
section 206, which sets forth the Commission's authority to determine
and fix by order a replacement rate after appropriate findings.\154\
The compliance filings required by Order Nos. 1920 and 1920-A are a
tool to implement the Commission's authority under FPA section 206, and
do not implicate public utilities' rights and obligations under FPA
section 205. Thus, we address at the outset the statutory text and
structure of the FPA, as well as relevant Commission and judicial
decisions, in addressing these arguments.
---------------------------------------------------------------------------
\154\ 16 U.S.C. 824d (setting forth public utility filing rights
and obligations); 16 U.S.C. 824e (setting forth power of Commission
to fix rates and charges).
---------------------------------------------------------------------------
47. Order Nos. 1920 and 1920-A were issued pursuant to Commission-
initiated proceedings under FPA section 206.\155\ As the Commission
stated in Order No. 1920-A, having determined that the Commission's
existing regional transmission planning and cost allocation
requirements are unjust, unreasonable, and unduly discriminatory or
preferential under FPA section 206, ``[t]he Commission thus had both
the authority and responsibility to `determine the just and reasonable
. . . practice . . . to be thereafter observed and in force.' '' \156\
The Commission required the submission of compliance filings to assist
in effectuating the Commission's authority under FPA section 206,
explaining in Order No. 1920-A that ``[t]his compliance filing
submitted pursuant to FPA section 206 is not an FPA section 205
filing.'' \157\
---------------------------------------------------------------------------
\155\ See Bldg. for the Future Through Elec. Reg'l Transmission
Plan. & Cost Allocation & Generator Interconnection, 179 FERC ]
61,028, at P 1 (2022) (NOPR); Order No. 1920, 187 FERC ] 61,068 at P
1; Order No. 1920-A, 189 FERC ] 61,126 at PP 1, 652.
\156\ Order No. 1920-A, 189 FERC ] 61,126 at P 652 (quoting 16
U.S.C. 824e(a)).
\157\ Id. (citing ISO New England Inc., 173 FERC ] 61,204 at P
8).
---------------------------------------------------------------------------
48. While FPA sections 205 and 206 embody a complementary structure
for regulating the rates and practices of public utilities, they are
distinct provisions which assign rights and
[[Page 17703]]
responsibilities to different entities under different circumstances.
FPA section 205 requires that the public utility, subject to Commission
oversight, ``file with the Commission . . . schedules showing all rates
and charges for any transmission or sale subject to the jurisdiction of
the Commission, and the classifications, practices, and regulations
affecting such rates and charges.'' \158\ FPA section 206(a), by
contrast, delineates the authority of the Commission--the subject of
the provision--to modify public utilities' existing rates on
appropriate findings and, itself, determine and fix by order the just
and reasonable rate, charge, classification, rule, regulation,
practice, or contract to be observed and in force.\159\
---------------------------------------------------------------------------
\158\ 16 U.S.C. 824d(c); cf. id. 824d(a) (requiring that ``[a]ll
rates and charges made, demanded, or received by any public utility
for or in connection with the transmission or sale of electric
energy subject to the jurisdiction of the Commission, and all rules
and regulations affecting or pertaining to such rates or charges
shall be just and reasonable, and any such rate or charge that is
not just and reasonable is hereby declared to be unlawful'').
\159\ 16 U.S.C. 824e(a) (providing that ``the Commission shall
determine'' the replacement rate and ``shall fix the same by
order'').
---------------------------------------------------------------------------
49. The express text of FPA section 206 does not provide public
utilities with statutory filing rights with respect to the just and
reasonable replacement rate following a finding that existing rates are
unjust, unreasonable, or unduly discriminatory or preferential. Rather,
the authority to ``determine the just and reasonable rate, charge,
classification, rule, regulation, practice, or contract to be
thereafter observed and in force'' is vested in the Commission, and--in
Commission-initiated proceedings under FPA section 206--the Commission
must find that the replacement rate it determines and fixes meets the
statutory criteria.\160\ To implement this authority the Commission
frequently requires public utilities to submit compliance filings, as
it did in Order Nos. 1920 and 1920-A, which the Commission will review
and address in further orders.\161\
---------------------------------------------------------------------------
\160\ Id.; see E. Tenn. Nat. Gas Co. v. FERC, 863 F.2d 932, 937
(D.C. Cir. 1988) (explaining that, under the parallel provisions of
the NGA, ``[w]hen review of existing rates is initiated by the
Commission, . . . the burden of proving that the existing rates are
unjust or unreasonable, and that those it orders in replacement are
just and reasonable, rests with [the Commission]''); ISO New England
Inc., 153 FERC ] 61,224, at P 24 (2015) (``The Commission did not
place the burden on Connecticut and Rhode Island to prove that the
dynamic de-list bid threshold [proposed in a compliance filing] was
unreasonable. Rather, the Commission affirmatively found the dynamic
de-list bid threshold to be just and reasonable.'').
\161\ See, e.g., Improvements to Generator Interconnection
Procs. & Agreements, Order No. 2023, 184 FERC ] 61,054, at P 1762,
order on reh'g, 185 FERC ] 61,063 (2023), order on reh'g, Order No.
2023-A, 186 FERC ] 61,199, errata notice, 188 FERC ] 61,134 (2024);
Participation of Distributed Energy Res. Aggregations in Mkts.
Operated by Reg'l Transmission Orgs. & Indep. Sys. Operators, Order
No. 2222, 172 FERC ] 61,247, at P 360 (2020), order on reh'g, Order
No. 2222-A, 174 FERC ] 61,197 (2021). This particular compliance
process, however, is not prescribed by the statute and by no means
required. See Elec. Dist. No. 1 v. FERC, 774 F.2d 490, 494 (D.C.
Cir. 1985) (Electrical District) (explaining that the Commission may
instead ``complete the process itself and fix the rates in its
initial order'').
---------------------------------------------------------------------------
50. As the D.C. Circuit held in discussing what it means to ``
`fix' a rate within the meaning of [FPA section 206],'' when the
Commission determines that an existing rate is unjust and unreasonable,
it is not ``inevitable that the Commission has the obligation to end an
unlawful rate from the moment it finds unlawfulness.'' \162\ The court
therefore rejected the Commission's argument that a replacement rate
necessarily must go into effect as of the date the Commission finds
that an existing rate is not lawful under the FPA, rather than the
effective date provided when the Commission determines and fixes the
replacement rate on compliance.\163\ This decision underscores that the
Commission's authority and responsibility under FPA section 206 to fix
the replacement rate continued, in the Order Nos. 1920 and 1920-A
context, from the point at which the Commission determines that
existing rates are unlawful and requires compliance filings until the
Commission fixes the replacement rate by order.\164\ The submission and
Commission consideration of compliance filings pursuant to those
orders, and the Commission's subsequent determination of the
replacement rate, are thus later stages occurring as part of a
continuing process under FPA section 206, not under FPA section
205.\165\ Accordingly, the Commission has distinguished compliance
filings that assist the Commission's exercise of its authority under
FPA section 206 from other filings made by public utilities under the
distinct rights afforded to them under FPA section 205.\166\
---------------------------------------------------------------------------
\162\ Electrical District, 774 F.2d at 492. The D.C. Circuit
later explained how this decision could be reconciled with Pub.
Serv. Co. of New Hampshire v. FERC, 600 F.2d 944 (D.C. Cir. 1979),
which applied a seemingly lower standard with respect to the
necessary notice required under the FPA as to certain types of
rates. See Transwestern Pipeline Co. v. FERC, 897 F.2d 570, 577-78
(D.C. Cir. 1990). The reconciliation of these cases does not affect
the relevance of the analysis from the D.C. Circuit discussed herein
regarding the Commission's ongoing FPA section 206 authority.
\163\ See Electrical District, 774 F.2d at 492 (``Or to use a
more remote analogy, it is not the case that once a court has
concluded that a particular action challenged before it is unlawful
it must immediately issue an injunction, instead of taking time for
further deliberations necessary to determine what the precise terms
of that injunction should be.''); see also Kern River Gas
Transmission Co., 133 FERC ] 61,162, at P 22 (2010) (Kern River)
(``Since Electrical District, the Commission's general practice in
determining the effective date of rate changes ordered pursuant to
NGA section 5 has been to follow the approach suggested by the court
in that case.'').
\164\ See Electrical District, 774 F.2d at 492 (citing FPA
section 206(a), 16 U.S.C. 824e(a), as establishing ``the procedures
that the statute establishes for adjusting unlawful rates'' and
finding that these procedures for the Commission to follow in fixing
the replacement rate by order, pursuant to the statutory text are
``not at all ambiguous'').
\165\ See id. Similarly, Entergy recognizes that the Commission
may select the just and reasonable rate in an FPA section 206
proceeding and that its authority to do so remains intact throughout
the compliance process. 40 F.4th at 701-02. This stands in contrast
to FPA section 205 proposals where the Commission's role is passive
and reactive. See City of Winnfield, La. v. FERC, 744 F.2d 871, 876
(D.C. Cir. 1984) (City of Winnfield); NRG Power Mktg., 862 F.3d at
114.
\166\ See, e.g., ISO New England Inc., 173 FERC ] 61,204 at P 8
(explaining that a filing from ISO-NE would be considered as a new
FPA section 205 filing, rather than a compliance filing related to
an FPA section 206 investigation, because the Commission ``did not
make a finding that ISO-NE's tariff was unjust and unreasonable
without such revisions, a necessary precursor to the Commission
considering ISO-NE's tariff revisions as a compliance filing setting
forth a proposed replacement rate''); N.Y. Indep. Sys. Operator,
Inc., 131 FERC ] 61,242 at P 32 (stating that ``the Commission has
always treated compliance filings differently than a company-
initiated rate change application filed pursuant to section 205 of
the FPA,'' including that they are not subject to the 60-day prior
notice requirement under section 205(d) of the FPA); Ameren Servs.
Co. v. Midwest Indep. Transmission Sys. Operator, Inc., 132 FERC ]
61,186, at P 28 (2010) (finding that aspects of a filing exceeded
the scope of compliance and should, instead, have been submitted
under FPA section 205); PJM Interconnection, L.L.C., 85 FERC ]
61,111 at 61,413 (``Although PJM purported to file its market
monitoring plan in part pursuant to Section 205 of the FPA, it was
in fact a filing in compliance with Ordering Paragraph V of the
November 25 Order. Such compliance filings are pursuant to a
Commission directive and are not subject to the procedures of
Section 205(d).'') (cleaned up).
---------------------------------------------------------------------------
51. FPA section 206 does not prevent the Commission, after having
found an existing rate unjust and unreasonable, from choosing in a
specific rulemaking proceeding to consider the approaches of entities
other than the public utility to inform the Commission's determination
of the replacement rate; \167\ rather, it states that ``the Commission
shall determine the just and reasonable rate'' to be thereafter
observed and in force.\168\ It also does not preclude the Commission
from
[[Page 17704]]
requiring that transmission providers submit Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process with transmission providers' compliance
filings.\169\ Neither does FPA section 205, which governs the distinct
process of a public utility filing its own rates in the first instance,
subject to Commission oversight,\170\ rather than the determination of
a replacement rate by the Commission after appropriate findings under
FPA section 206. Moreover, that a public utility is the entity that
submits a compliance filing does not transform that submission into an
FPA section 205 filing, subject to the requirements of that
provision.\171\ A contrary conclusion would fail to recognize and give
effect to the distinct and express statutory authority afforded to the
Commission in FPA section 206, which arises pursuant to specific
statutory findings and which, once triggered, is subject to different
requirements than FPA section 205 filings.
---------------------------------------------------------------------------
\167\ As discussed below, Order No. 1920-A's approach to
considering compliance filings on cost allocation represents a
limited departure, in these particular circumstances, from the
Commission's typical approach of adopting public utilities'
proposals in compliance filings if they are compliant with the
requirements of the final rule. See infra PP 86-87.
\168\ 16 U.S.C. 824e(a).
\169\ See 16 U.S.C. 824e(a), (b) (setting forth certain
procedural requirements relating to proceedings under FPA section
206, which do not include such restrictions); see also Interstate
Nat. Gas Ass'n of Am. v. FERC, 285 F.3d 18, 38-39 (D.C. Cir. 2002)
(INGAA) (holding under parallel provisions of the NGA that ``the
Commission has authority under [NGA section] 5 to order hearings to
determine whether a given pipeline is in compliance with FERC's
rules . . . and under [NGA sections] 10 and 14 to require pipelines
to submit needed information for making its [NGA section] 5
decisions''); 16 U.S.C. 825c(a), 825f(a), 825h.
\170\ See 16 U.S.C. 824d.
\171\ See supra P 50 & note 166 (discussing cases distinguishing
compliance filings made by public utilities, which the Commission
and courts consistently and correctly treated as made under FPA
section 206, from FPA section 205 filings).
---------------------------------------------------------------------------
52. We agree with rehearing petitioners that FPA section 205
expressly provides public utilities with statutory filing rights. But
when considered in the correct statutory context, the arguments on
rehearing that the Commission has intruded on those public utilities'
FPA section 205 filing rights by: (1) requiring that public utilities
attach to their compliance filings Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process and associated information; or (2) considering, and
potentially adopting, Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process in determining the replacement rate, are not persuasive.\172\
These aspects of Order No. 1920-A were adopted pursuant to FPA section
206, to assist in building the record for the Commission's exercise of
its own authority to determine and fix the just and reasonable rate, as
well as in monitoring compliance with the requirements related to the
Engagement Period and efficiently considering the views of both
Relevant State Entities and transmission providers. FPA section 205 is
not implicated by these aspects of Order No. 1920-A and arguments to
the contrary conflate compliance filings to assist the Commission in
implementing its authority under FPA section 206 with public utilities'
rate filings under FPA section 205.
---------------------------------------------------------------------------
\172\ See supra PP 30-31.
---------------------------------------------------------------------------
53. Efforts to connect public utilities' FPA section 205 rights to
this distinct FPA section 206 process by appealing to the structure of
FPA sections 205 and 206 \173\ are misplaced for similar reasons; these
arguments incorrectly blur the line between the separate authorities
assigned in FPA sections 205 and 206. As the petitioners seeking
rehearing observe, public utilities have the statutory right under FPA
section 205 to file proposals to set and revise their rates of their
own initiative in the first instance, and under that section, the
Commission plays an essentially passive role in reviewing--and then
accepting or rejecting--those proposals based on their consistency with
the statutory requirements.\174\ And as discussed below, public
utilities retain their discretion as to whether to file--or not file--
those proposals using this FPA section 205 authority.\175\ But as to
existing, Commission-approved rates, the FPA separately assigns to the
Commission under FPA section 206 the authority to review those rates of
its own initiative or in response to a complaint.\176\ Upon appropriate
findings, the Commission--not the public utility--has the authority
itself to determine and fix the replacement rate,\177\ including
determining such rate through the use of compliance filings.\178\
Subsequently, public utilities may seek to revise that Commission-
determined replacement rate through the exercise of their FPA section
205 rights.\179\ FPA sections 205 and 206 are thus complementary
provisions under a coherent statutory structure, but they embody a
statutorily-imposed division of rights and responsibilities between
public utilities under FPA section 205 and the Commission under FPA
section 206.\180\
---------------------------------------------------------------------------
\173\ See supra P 32.
\174\ See, e.g., EEI Rehearing Request at 13; Indicated PJM TOs
Rehearing Request at 2-4; MISO TOs Rehearing Request at 5-6; SPP TOs
Rehearing Request at 3, 5-6; WIRES Rehearing Request at 8.
\175\ See infra P 118.
\176\ 16 U.S.C. 824e(a).
\177\ Id.; see also FirstEnergy Serv. Co. v. FERC, 758 F.3d 346,
353 (D.C. Cir. 2014) (stating that, under FPA section 206, ``[i]t is
the Commission's job--not the petitioner's--to find a just and
reasonable rate.'' (internal quotations omitted)).
\178\ Arguments on rehearing attempting to conflate compliance
filings under FPA section 206 with public utilities' filings under
FPA section 205 because both are evaluated based on a just and
reasonable standard, see, e.g., WIRES Rehearing Request at 14-15,
incorrectly blur the lines between these two distinct statutory
provisions.
\179\ See, e.g., PJM Power Providers Grp. v. FERC, 88 F.4th at
270 n.122 (describing the statutory structure and stating that
public utilities may seek, through FPA section 205 filings, to
modify rates set by the Commission under FPA section 206).
\180\ See, e.g., Emera Maine, 854 F.3d at 24 (describing this
division, where FPA section 205 is intended for the benefit of the
utility, but FPA section 206 has a ``quite different'' purpose of
empowering the Commission to modify rates upon complaint or its own
initiative, with ``entirely different'' and ``stricter'' procedures,
such as the burden of proof and required two-step findings under FPA
section 206 (quotation marks and citations omitted)).
---------------------------------------------------------------------------
54. Nor does the precedent that the rehearing requests rely on
\181\ to claim that Order No. 1920-A unlawfully intrudes on public
utilities' FPA section 205 filing rights support this argument.\182\
These cases do not address the context--applicable here--of how the
Commission may exercise its authority, under FPA section 206, to
determine the just and reasonable replacement rate, including how or
from whom it obtains views concerning the replacement rate or which
replacement rate it may determine and fix. Rather, they arise in
proceedings under different statutory provisions--particularly
including FPA section 205 and the parallel context of NGA section 4
\183\--as discussed in greater detail below. As a result, none of these
cases support the conclusion that the Commission intrudes on FPA
section 205 when it exercises its authority under FPA section 206 by
requiring that public utilities attach to their compliance filings
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process and associated
information or by potentially adopting that agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process in determining the replacement rate.
---------------------------------------------------------------------------
\181\ See, e.g., Atlantic City I, 295 F.3d at 9-11; Atlantic
City II, 329 F.3d at 858-59; NRG Power Mktg., 862 F.3d at 114;
Western Resources, 9 F.3d at 1578; Massachusetts Department of
Public Utilities, 729 F.2d at 886-88.
\182\ See supra P 33 (summarizing the arguments by rehearing
petitioners asserting that Order No. 1920-A is contrary to judicial
precedent relating to public utilities' FPA section 205 filing
rights).
\183\ 15 U.S.C. 717c.
---------------------------------------------------------------------------
55. Atlantic City I provides a straightforward example of this
[[Page 17705]]
distinction. The D.C. Circuit there rebuffed a Commission attempt,
under FPA section 205,\184\ to require that public utilities cede to an
ISO their FPA section 205 right to make unilateral changes in rate
design, terms or conditions of service such that ``only the ISO could
propose changes in rate design.'' \185\ The court held that the
Commission ``lacks the authority to require the petitioners to cede
their right under [FPA] section 205 . . . to file changes in rate
design with the Commission,'' \186\ explaining that the Commission was
``attempting to deny the utility petitioners the very statutory rights
given to them by Congress.'' \187\ Here, by contrast, public utilities
retain all of their rights to file proposed rate changes under FPA
section 205. Order No. 1920-A's approach to cost allocation in
compliance filings, under which transmission providers must attach or
include Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process
and associated material in transmission providers' compliance filings
and the Commission may consider and adopt Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process, is pursuant to the Commission's
authority to set a replacement rate in FPA section 206
proceedings.\188\
---------------------------------------------------------------------------
\184\ 16 U.S.C. 824d.
\185\ Atlantic City I, 295 F.3d at 7; see id. at 9 (``FERC
disapproved this sharing arrangement and directed the utility
petitioners to give up all authority to make unilateral changes to
rate design.'').
\186\ Id. at 11.
\187\ Id. at 9.
\188\ Atlantic City II is inapposite for the same reason, as
that decision involved a petition to enforce the mandate of Atlantic
City I where the Commission ``rather than simply vacating the
offending portions of its prior order . . . commanded the utilities
comprising the ISO to relitigate before it the very issues upon
which they had theretofore prevailed before th[e] court.'' Atlantic
City II, 329 F.3d at 858; see also id. at 859 (``[W]e reaffirm and
clarify our prior decision that [the Commission] has no jurisdiction
to enter limitations requiring utilities to surrender their rights
under [section] 205 of the FPA to make filings to initiate rate
changes.'').
---------------------------------------------------------------------------
56. Other cases that the rehearing requests rely on are similarly
inapposite because they rejected attempts by the Commission or its
predecessor, the Federal Power Commission (FPC), to modify public
utilities' FPA section 205 filings or natural gas companies' NGA
section 4 filings, without first exercising its authority and carrying
its burden under FPA section 206 or NGA section 5, as appropriate.\189\
Also distinguishable are cases involving Commission attempts--in NGA
section 4 proceedings--to require that natural gas companies refile
their rates at regular intervals, rather than the Commission employing
its NGA section 5 \190\ authority to review existing rates.\191\ Again,
none of these cases address the circumstances presented here, where the
Commission has invoked its FPA section 206 authority, made findings
that existing practices do not meet the statutory standard, and then
further exercised its authority to determine and fix the replacement
rate.
---------------------------------------------------------------------------
\189\ See NRG Power Mktg., 862 F.3d at 110, 114-17 & n.2
(explaining that, in FPA section 205 proceedings, the Commission may
not unilaterally impose a new rate scheme of its own making without
the consent of the utility, but that it ``may unilaterally impose a
new rate scheme on a utility or [RTO] only under a different
provision of the Act[,][FPA section 206,]'' which was not ``the
basis for [the Commission's] decision in this case''); Western
Resources, 9 F.3d at 1577-79 (``After careful consideration of the
statutory framework, we cannot accept the Commission's argument that
[NGA section] 4 permits it to approve any rate, no matter how
materially different from that proposed by the pipeline, so long as
it can be viewed as a `part' of the original request.''); Louisiana
v. FPC, 503 F.2d at 861-62 (``The difficulty is this: FPC approved
the interim four-level plan as `just and reasonable,' and in the
next breath it ordered a new, three-level plan to take its
place.'').
\190\ 15 U.S.C. 717d.
\191\ See, e.g., Consumers Energy Co. v. FERC, 226 F.3d 777,
780-81 (6th Cir. 2000); NYPSC, 866 F.2d 487, 488-92 (D.C. Cir.
1989).
---------------------------------------------------------------------------
57. Massachusetts Department of Public Utilities also does not
support rehearing petitioners' arguments. In that case, the D.C.
Circuit held that the Commission correctly concluded that Massachusetts
could not compel a public utility to exercise its FPA section 205
rights to change its Commission-jurisdictional rates.\192\ The court
there described the ``procedural dichotomy'' reflected in FPA sections
205 and 206.\193\ It explained that Massachusetts's argument that it
could compel a public utility to make FPA section 205 rate changes
``would prevent the utility from choosing among reasonable rate-
practice alternatives.'' \194\ By contrast, the Commission's view was
``more consistent with the purposes of the entire procedural scheme''
in that it allows the utility's filed rate to remain in effect absent a
finding that the rate is unjust, unreasonable, or unduly discriminatory
or preferential and allows the utility to change its rate so long as
the utility can prove the proposed change is reasonable.\195\ This same
``procedural dichotomy'' supports the lawfulness of Order No. 1920-A;
public utilities are not exercising (or being compelled to exercise)
their FPA section 205 filing rights. Rather, the Commission has made
the requisite findings to support the exercise of its own authority
under FPA section 206--a posture that the court in Massachusetts
Department of Public Utilities differentiated \196\--and the compliance
filings that Order Nos. 1920 and 1920-A require and the subsequent
fixing of the replacement rate by order occurs under that authority,
not FPA section 205.
---------------------------------------------------------------------------
\192\ Massachusetts Department of Public Utilities, 729 F.2d at
886-87.
\193\ Id. at 886-88.
\194\ Id. at 888.
\195\ Id.; see id. (explaining further that ``the net effect of
accepting Massachusetts' argument is to allow a state to do what
FERC itself cannot, namely, to change an interstate rate practice
that FERC has not found unreasonable'' and also identifying
pragmatic considerations relating to the availability of refunds
under FPA section 205 and concerns of ``confusion, possibly chaos''
that could result if states attempted to require conflicting
changes); 16 U.S.C. 824e(a).
\196\ Massachusetts Department of Public Utilities, 729 F.2d at
866-88 (contrasting the two procedural ``tracks'' under which rates
are regulated in FPA sections 205 and 206).
---------------------------------------------------------------------------
(b) Inclusion of Relevant State Entities' Agreed-Upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process in Transmission Providers' Compliance Filings
58. As explained above, Order No. 1920-A's compliance process with
respect to cost allocation does not infringe on or encumber
transmission providers' FPA section 205 filing rights, as a matter of
statutory text, structure, and applicable precedent. Specifically, the
compliance process requirement that transmission providers include in
their transmittals or attach to their Order No. 1920 regional
transmission planning and cost allocation compliance filings Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process does not infringe
or encumber transmission providers' FPA section 205 filing rights. We
address in additional detail here certain of the arguments raised on
rehearing challenging this requirement.
59. We disagree with rehearing petitioners' claims that requiring
transmission providers to include or attach these materials in
transmission providers' FPA section 206 compliance filings in response
to Order Nos. 1920 and 1920-A constitutes a ``filing'' requirement
under FPA section 205, requires transmission providers to ``cede'' FPA
section 205 filing rights or encumbers those rights, or grants such
filing rights to Relevant State Entities. The Commission required only
that transmission providers include this material in their FPA section
206 compliance filings, either in the
[[Page 17706]]
transmittal or an attachment thereto.\197\ The Commission did not
require transmission providers to independently characterize this
material.\198\ The Commission was further clear that ``the transmission
providers decide what to submit as their actual Order No. 1920
compliance proposal, including relevant tariff language and supporting
evidence or arguments.'' \199\ Put in practical terms, in Order No.
1920-A, the Commission requires nothing more from transmission
providers than attaching one or more additional documents, produced by
parties other than transmission providers, to a compliance filing made
under FPA section 206, to assist in building the record for the
Commission's exercise of its own authority to determine and fix the
just and reasonable rate under that statutory provision, as well as
monitoring compliance with the requirements related to the Engagement
Period and efficiently considering the views of both Relevant State
Entities and transmission providers.\200\ Furthermore, this is a one-
time filing requirement associated with this FPA section 206
proceeding--not an ongoing obligation affecting any future filings by
transmission providers under section 205 or any other section of the
FPA.\201\ And where transmission providers' FPA section 205 rights are
at stake, Order No. 1920-A does not include these same
requirements.\202\
---------------------------------------------------------------------------
\197\ Order No. 1920-A, 189 FERC ] 61,126 at P 651.
\198\ Id. P 655.
\199\ Id. P 654 n.1651 (``The requirement to include Relevant
State Entities' Long-Term Regional Transmission Cost Allocation
Method and/or State Agreement Process as an addition to the
compliance filing does not constitute a `proposal' from the
transmission provider.'').
\200\ FPA section 206 does not mandate a specific process
through which the Commission chooses to build the record to
determine and fix the replacement rate; rather, FPA section 206
merely requires a hearing prior to finding the existing rate unjust
and reasonable, and then empowers the Commission to determine and
fix the replacement rate by order. See 16 U.S.C. 824e; see also
Pension Ben. Guar. Corp. v. LTV Corp., 496 U.S. 633, 653, 655-56
(1990) (holding that when the Due Process Clause is not implicated
and an agency's governing statute contains no specific procedural
mandates, the APA establishes the maximum procedural requirements a
reviewing court may impose on agencies); Vermont Yankee Nuclear
Power Corp. v. Nat. Res. Def. Council, Inc., 435 U.S. 519, 524
(1978) (``Even apart from the [APA,] this Court has for more than
four decades emphasized that the formulation of procedures was
basically to be left within the discretion of the agencies to which
Congress had confided the responsibility for substantive
judgments.''); FPC v. Transcont'l Gas Pipe Line Corp., 423 U.S. 326,
333 (1976); Towns of Concord, Norwood, & Wellesley, Mass. v. FERC,
No. 90-1179, 1991 WL 17224, at *3 (D.C. Cir. 1991) (noting ``the
Commission's broad authority to establish its own rules of procedure
and structure its own methods of inquiry''); 5 U.S.C. 706(2)(D)
(permitting courts to hold unlawful and set aside action found to be
``without observance of procedure required by law'' (emphasis
added)).
\201\ Order No. 1920-A, 189 FERC ] 61,126 at P 651.
\202\ See infra P 118.
---------------------------------------------------------------------------
60. Arguments asserting that the Commission has offered only a
``hollow'' explanation for this requirement, resting on ``empty
formalisms,'' \203\ wrongly conflate the two distinct procedural
postures and authorities set forth in FPA sections 205 and 206. The
fact that a ``compliance filing submitted pursuant to FPA section 206
[as required by Order Nos. 1920 and 1920-A] is not an FPA section 205
filing'' \204\ carries legal consequences. Moreover, as the Commission
explained, the requirement to include materials from Relevant State
Entities in the context of this FPA section 206 compliance filing
``does not constitute a `proposal' from the transmission provider''
\205\ and transmission providers remain free to present whatever
proposal they desire (and believe is compliant with the requirements of
Order Nos. 1920 and 1920-A). Furthermore, transmission providers retain
their full and exclusive discretion as to whether to file--or not
file--proposed changes to Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process under FPA section
205. Transmission providers continue to be able to fully participate in
the FPA section 206 compliance process, their FPA section 205 rights
are not implicated in this process, and FPA section 206 does not
constrain the Commission, as it effectuates its own authority under
that section, from requiring transmission providers to include
information from Relevant State Entities in transmission providers'
compliance filings to assist the Commission in setting the just and
reasonable rate.
---------------------------------------------------------------------------
\203\ MISO TOs Rehearing Request at 19-20; see also WIRES
Rehearing Request at 13; SPP TOs Rehearing Request at 4-5; EEI
Rehearing Request at 8-9.
\204\ Order No. 1920-A, 189 FERC ] 61,126 at P 652.
\205\ Id. P 654 n.1651.
---------------------------------------------------------------------------
61. SPP TOs' argument that ``[t]he Commission previously rejected
attempts to use compliance filings to bypass the FPA's filing
requirements'' and cannot `` `circumvent the notice and filing
requirements of FPA sections 205 and 206' '' \206\ is immaterial
because Order No. 1920-A does not have these effects--no notice and
filing requirements are ``bypassed,'' and no filings under FPA section
205 are required at all. Rather, Order No. 1920-A's approach to cost
allocation in the required compliance filings is a proper exercise of
the Commission's authority under FPA section 206. For the same reason,
we disagree with SPP TOs' assertion that Order No. 1920-A raises a
``major question'' because it attempts to weaken FPA sections 205 and
206's statutory constraints: \207\ Order No. 1920-A is a clear and
unequivocal application of the Commission's authority under FPA section
206.
---------------------------------------------------------------------------
\206\ SPP TOs Rehearing Request at 15 & nn.37-38 (quoting PJM
Interconnection, L.L.C., 178 FERC ] 61,083 at P 29).
\207\ Id. at 17-18.
---------------------------------------------------------------------------
62. We similarly disagree with SPP TOs' claim that Order No. 1920-A
sets a precedent in which, ``in a future section 206 complaint
proceeding, the Commission could authorize states or other favored
parties to include their preferred alternative remedies in other
parties' compliance filings without first having to make the first step
showings under FPA section 206 that are normally required.'' \208\ The
Commission considers compliance filings in FPA section 206 rulemaking
proceedings only after it makes a first-step determination that
existing rates are unjust, unreasonable, or unduly discriminatory or
preferential,\209\ as it did in Order No. 1920. Once such a finding is
made, the Commission determines and fixes the replacement rate,
including through the use of compliance filings.\210\
---------------------------------------------------------------------------
\208\ Id. at 15.
\209\ 16 U.S.C. 824e(a); see, e.g., Emera Maine, 854 F.3d at 24
(holding that ``unlike section 205, section 206 mandates a two-step
procedure that requires FERC to make an explicit finding that the
existing rate is unlawful before setting a new rate'').
\210\ In a complaint proceeding under FPA section 206, the
burden of proof to make this first prong showing is on the
complainant, see id. 824e(b), but once that showing is made, the
replacement rate is determined and fixed by the Commission, see id.
824e(a); see also supra PP 51 (discussing that the Commission is
not, under the FPA, constrained to consider proposals only from
particular entities in receiving compliance filings); infra PP 86-87
(discussing the Commission's ordinary practice of accepting the
compliant, just and reasonable proposal of the public utility and
its reasons for taking a different approach with respect to cost
allocation under Order No. 1920-A).
---------------------------------------------------------------------------
63. Indicated PJM TOs claim that Order No. 1920-A intrudes into
transmission providers' decision making processes by requiring that
transmission providers include Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process in transmission providers' compliance filings.\211\
We disagree, however, with the factual premise of this argument--that
the requirement to include the Relevant State Entities' Long-Term
Regional Transmission Cost
[[Page 17707]]
Allocation Method(s) and/or State Agreement Process in transmission
providers' compliance filings changes transmission providers' decision-
making process as to what proposal transmission providers choose to
make in their compliance filing.\212\ Regardless of Order No. 1920-A's
filing requirement, transmission providers will need to decide whether
to adopt Relevant State Entities' Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process, or file a
different proposal. And if transmission providers decide to file a
different proposal, the requirement to simply include or attach,
without characterization, Relevant State Entities' agreed-upon Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process and associated information received from Relevant
State Entities need not involve deliberation. In short, the Commission
is not regulating transmission providers' decision as to what proposal
they make on compliance.\213\
---------------------------------------------------------------------------
\211\ Indicated PJM TOs Rehearing Request at 12-15.
\212\ See id. at 12-13.
\213\ For this reason, Indicated PJM TOs' discussion of the
applicability of precedent relating to RTO governance, see Indicated
PJM TOs Rehearing Request at 15 & n.50, is mistaken and beside the
point. We further find that the Commission's regulation of cost
allocation methods for Long-Term Regional Transmission Facilities as
practices directly affecting Commission-jurisdictional rates falls
well within its authority pursuant to EPSA, 577 U.S. at 278.
Moreover, CAISO, in which the court found that a Commission attempt
to order a public utility to replace its governing board exceeded
the Commission's authority, 372 F.3d at 398, 403, bears no
resemblance whatsoever to the facts before us here, given that the
Commission is in no way regulating transmission providers decision-
making process or governance structure. Indeed, we note that
Indicated PJM TOs' argument proves too much: every time the
Commission directs a public utility to make a compliance filing, it
requires that the utility make decisions as to what proposal to
adopt.
---------------------------------------------------------------------------
64. Indicated PJM TOs' argument is also incorrect for other
reasons. This argument is further premised on an alleged intrusion on
public utilities' ``internal decisions on whether to submit a filing
under section 205 of the FPA and the content of that filing.'' \214\
But, as discussed above, compliance filings are not submitted under FPA
section 205. The compliance filing at issue here is a one-time
requirement under FPA section 206. So the premise of this argument is
also mistaken as a matter of law and fact.
---------------------------------------------------------------------------
\214\ Indicated PJM TOs Rehearing Request at 6-7 (emphasis
added); see also id. at 2-3; id. at 14 (citing Atlantic City I,
which addressed FPA section 205 rights, and referring to the
``passive'' role of the Commission, which pertains under FPA section
205).
---------------------------------------------------------------------------
65. EEI, SPP TOs, and WIRES each argue that there are other avenues
(e.g., protests) for parties to be heard with respect to cost
allocation, such that allegedly infringing on transmission providers'
FPA section 205 rights by requiring inclusion of Relevant State
Entities' materials in transmission provider's compliance filings is
not necessary or justified.\215\ For the most part, these arguments
appear to be claims that the Commission's decision on this point was
arbitrary and capricious or that the Commission should have adopted a
different approach.\216\ At times, however, rehearing petitioners link
these arguments to their claims that the Commission has afforded
Relevant State Entities rights not found in the FPA.\217\ We reject
these arguments as inconsistent with the statutory text and structure,
as well as applicable precedent. Although protests are one way that
other entities can be heard, the FPA does not limit the Commission's
ability to determine how to build the record when determining and
fixing an appropriate replacement rate under FPA section 206.\218\
---------------------------------------------------------------------------
\215\ See EEI Rehearing Request at 9-10, 12; SPP TOs Rehearing
Request at 15-18; WIRES Rehearing Request at 14.
\216\ See infra PP 78-80 (addressing these arguments).
\217\ See, e.g., EEI Rehearing Request at 9 (arguing that the
Commission ``goes beyond its authority under the FPA'' and that the
proper method for submitting an alternative to a replacement rate
proposed by a public utility on compliance is to file a protest);
SPP TOs Rehearing Request at 17-18 (``The fact that states `are
unable to file cost allocation methods themselves' and must instead
either comment on transmission providers' proposals or file section
206 complaints is exactly what the FPA requires.'' (quoting Order
No. 1920-A, 189 FERC ] 61,126 at P 645)); WIRES Rehearing Request at
11, 14 (advancing this argument in contending the Commission does
not have statutory authority to require a public utility to file
another entity's rate proposal).
\218\ See supra PP 51-52, 59.
---------------------------------------------------------------------------
(c) Commission Consideration of Relevant State Entities' Agreed-Upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process
66. The above discussion of the statutory text, structure, and
precedent rebuts the core of the challenges to the Commission's
determination that it will ``consider the entire record--including the
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method and/or State Agreement Process and the
transmission providers' proposal--when setting the replacement rate.''
\219\ We address in additional detail certain of the specific arguments
raised on rehearing challenging Order No. 1920-A in this respect.
---------------------------------------------------------------------------
\219\ Order No. 1920-A, 189 FERC ] 61,126 at P 659.
---------------------------------------------------------------------------
67. We continue to conclude that ``the Commission need only select
a replacement rate that complies with the final rule and that is
adequately supported in the record, and then intelligibly explain the
reasons for its choice.'' \220\ Claims that Order No. 1920-A distorts
the statutory scheme by ``elevating'' Relevant State Entities to the
equivalent of public utilities by requiring that their agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process be included in the compliance filing, which will be
assessed under the same just and reasonable standard as articulated in
FPA section 205,\221\ are unpersuasive. As discussed above, FPA section
206 does not specify that the Commission may only consider public
utilities' proposals for a replacement rate; rather, FPA section 206
merely requires a hearing prior to finding the existing rate unjust and
reasonable, and then empowers the Commission to determine and fix the
replacement rate by order.\222\ In fact, the D.C. Circuit has explained
that the Commission is not required to await public utilities'
proposals on compliance at all but may instead determine and fix the
replacement rate coincident with the finding under the first prong of
FPA section 206 that the existing rate is unjust and unreasonable.\223\
And while the Commission has typically adopted public utilities'
compliant just and reasonable proposals for the replacement rate
without considering alternate proposals by other entities, FPA section
206 does not prevent the Commission from taking a different approach in
a specific rulemaking proceeding. Rather, and as discussed further
below,\224\ where the Commission has adopted transmission providers'
proposals on compliance where it finds them compliant with the
requirements of the final rule, it has done so based on pragmatic
considerations and pursuant to its authority and discretion to
determine and fix a just and reasonable rate.\225\
---------------------------------------------------------------------------
\220\ Id. P 658 (citing Entergy, 40 F.4th at 701-02).
\221\ See, e.g., SPP TOs Rehearing Request at 13-14.
\222\ See supra P 51.
\223\ See Electrical District, 774 F.2d at 494; Kern River Gas
Transmission Co., 133 FERC ] 61,162 at PP 21-22 (``[A]s an
alternative to waiting for the pipeline to calculate the rates in a
compliance filing, the Commission may calculate and fix the rate
itself in the initial order.'').
\224\ See infra PP 71, 86-87.
\225\ See, e.g., Entergy, 40 F.4th at 701-02 (``[A]t bottom,
Petitioners simply argue that, in its view, a better method exists.
But [the Commission] is not required to choose the best solution,
only a reasonable one.'' (quotation marks and citation omitted));
Duke Energy Trading & Mktg., L.L.C. v. FERC, 315 F.3d 377, 382 (D.C.
Cir. 2003) (``[T]here may be a number of different potential rates
all of which are just and reasonable.''); Kern River, 142 FERC ]
61,132 at P 37 (``Here, the Commission is acting under NGA section
5, not section 4. However, just as there may be several just and
reasonable rates, terms, or conditions which a pipeline may propose
in a section 4 proceeding, there may be several just and reasonable
rates, terms or conditions which the Commission may adopt as a just
and reasonable remedy in a section 5 proceeding.'').
---------------------------------------------------------------------------
[[Page 17708]]
68. Relatedly, MISO TOs misunderstand Order No. 1920-A in
contending that the Commission has ascribed ``heightened importance''
to state-developed cost allocation methods in the context of planning
to meet Long-Term Transmission Needs, such that the Commission will be
particularly likely to accept Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process rather than those of transmission providers.\226\
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Methods and State Agreement Processes take on
heightened importance in relation to other commenters' views, not in
relation to transmission providers' proposals for a replacement rate in
transmission providers' compliance filings. Further, MISO TOs' argument
disregards the Commission's explanation that ``the Commission will
consider the entire record--including the Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method and/
or State Agreement Process and the transmission provider's proposal--
when setting the replacement rate.'' \227\ The Commission did not state
that it was adopting any generic or per se preference for Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process. Rather, the
Commission provided that it will make determinations as to the
appropriate replacement rate on a case-by-case basis, based on the
entire record and consistent with the Commission's statutory authority
and discretion to determine and fix the replacement rate.\228\ And,
consistent with the discussion herein, nothing prevents the Commission
from determining and fixing the replacement rate of its choosing,
including choosing the Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process, pursuant to FPA section 206, so long as it is consistent with
the final rule, adequately supported in the record, and the Commission
adequately explains the reason for its choice.
---------------------------------------------------------------------------
\226\ See, e.g., MISO TOs Rehearing Request at 24-25, 33-37
(citing Order No. 1920-A, 189 FERC ] 61,126 at P 659).
\227\ Order No. 1920-A, 189 FERC ] 61,126 at P 659; see also id.
(explaining that the Commission was ``not required to accept a cost
allocation proposal from a transmission provider simply because it
may comply with Order No. 1920'' but could, instead, ``adopt any
cost allocation method proposed by Relevant State Entities and
submitted on compliance so long as it complies with Order No.
1920'').
\228\ See id. P 658 (explaining how the Commission will consider
replacement rate proposals) (citing 16 U.S.C. 824e, 825l(b)).
---------------------------------------------------------------------------
69. MISO TOs claim that ``[i]f the Commission accepts the Relevant
State Entities' Cost Allocation Method over the transmission provider's
method . . . the Commission has subverted future FPA section 205
filings related to that rate scheme in a manner that disfavors the
transmission provider's FPA section 205 proposals.'' \229\ Although
MISO TOs do not sufficiently explain this specific argument,\230\
namely by indicating how they believe the Commission is ``subverting''
future FPA section 205 filings, this argument again appears to ascribe
effects to Order No. 1920-A that it does not have, which we have
already addressed. Irrespective of the replacement rate that the
Commission sets under FPA section 206, the Commission will assess
transmission providers' future FPA section 205 filings according to the
statutory standard prescribed by the FPA for such filings. Nothing in
Order No. 1920-A ``disfavors'' or ``subvert[s]'' those hypothetical
future filings.\231\ Moreover, any challenges related to the
Commission's treatment of such future FPA section 205 filings can be
raised when those filings are made.
---------------------------------------------------------------------------
\229\ MISO TOs Rehearing Request at 24-25.
\230\ A rehearing request must set forth with specificity the
grounds on which the request is based. 16 U.S.C. 825l(a); 18 CFR
385.713(c)(2) (2024); see ZEP Grand Prairie Wind, LLC, 183 FERC ]
61,150, at P 10 (2023); Ind. Util. Regul. Comm'n v. FERC, 668 F.3d
735, 738-40 (D.C. Cir. 2012).
\231\ Challenges to the Commission's treatment of those
potential filings are not before us at this time.
---------------------------------------------------------------------------
70. We find unpersuasive Indicated PJM TOs' and SPP TOs' arguments
that Entergy is inapposite to Order No. 1920-A because the Commission
in that case first rejected MISO's compliance filing before selecting a
different replacement rate.\232\ First, the Commission's determination
that it may, in compliance proceedings, consider and set as the
replacement rate Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process is consistent with both the text and structure of the FPA, for
the reasons already discussed.\233\ Second, Entergy supports this
conclusion because it reflects that the Commission, when addressing
compliance filings in FPA section 206 proceedings, is not required to
adopt a replacement rate proposed by public utilities,\234\ but instead
may determine and fix any just and reasonable replacement rate of its
choosing.\235\ Third, Indicated PJM TOs and SPP TOs misconstrue Entergy
as reflecting a requirement that the Commission must first reject a
public utility's proposal on compliance before adopting a different
replacement rate. That the Commission in that case elected to first
consider and reject MISO's proposal \236\ before selecting a different
replacement rate does not demonstrate that it was legally required to
do so--and nothing in Entergy holds to the contrary.\237\
---------------------------------------------------------------------------
\232\ See Indicated PJM TOs Rehearing Request at 22-23; SPP TOs
Rehearing Request at 18-19 n.49.
\233\ See supra PP 48-53.
\234\ In other words, if compliance filings were subject to the
requirements of FPA section 205, under which the Commission plays a
passive role, once the Commission rejected MISO's proposal in
Entergy it would not have been empowered to itself fashion a
different rate. Entergy reflects that this is not the case, as the
Commission itself fashioned the replacement rate and the court
upheld this result. See Entergy, 40 F.4th at 701-02.
\235\ See id. (noting that the Commission ``is not required to
choose the best solution, only a reasonable one'' (citations
omitted)).
\236\ The approach in Entergy was consistent with the
Commission's general practice with respect to compliance filings
under FPA section 206 by public utilities, but, as we have explained
above, this practice is not a statutory or legal requirement under
FPA section 206.
\237\ Contrary to SPP TOs' contention that the Commission
erroneously relied on certain cases that do not support its
approach, see SPP TOs Rehearing Request at 16-17, the Commission
cited these cases in ``recogni[tion]'' of the Commission's typical
practice that it ``generally does not consider alternate compliance
proposals other than those filed by the relevant public utility
(here, the transmission provider),'' before then explaining why it
was not adopting that practice in Order No. 1920-A with respect to
these cost allocation proposals. Order No. 1920-A, 189 FERC ] 61,126
at P 659; see F.C.C. v. Fox Television Stations, Inc., 556 U.S. at
515 (``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.'' (emphasis in original)).
---------------------------------------------------------------------------
71. We are also not convinced by Indicated PJM TOs' contention that
the statutory structure of FPA sections 205 and 206 mandates a
preference for the public utility's proposal on compliance.\238\
Although the Commission has historically identified prudential and
policy reasons for adopting public utilities' proposals in compliance
filings if they are compliant with the requirements of a final rule
[[Page 17709]]
issued pursuant to FPA section 206,\239\ these prudential and policy
reasons are not statutory commands.\240\ Interpreting the FPA as
Indicated PJM TOs urge renders meaningless this aspect of the statutory
divide of FPA sections 205 and section 206 and would impermissibly
convert the Commission's statutory authority to determine the
replacement rate into a substantive statutory right for the public
utilities.
---------------------------------------------------------------------------
\238\ See Indicated PJM TOs Rehearing Request at 17-18, 20.
\239\ See, e.g., Kern River, 142 FERC ] 61,132 at P 37 (noting
that ``[i]f the pipeline supports one such just and reasonable
remedy, the Commission finds that adopting the pipeline's remedy, in
preference to other possible remedies, properly recognizes the NGA's
policy of giving pipelines the primary initiative to establish their
rates, terms, and conditions of service'' but also recognizing that
``there may be several just and reasonable rates, terms or
conditions which the Commission may adopt as a just and reasonable
remedy in [an NGA] section 5 proceeding''); PJM Interconnection,
L.L.C., 173 FERC ] 61,134 at P 117 n.175 (``Because PJM may make a
section 205 filing to revise these [OATT] provisions, we find it
reasonable to accept PJM's proposal over alternatives if PJM's
proposal is just and reasonable.'').
\240\ See 16 U.S.C. 824e(a); Electrical District, 774 F.2d at
492. Reinforcing this conclusion, the D.C. Circuit has explained
that the Commission is not required to await public utilities'
proposals on compliance at all but may instead set the replacement
rate. See Electrical District, 774 F.2d at 494; Kern River Gas
Transmission Co., 133 FERC ] 61,162 at PP 21-22 (``[A]s an
alternative to waiting for the pipeline to calculate the rates in a
compliance filing, the Commission may calculate and fix the rate
itself in the initial order.'').
---------------------------------------------------------------------------
72. Indicated PJM TOs and WIRES are similarly incorrect in arguing
that the Commission is limited to considering whether the rate
submitted by the public utility on compliance is just and reasonable
because the Commission failed to prescribe a specific replacement rate
in Order No. 1920-A.\241\ Consistent with the D.C. Circuit's holding in
Electrical District, the Commission is not ``obligat[ed] to end an
unlawful rate from the moment it finds unlawfulness'' but rather may
``tak[e] time for further deliberations necessary to determine what the
precise terms of [the replacement rate] should be.'' \242\ The ``not at
all ambiguous'' procedures set forth in FPA section 206 establish that
after finding existing rates are unjust, unreasonable, or unduly
discriminatory or preferential `` `the Commission shall determine the
just and reasonable rate . . . to be thereafter observed and in force,
and shall fix the same by order.' '' \243\ Claims that the Commission
somehow in Order No. 1920 or 1920-A forfeited to transmission providers
the responsibility--assigned to the Commission by the statute's plain
text--to fix the replacement rate, consistent with the requirements of
those orders, are not grounded in the statutory text or structure, and
are contrary to precedent.\244\
---------------------------------------------------------------------------
\241\ Indicated PJM TOs Rehearing Request at 28; see also, e.g.,
id. at 3-4, 5, 7-8; WIRES Rehearing Request at 10-11.
\242\ Electrical District, 774 F.2d at 492; see also Entergy, 40
F.4th at 701-02 (affirming order in which the Commission, after
rejecting MISO's compliance filings, subsequently determined the
replacement rate on its own initiative, under FPA section 206).
\243\ Electrical District, 774 F.2d at 492 (quoting FPA section
206(a), 16 U.S.C. 824e(a); emphasis in original).
\244\ Contrary to Indicated PJM TOs' argument, see Indicated PJM
TOs Rehearing Request at 27 n.102, the Commission's decision in
Indep. Energy Producers Ass'n v. Cal. Indep. Sys. Operator Corp.,
128 FERC ] 61,165 (2009) does not suggest that the Commission
forwent the opportunity to establish a specific replacement rate.
Rather, the discussion in that case addressed the point at which a
sufficient degree of specificity has been provided such that a rate
can be deemed fixed for purposes of a particular effective date, id.
PP 21-26, and--in fact--is consistent with viewing the Commission's
authority under FPA section 206 as part of an ongoing process until
the replacement rate is fixed.
---------------------------------------------------------------------------
b. Compliance With the APA
i. Rehearing Requests
73. Several petitioners argue that the Commission failed to engage
in reasoned decision-making as required by the Administrative Procedure
Act (APA) in adopting the requirement that transmission providers
include in the transmittal or as an attachment to their compliance
filings any Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process agreed to by Relevant State Entities as
well as any and all supporting evidence and/or justification related to
such method(s) and/or process.\245\ MISO TOs, Indicated PJM TOs, SPP
TOs, and EEI argue that the Commission failed to explain why states did
not already have adequate opportunities to provide input to cost
allocation through previously existing processes--generally connecting
these arguments to their view that the compliance filing requirements
in Order No. 1920-A are inconsistent with FPA section 205.\246\ MISO
TOs and SPP TOs argue that Order No. 1920-A's compliance filing
requirements are inconsistent with the Commission's determination that
transmission providers have the obligation, subject to Commission
oversight, to engage in transmission planning and cost allocation.\247\
WIRES argues that the approach the Commission selected in Order No.
1920-A is adversarial, leading to delay and litigation, and that ``the
record demonstrates that there are other less intrusive means by which
states can meaningfully participate in the development of Long-Term
Regional [Transmission] Cost Allocation [M]ethods and State Agreement
Processes.'' \248\ EEI argues that the Commission's stated
justification for requiring transmission providers to include in their
compliance filings the preferred approach of Relevant State Entities to
cost allocation (i.e., the unique role of Relevant State Entities) does
not relate to cost allocation and does not justify infringing on
utilities' FPA filing rights.\249\ EEI further argues that the
requirement to include Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process in transmission providers' compliance filings could confuse
stakeholders as to which material to provide feedback on--that of the
transmission provider or of the Relevant State Entities--and result in
stakeholder feedback that is not focused on the transmission provider's
proposal.\250\
---------------------------------------------------------------------------
\245\ Indicated PJM TOs Rehearing Request at 8 (citing Mayor of
Balt. v. Azar, 973 F.3d 258, 275 (4th Cir. 2020) (other citations
omitted)); MISO TOs Rehearing Request at 20-21 (citing 5 U.S.C. 706
(other citations omitted)); SPP TOs Rehearing Request at 2 (citing 5
U.S.C. 706(2)).
\246\ MISO TOs Rehearing Request at 8-9, 20-22 (arguing that the
Commission provides notice and comment review of compliance filings,
through Commission Rules of Practice and Procedure 211 and 214,
which is ``reasonable and more statutorily aligned'' than the
approach adopted in Order No. 1920-A); Indicated PJM TOs Rehearing
Request at 8 (``The Commission made no finding and there is no
substantial evidence that the Commission would not have been able to
consider those proposals or that the [Relevant State Entities] would
not have been able to submit their proposals to the Commission or
were in any way impeded from doing so.''); id. at 12 n.35, 32-33;
SPP TOs Rehearing Request at 29 (arguing that the importance the
Commission ascribes to state perspectives reflects that state views
would be taken seriously if presented through other means, such that
there is no need for additional avenues for state participation
through ``preferential filing privileges that are not contemplated
by the FPA''); EEI Rehearing Request at 9-10 (``After all, state
commissions are already afforded special treatment under the
Commission's procedural rules because they can intervene in rate
proceedings as a matter of right.'').
\247\ MISO TOs Rehearing Request at 22-23 (citing Order No.
1920-A, 189 FERC ] 61,126 at P 661) (``The Commission fails to
explain how it maintains this `tariff obligation' if it requires
transmission providers to subordinate their interests and
preferences those of state entities.''); SPP TOs Rehearing Request
at 14, 29 (similar).
\248\ WIRES Rehearing Request at 14, 16-17 (asserting that the
same set of facts relied on in Order No. 1920 were used to justify
the requirements of Order No. 1920-A, such that ``there seems little
connection between what are essentially the same facts and the
choices made''). WIRES here challenges both the compliance filing
requirements, discussed above, and certain consultation requirements
set forth by Order No. 1920-A, see infra Consultation with Relevant
State Entities After the Engagement Period section, as arbitrary and
capricious for the same reasons.
\249\ EEI Rehearing Request at 12.
\250\ Id. at 10.
---------------------------------------------------------------------------
[[Page 17710]]
74. MISO TOs, Indicated PJM TOs, SPP TOs, and EEI all argue that
the Commission has departed--without sufficient basis or explanation--
from its precedent establishing a preference for accepting the
compliant just and reasonable compliance proposals of public utilities
(or, in the context of the NGA, natural-gas companies), rather than
competing proposals.\251\ They assert that this preference is justified
(as recognized by Commission precedent) because public utilities have
the primary initiative to set their rates, terms, and conditions of
service and because, should the Commission adopt a compliance proposal
from an entity other than the public utility, the public utility could
immediately refile its own proposal under FPA section 205.\252\
---------------------------------------------------------------------------
\251\ See MISO TOs Rehearing Request at 33-38 (arguing that the
Commission failed to provide adequate reasoning to support this
decision); Indicated PJM TOs Rehearing Request at 18-20; id. at 21
(arguing that ``the Commission does not explain how these
considerations [that it identified as supporting its approach in
Order No. 1920-A] are any different in the planning process under
Order No. 1920 and 1920-A than they are in the planning processes
under other prior rule changes'' such as Order No. 1000); SPP TOs
Rehearing Request at 16-17; id. at 30 (arguing that this departure
from the Commission's approach in other contexts is arbitrary and
capricious); EEI Rehearing Request at 10-11. These petitioners cite
several Commission decisions reflecting this preference, see, e.g.,
PJM Interconnection, L.L.C., 119 FERC ] 61,318 at P 115 n.124;
Midwest Indep. Transmission Sys. Operator, Inc., 122 FERC ] 61,084,
at P 21 n.18 (2008); PJM Interconnection, L.L.C., 117 FERC ] 61,331,
at P 85 (2006); Kern River Gas Transmission Co., Opinion No. 486-F,
142 FERC ] 61,132 at P 37 & n.50; ANR Pipeline Co., 109 FERC ]
61,138, at P 28 (2004), order on reh'g, 111 FERC ] 61,113, at P 19
(2005), as well as certain judicial decisions, see, e.g., Emera
Maine, 854 F.3d at 674; Pub. Serv. Comm'n of N.Y. v. FERC, 642 F.2d
1335, 1343-44 (D.C. Cir. 1980); ANR Pipeline Co. v. FERC, 771 F.2d
507, 514 (D.C. Cir. 1985); Consol. Edison Co. v. FERC, 165 F.3d 992,
1000 (D.C. Cir. 1999).
\252\ See, e.g., MISO TOs Rehearing Request at 33-35; id. at 37-
38 (arguing that Order No. 1920-A creates a layer of bureaucratic
delay); Indicated PJM TOs Rehearing Request at 18-21.
---------------------------------------------------------------------------
75. SPP TOs contend that the Commission improperly imposed
different requirements on compliance proposals addressing cost
allocation for Relevant State Entities versus transmission
providers.\253\ Specifically, SPP TOs state that compliance filings by
transmission providers must comply with five of Order No. 1000's six
regional cost allocation principles, but Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process must merely comply with the cost-
causation principle and any other legal requirements for cost
allocation.\254\ SPP TOs aver that it is unclear how the Commission
will choose between competing replacement rate proposals given that
they are subject to different criteria, and assert that the Commission
will struggle to explain a decision to adopt, as the replacement rate,
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process.\255\
---------------------------------------------------------------------------
\253\ See SPP TOs Rehearing Request at 20-21.
\254\ See id.; see also id. at 7 (arguing that Order No. 1920-A
violates the structure of FPA sections 205 and 206 because it
imposes on transmission providers a higher burden than on Relevant
State Entities).
\255\ See id.
---------------------------------------------------------------------------
ii. Commission Determination
76. We disagree with arguments raised on rehearing that the
Commission failed to comply with the APA in adopting the requirement
that transmission providers include Relevant State Entities' agreed-
upon Long-Term Regional Transmission Cost Allocation Method(s) and/or
State Agreement Process and associated information in their Order No.
1920 regional transmission planning and cost allocation compliance
filings.
77. Under the APA, agency action must be upheld unless it is
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law.\256\ In South Carolina, the D.C. Circuit set
forth the standard that the Commission must meet in issuing a rule for
the court to find that the Commission met its obligations under the
APA:
---------------------------------------------------------------------------
\256\ 5 U.S.C. 706(2)(A).
The Commission must examine the relevant data and articulate a
satisfactory explanation for its action including a rational
connection between the facts found and the choice made. The
Commission's factual findings are conclusive if supported by
substantial evidence. Substantial evidence is such relevant evidence
as a reasonable mind might accept as adequate to support a
conclusion, and requires more than a scintilla but less than a
preponderance of evidence. When applied to rulemaking proceedings,
the substantial evidence test is identical to the familiar arbitrary
and capricious standard, which requires the Commission to specify
the evidence on which it relied and to explain how that evidence
supports the conclusion it reached.\257\
---------------------------------------------------------------------------
\257\ South Carolina, 762 F.3d at 54 (quotation marks omitted)
(citing Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983); 16 U.S.C. 825l(b); Murray
Energy Corp. v. FERC, 629 F.3d 231, 235 (D.C. Cir. 2011); Fla. Gas
Transmission Co. v. FERC, 604 F.3d 636, 645 (D.C. Cir. 2010); Wis.
Gas Co. v. FERC, 770 F.2d 1144, 1156 (D.C. Cir. 1985)).
78. We disagree with the rehearing petitioners who argue that the
requirement that transmission providers include Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process in their compliance filings
fails to satisfy these requirements. Specifically, we disagree with the
arguments by MISO TOs, Indicated PJM TOs, SPP TOs, and EEI that the
Commission failed to explain why states did not already have adequate
opportunities to provide input on regional transmission cost allocation
issues through previously existing processes. Recognizing the increased
importance of state engagement regarding cost allocation for Long-Term
Regional Transmission Facilities, the Commission in Order No. 1920
established the Engagement Period and required transmission providers
on compliance to explain how they complied with the requirement to
provide a forum for negotiation of a Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process that enables
meaningful participation by Relevant State Entities.\258\ In Order No.
1920-A, the Commission reiterated that it is critical to the success of
the Long-Term Regional Transmission Planning reforms that states have
an opportunity to have a significant role in the establishment of just
and reasonable Long-Term Regional Transmission Cost Allocation Methods
and State Agreement Processes.\259\ Consistent with these findings,
when the Commission adopted the requirement that transmission providers
include Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process,
and any information relevant thereto, in their compliance filings, the
Commission found that the additional requirement would allow it to
better evaluate whether transmission providers have complied with Order
No. 1920's requirement to provide a forum for negotiations that enables
meaningful participation by Relevant State Entities during the
Engagement Period.\260\ The Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process agreed upon by
Relevant State Entities during the Engagement Period are thus evidence
for compliance purposes that will assist the Commission as it
determines and fixes the replacement rate.
---------------------------------------------------------------------------
\258\ Order No. 1920, 187 FERC ] 61,068 at PP 126, 1354, 1357.
\259\ Order No. 1920-A, 189 FERC ] 61,126 at PP 649, 654-657.
\260\ Id.
---------------------------------------------------------------------------
79. Moreover, receiving Relevant State Entities' agreed-upon Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement
[[Page 17711]]
Process, and any information relevant thereto, in tandem with
transmission providers' compliance filings is procedurally consistent
with the Commission's intention, as stated in Order No. 1920-A, to
review the entire record in determining and fixing a replacement rate.
We further conclude that, in these circumstances, there is significant
administrative efficiency in receiving these materials together, as--
for instance--it will allow interested stakeholders to comment
simultaneously on both transmission providers' proposal and Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process. We anticipate that
this process will provide the Commission with a more comprehensive,
better-developed record for the exercise of its FPA section 206
authority to determine and fix the replacement rate.\261\
---------------------------------------------------------------------------
\261\ Id. P 659.
---------------------------------------------------------------------------
80. Rehearing petitioners argue that there are other avenues
available for Relevant State Entities to present their views, such as
through protests.\262\ But the availability of such alternative
approaches, and rehearing petitioners' view that they are adequate or
preferable, does not render Order No. 1920-A's requirements unjust and
unreasonable or arbitrary and capricious.\263\ The Commission has
adequately explained and supported the approach that it adopted in
Order No. 1920-A.
---------------------------------------------------------------------------
\262\ See, e.g., EEI Rehearing Request at 9-10; SPP TOs
Rehearing Request at 17-18, 29; WIRES Rehearing Request at 14.
\263\ See, e.g., EPSA, 577 U.S. at 292 (``A court is not to ask
whether a regulatory decision is the best one possible or even
whether it is better than the alternatives. Rather, the court must
uphold a rule if the agency has `examine[d] the relevant
[considerations] and articulate[d] a satisfactory explanation for
its action[,] including a rational connection between the facts
found and the choice made.' '' (alterations in original) (quoting
State Farm, 463 U.S. at 43)); Entergy, 40 F.4th at 701-02 (``[A]t
bottom, Petitioners simply argue that, in its view, a better method
exists. But [the Commission] is not required to choose the best
solution, only a reasonable one.'' (quotation marks and citation
omitted)).
---------------------------------------------------------------------------
81. We also disagree with MISO TOs' and SPP TOs' arguments that
Order No. 1920-A's compliance filing requirements are inconsistent with
the Commission's determination that transmission providers have the
obligation, subject to Commission oversight, to engage in transmission
planning and cost allocation. Order No. 1920-A is clear that, as in
Order No. 1920, transmission providers decide what to submit as their
actual Order No. 1920 compliance proposal, including relevant tariff
language and supporting evidence or arguments, whether they decide to
propose the Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process
or a different Long-Term Regional Transmission Cost Allocation
Method.\264\ This requirement therefore does not diminish transmission
providers' role in transmission planning and cost allocation matters.
Further, Order No. 1920-A retains the Commission's oversight of
transmission providers' transmission planning and cost allocation, as
the Commission will exercise its authority under FPA section 206 to
determine the replacement rate on compliance.\265\
---------------------------------------------------------------------------
\264\ Order No. 1920-A, 189 FERC ] 61,126 at P 654 n.1651 (``The
requirement to include Relevant State Entities' Long-Term Regional
Transmission Cost Allocation Method and/or State Agreement Process
as an addition to the compliance filing does not constitute a
`proposal' from the transmission provider.'').
\265\ Id. P 659.
---------------------------------------------------------------------------
82. We disagree with WIRES that Order No. 1920-A is arbitrary and
capricious because, in WIRES' opinion, Order No. 1920-A ``adopts an
adversarial approach'' that is ``likely to engender years of costly
litigation that would cast a cloud over successfully siting and
developing critically needed transmission in a timely manner.'' \266\
To begin with, as rehearing petitioners recognize,\267\ absent Order
No. 1920-A's requirement that transmission providers include Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process in their compliance
filings, Relevant State Entities would be able to submit their agreed-
upon Long-Term Regional Transmission Cost Allocation Method(s) and/or
State Agreement Process in comments in opposition to transmission
providers' compliance filings. Therefore, were a transmission provider
to choose not to propose Relevant State Entities' agreed-upon Long-Term
Regional Transmission Cost Allocation Method(s) and/or State Agreement
Process on compliance, the proceedings related to the transmission
provider's compliance filing could still result in disagreement between
the transmission provider and Relevant State Entities, regardless of
whether the Commission required transmission providers to include
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process in their
compliance filings. However, as discussed above, the requirement that
transmission providers include Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process in their compliance filings, as well as any
information that Relevant State Entities provide to them regarding the
state negotiations during the Engagement Period, will allow the
Commission to better evaluate whether transmission providers have
complied with Order No. 1920's requirement to provide a forum for
negotiations that enables meaningful participation by Relevant State
Entities during the Engagement Period.\268\ Moreover, we believe that
ensuring that such a forum exists--and verifying compliance with this
requirement--is likely to reduce the prospect of disputes over cost
allocation methods by ensuring Relevant State Entities' views are
considered by transmission providers and therefore that their
participation is meaningful.\269\ Therefore, on balance, the Commission
reasonably required that transmission providers include Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process in their compliance filings.
---------------------------------------------------------------------------
\266\ WIRES Rehearing Request at 14.
\267\ See, e.g., EEI Rehearing Request at 9-10; SPP TOs
Rehearing Request at 17-18, 29; WIRES Rehearing Request at 14.
\268\ We note that no rehearing petitioners challenge the
requirements of Order Nos. 1920 and 1920-A regarding the Engagement
Period.
\269\ E.g., Order No. 1920, 187 FERC ] 61,068 at P 124 (``As the
Commission discussed in the NOPR and we continue to find in this
final rule, facilitating state regulatory involvement in the cost
allocation process could minimize delays and additional costs
associated with state and local siting proceedings.'').
---------------------------------------------------------------------------
83. We also disagree with WIRES' argument that the Commission's
adoption of Order No. 1920-A's ``compliance mandates'' is arbitrary and
capricious because the Commission in Order No. 1920-A ``defend[ed] its
amendments by using the same justification relied upon in Order No.
1920.'' \270\ In Order No. 1920-A, the Commission ``weighed [the]
competing views'' presented by rehearing petitioners and, based upon
the substantial evidence it identified in Order No. 1920, concluded
that the requirement that transmission providers include Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process in their compliance filings is
just and reasonable.\271\ The
[[Page 17712]]
Commission further concluded that this and other requirements adopted
in Order No. 1920-A strike a reasonable balance between, on the one
hand, recognizing the rights and responsibilities of the Commission and
transmission providers over regional transmission planning and, on the
other, the states' critical interests in the resulting Long-Term
Regional Transmission Facilities and how the costs associated with
those facilities will be allocated.\272\ Therefore, the Commission's
decision-making in this regard satisfies the APA.
---------------------------------------------------------------------------
\270\ WIRES Rehearing Request at 15.
\271\ See Entergy, 40 F.4th at 701-02 (``It is not our job to
determine that `FERC made the better call,' rather, our `important
but limited role is to ensure that the Commission engaged in
reasoned decisionmaking.' '' (quoting EPSA, 577 U.S. at 295)). See
also Order No. 1920-A, 189 FERC ] 61,126 at P 649 (``As the
Commission recognized in Order No. 1920, and we reiterate in this
order, it is critical to the success of the Long-Term Regional
Transmission Planning reforms that states have an opportunity to
have a significant role in the establishment of just and reasonable
Long-Term Regional Transmission Cost Allocation Methods and State
Agreement Processes.'' (citing Order No. 1920, 187 FERC ] 61,068 at
P 1415)); id. P 659 (citing Order No. 1920, 187 FERC ] 61,068 at PP
124, 126, 268, 1293, 1362-1364, 1404, 1407, 1410-1411, 1415, 1477,
1515).
\272\ Order No. 1920-A, 189 FERC ] 61,126 at P 660.
---------------------------------------------------------------------------
84. We also are not persuaded by EEI's argument that the unique
role of Relevant State Entities does not relate to cost allocation or
justify the requirement that transmission providers include Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process in their compliance
filings.\273\ In Order No. 1920-A, the Commission reiterated that
states play a unique role in Long-Term Regional Transmission Planning,
as their laws, regulations, and policies drive the need for Long-Term
Regional Transmission Facilities, and they typically will have
responsibility to consider and approve the siting, permitting, and
construction of Long-Term Regional Transmission Facilities selected in
a regional transmission plan.\274\ As such, states affect whether Long-
Term Regional Transmission Facilities are timely, efficiently, and
cost-effectively developed such that customers actually receive the
benefits associated with the selection of more efficient or cost-
effective transmission solutions.\275\ The effect of Relevant State
Entities' decisions on such timely, efficient, and cost-effective
development of Long-Term Regional Transmission Facilities directly
relates to the allocation of costs for those facilities. It is
therefore reasonable to require that transmission providers provide the
Commission with any Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process that Relevant State Entities
have agreed upon.
---------------------------------------------------------------------------
\273\ See EEI Rehearing Request at 12.
\274\ Order No. 1920-A, 189 FERC ] 61,126 at P 659.
\275\ Id. (citing Order No. 1920, 187 FERC ] 61,068 at PP 124,
126, 268, 1293, 1362-1364, 1404, 1407, 1410-1411, 1415, 1477, 1515).
---------------------------------------------------------------------------
85. Further, we disagree with EEI that stakeholders are likely to
be confused as to whether they should provide feedback on the
transmission provider's proposal or the Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process that Relevant
State Entities have agreed upon.\276\ As the Commission clarified in
Order No. 1920-A, any Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process agreed upon by Relevant State
Entities and included in a transmission provider's transmittal or as an
attachment to its compliance filing does not constitute a proposal from
the transmission provider. Furthermore, commenters may provide their
support for, or feedback on, either or both the transmission provider's
proposal and any Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process agreed upon by Relevant State
Entities.
---------------------------------------------------------------------------
\276\ See EEI Rehearing Request at 10.
---------------------------------------------------------------------------
86. We disagree with MISO TOs, Indicated PJM TOs, SPP TOs, and EEI
that the Commission departed--without sufficient basis or explanation--
from its precedent establishing a preference for accepting compliant,
just and reasonable compliance proposals of public utilities rather
than competing proposals.\277\ The Supreme Court has held that ``agency
action representing a policy change [need not] be justified by reasons
more substantial than those required to adopt a policy in the first
instance.'' \278\ Rather, where an agency changes its position, ``it
suffices that the new policy is permissible under the statute, that
there are good reasons for it, and that the agency believes it to be
better, which the conscious change of course adequately indicates.''
\279\
---------------------------------------------------------------------------
\277\ See MISO TOs Rehearing Request at 33-38; Indicated PJM TOs
Rehearing Request at 18-21; SPP TOs Rehearing Request at 16-17, 30;
EEI Rehearing Request at 10-11.
\278\ FCC v. Fox Television Stations, Inc., 556 U.S. at 514.
\279\ Id. at 515.
---------------------------------------------------------------------------
87. Order No. 1920-A satisfies these requirements. First, as
explained above,\280\ the Commission's typical practice of accepting
compliant just and reasonable compliance proposals of public utilities
rather than competing proposals is just that: a practice, not a
requirement of the FPA. Next, in Order No. 1920-A, the Commission
recognized that, while it generally does not consider alternate
compliance proposals other than those filed by the relevant public
utility,\281\ there are ``good reasons'' for considering Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process in addition to transmission
providers' proposals here.\282\ Specifically, and as discussed: (1)
states play a unique role in Long-Term Regional Transmission Planning;
\283\ (2) states affect whether Long-Term Regional Transmission
Facilities are timely, efficiently, and cost-effectively developed;
\284\ and (3) given the inherent uncertainty involved in planning to
meet Long-Term Transmission Needs, state-developed cost allocation
methods and State Agreement Processes take on heightened
importance.\285\ The Commission thus adequately explained its belief,
based on these ``good reasons,'' that considering Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process along with the transmission
provider's proposal is not simply warranted, but ``better'' than
considering the transmission provider's proposal alone and to the
exclusion of alternatives.\286\
---------------------------------------------------------------------------
\280\ See supra Requirements Concerning Relevant State Entities'
Agreed-upon Cost Allocation Methods, Statutory Filing Rights Under
the FPA section.
\281\ Order No. 1920-A, 189 FERC ] 61,126 at P 659 (citing PJM
Interconnection, L.L.C., 173 FERC ] 61,134 at P 117 n.175; PJM
Interconnection, L.L.C., 119 FERC ] 61,318 at P 115; ANR Pipeline
Co., 110 FERC ] 61,069 at P 49).
\282\ Id. P 659.
\283\ Id.; supra P 84.
\284\ Order No. 1920-A, 189 FERC ] 61,126 at P 659 (citing Order
No. 1920, 187 FERC ] 61,068 at PP 124, 126, 268, 1293, 1362-1364,
1404, 1407, 1410-1411, 1415, 1477, 1515); supra P 84.
\285\ Order No. 1920-A, 189 FERC ] 61,126 at P 659 (citing Order
No. 1920, 187 FERC ] 61,068 at P 227).
\286\ FCC v. Fox Television Stations, Inc., 556 U.S. at 514-15.
---------------------------------------------------------------------------
88. We recognize that, even if the Commission adopts Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process as the replacement rate under
FPA section 206, transmission providers may subsequently file an FPA
section 205 proposal seeking to implement their preferred approach to
cost allocation.\287\ Nonetheless, we sustain Order No. 1920-A's
determination that the Commission will consider the entire record on
compliance in selecting the replacement rate and may permissibly adopt
Relevant State Entities' agreed-upon approach. While transmission
providers' ability to submit an FPA section 205 filing of their own
initiative proposing a set of preferred rates is a consideration the
Commission has
[[Page 17713]]
identified as relevant to our typical approach to assessing compliance
filings,\288\ this consideration--standing alone--cannot render it
inherently arbitrary and capricious for the Commission to require, in
FPA section 206 proceedings, a replacement rate other than the one
proposed by the transmission provider. A contrary conclusion would
effectively amend FPA section 206, removing the Commission as the
entity that ``determine[s] the just and reasonable rate . . . to be
thereafter observed and in force.'' \289\ As discussed above, this is
not the design Congress enacted.\290\
---------------------------------------------------------------------------
\287\ See MISO TOs Rehearing Request at 35, 37-38; Indicated PJM
TOs Rehearing Request at 20-21.
\288\ See PJM Interconnection, L.L.C., 173 FERC ] 61,134 at P
117 n.175 (``Because PJM may make a section 205 filing to revise
these Tariff provisions, we find it reasonable to accept PJM's
proposal over alternatives if PJM's proposal is just and
reasonable.'').
\289\ 16 U.S.C. 824e(a).
\290\ See supra Requirements Concerning Relevant State Entities'
Agreed-upon Cost Allocation Methods, Statutory Filing Rights Under
the FPA section.
---------------------------------------------------------------------------
89. We disagree with SPP TOs' argument that the Commission
improperly imposed different requirements on Long-Term Regional
Transmission Cost Allocation Methods agreed upon by Relevant State
Entities--which need not comply with any of the Order No. 1000 regional
cost allocation principles--and Long-Term Regional Transmission Cost
Allocation Methods to which Relevant State Entities do not agree--which
must comply with Order No. 1000 regional cost allocation principles (1)
through (5).\291\ We reiterate that all cost allocation methods must
comply with the cost causation principle, as required by the FPA.\292\
We also continue to find that although there are different requirements
for cost allocation methods resulting from a State Agreement Process or
Long-Term Regional Transmission Cost Allocation Method that Relevant
State Entities indicate that they have agreed to and have asked
transmission providers to file, as compared to Long-Term Regional
Transmission Cost Allocation Methods to which states do not agree, this
distinction is appropriate to afford flexibility in order to encourage
their use of these methods, which are likely to facilitate agreement
over development of such Long-Term Regional Transmission Facilities and
thus facilitate the selection of more efficient or cost-effective Long-
Term Regional Transmission Facilities.\293\ We further find speculative
and disagree with SPP TOs' assertion that the Commission will struggle
to explain a decision to adopt Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process as the replacement rate. If the Commission fixes
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process as the
replacement rate, the Commission will necessarily and intelligibly
explain why that method(s) and/or process complies with the final rule
based on support in the record.\294\
---------------------------------------------------------------------------
\291\ See SPP TOs Rehearing Request at 7, 20-21.
\292\ Order No. 1920-A, 189 FERC ] 61,126 at P 763 (citing Order
No. 1920, 187 FERC ] 61,068 at P 1305 & n.2786).
\293\ Order No. 1920, 187 FERC ] 61,068 at P 1477; see also
Order No. 1920-A, 189 FERC ] 61,126 at P 763 (citing Order No. 1920,
187 FERC ] 61,068 at P 1477).
\294\ See Entergy, 40 F.4th at 701-02.
---------------------------------------------------------------------------
c. Cooperative Federalism
i. Rehearing Requests
90. SPP TOs argue that Order No. 1920-A is contrary to the FPA's
structure of cooperative federalism because ``[t]here is a very real
possibility that a proposal could be added to a compliance filing
despite one or more of the Relevant State Entities' opposition.'' \295\
In this respect, SPP TOs differentiate Order No. 1920-A from the
Commission action at issue in the Supreme Court's decision in EPSA,
asserting that the Court there upheld the Commission's ``treatment of
demand response resources in wholesale markets [because it] did not
`negate state decisions' regarding retail demand response programs on
the basis that there was a `veto power . . . granted to the States.' ''
\296\
---------------------------------------------------------------------------
\295\ SPP TOs Rehearing Request at 30-31 (``[U]nder Order No.
1920-A, some state policies could be imposed, not only on the
transmission provider, but on dissenting states if the Commission
used its claimed power to accept favored compliance filings reached
through any means other than unanimity.''); see also id. at 31
(``When the outcome of the Engagement Period process was merely
advisory as the Commission originally ordered in Order No. 1920, the
methodology developed during the Engagement Period could only be
filed with the Commission on compliance if adopted by the
transmission provider as its own.'').
\296\ Id. (quoting EPSA, 577 U.S. at 288).
---------------------------------------------------------------------------
ii. Commission Determination
91. We are not persuaded by SPP TOs' argument invoking cooperative
federalism principles. The Supreme Court in EPSA addressed arguments
that the Commission's regulation of demand response, pursuant to the
Commission's authority over wholesale markets, allegedly intruded on a
particular area of reserved state authority over retail rates.\297\ SPP
TOs do not point to a similar alleged intrusion on a particular area of
reserved state authority here. Moreover, even in that context where
reserved state authority was implicated, EPSA did not describe the
state veto power afforded in the Commission's order on demand response
as ``dispositive'' as SPP TOs contend,\298\ but rather as a ``finishing
blow . . . [that] removes any conceivable doubt as to [the order's]
compliance with [FPA section 201(b)]'s allocation of federal and state
authority.'' \299\ In other words, the Court treated the state ``veto
power'' in that case as confirming the Commission's compliance with
principles of cooperative federalism, having already discussed at
length why the Commission, regulating within the areas of its
jurisdiction, was not intruding on state prerogatives.\300\ We further
note that, in Order No. 1920-A, the Commission explained that it would
defer to the Relevant State Entities themselves to determine what
constitutes ``agreement'' on a Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process.\301\ Accordingly,
we continue to find that the Commission's approach in Order No. 1920-A
is consistent with the division of responsibility set forth in the FPA,
consistent with our discussion in Order No. 1920-A.\302\
---------------------------------------------------------------------------
\297\ See EPSA, 577 U.S. at 281-82.
\298\ SPP TOs Rehearing Request at 31.
\299\ EPSA, 577 U.S. at 287-88.
\300\ See id. at 281-87 (concluding the Commission's order was
consistent with FPA section 201(b) notwithstanding that it
``affects--even substantially--the quantity or terms of retail
sales'' because it ``addresses--and addresses only--transactions
occurring on the wholesale market'' that are within the Commission's
jurisdiction, and the Commission's regulatory justification ``are
all about, and only about, improving the wholesale market'').
\301\ Order No. 1920-A, 189 FERC ] 61,126 at P 654 (citing Order
No. 1920, 187 FERC ] 61,068 at P 1360).
\302\ Id. PP 135-165.
---------------------------------------------------------------------------
d. Sub-Delegation
i. Rehearing Requests
92. MISO TOs and SPP TOs assert that the Commission in Order No.
1920-A impermissibly sub-delegated its authority to Relevant State
Entities.\303\ MISO TOs argue that the Commission is giving Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process ``heightened
importance'' over those of transmission providers, with the effect of
permitting Relevant State Entities to set interstate transmission
rates.\304\ MISO TOs state
[[Page 17714]]
that statutory authority to determine whether transmission rates are
unwarranted or excessive lies with the Commission, under the FPA, and
cannot be sub-delegated to state commissions.\305\ SPP TOs assert that
the Commission ``effectively purports to delegate the right to file
compliance filings--which [is] granted to public utilities under the
FPA--to the states,'' which is impermissible under Atlantic City I and
other cases, but also not within the set of circumstances in which
federal agencies may sub-delegate matters to the states.\306\ SPP TOs
also assert that under Order No. 1920-A ``the Commission will, in
practice, show a high degree of deference to alternative state
proposals that would be tantamount to a sub-delegation of Commission
authority to the states.'' \307\
---------------------------------------------------------------------------
\303\ See MISO TOs Rehearing Request at 8, 9-10, 38-41; SPP TOs
Rehearing Request at 32-34.
\304\ MISO TOs Rehearing Request at 38-41 (arguing that the
``most reasonable way to interpret the rule is that the Commission
is empowering states with such new `authority,' permitting Relevant
State Entities to dictate transmission cost allocation, critically,
over the objection of the filing utility itself'').
\305\ Id. at 39-41 (citing Order No. 1920-A, 189 FERC ] 61,126
(Christie, Comm'r, concurring at P 3)).
\306\ SPP TOs Rehearing Request at 32-33 (citing U.S. Telecom
Ass'n v. FCC, 359 F.3d 554, 565, 567-68 (D.C. Cir. 2004) (U.S.
Telecom)).
\307\ Id. at 33-34.
---------------------------------------------------------------------------
ii. Commission Determination
93. We find arguments that the Commission has unlawfully sub-
delegated its authority \308\ are incorrect because there is no sub-
delegation, impermissible or otherwise, of Commission authority
here.\309\ Contrary to MISO TOs' and SPP TOs' claims, the Commission
has not sub-delegated to states its FPA section 206 authority to
determine the replacement rate: the Commission has expressly stated
that it will consider the entire record before it and, itself,
determine the replacement rate.\310\ That the Commission will entertain
on compliance Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process,
in addition to any proposals made by transmission providers, and may
fix one of those as the replacement rate does not suggest that the
Commission has abdicated to states the Commission's clear and exclusive
authority to determine and fix the replacement rate under FPA section
206. SPP TOs' argument that the Commission has unlawfully sub-delegated
to states the right to make compliance filings, which--SPP TOs claim--
is granted solely to public utilities, is also mistaken. As explained
above, the compliance process assists the Commission in determining the
replacement rate, under FPA section 206. Order No. 1920-A requires that
transmission providers--not states--make compliance filings, and sets
out the information that transmission providers must include in those
filings. Arguments that Order No. 1920-A intrudes on public utilities'
rights or unlawfully assigns those rights to Relevant State Entities
are incorrect.\311\
---------------------------------------------------------------------------
\308\ See MISO TOs Rehearing Request at 8, 9-10, 38-41; SPP TOs
Rehearing Request at 32-34.
\309\ U.S. Telecom does not support MISO TOs' or SPP TOs'
arguments. There, the FCC had extensively sub-delegated its
authority over unbundling of mass market switches to state
commissions--indeed, there was no dispute that such a sub-delegation
had occurred, with the FCC arguing instead that the sub-delegation
was permissible. See U.S. Telecom, 359 F.3d at 564-68. Here, by
contrast, the compliance process set forth in Order No. 1920-A as to
cost allocation provides a vehicle for the receipt of Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process and the
Commission retains all decision-making authority under FPA section
206 to determine the replacement rate.
\310\ Order No. 1920-A, 189 FERC ] 61,126 at P 659; see also
supra P 68 (explaining that the Commission expects to determine the
replacement rate on a case-by-case basis, consistent with its
authority and discretion to select from the range of just and
reasonable replacement rates).
\311\ See supra Requirements Concerning Relevant State Entities'
Agreed-upon Cost Allocation Methods, Statutory Filing Rights Under
the FPA section.
---------------------------------------------------------------------------
e. First Amendment
i. Rehearing Requests
94. Indicated PJM TOs argue that the requirement to include
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process in
transmission providers' compliance filings is governmentally compelled
speech that violates the First Amendment to the Constitution.\312\
Indicated PJM TOs assert that the First Amendment protects the right to
petition the government, including through filings with courts and
administrative agencies.\313\ Indicated PJM TOs contend that the
compliance filing requirement violates their rights not to speak by
mandating that a public utility present views with which it disagrees
when filing its own proposal.\314\ Indicated PJM TOs state that the
Supreme Court has held that ``the government may not require that an
entity present views with which it disagrees when it engages in
expressive speech.'' \315\ They compare this case to the Supreme
Court's decision in PG&E, which overturned a state regulation requiring
a utility to include material from a consumer advocacy group in a
newsletter regularly included in the utility's billing envelopes
expressing the utility's views of energy policy.\316\
---------------------------------------------------------------------------
\312\ Indicated PJM TOs Rehearing Request at 29-34 (citing,
inter alia, Pac. Gas & Elec. Co. v. Pub. Util. Comm'n of Cal., 475
U.S. 1, 12-14 (1986) (PG&E)); cf. SPP TOs Rehearing Request at 13-14
(arguing that requiring a transmission provider to include Relevant
State Entities' information with its own commandeers the
transmission provider's compliance filing, citing PG&E, 475 U.S. 1).
\313\ Indicated PJM TOs Rehearing Request at 29 (citing U.S.
Const. amend. I; E. R.R. Presidents Conf. v. Noerr Motor Freight,
Inc., 365 U.S. 127, 138 (1961); Cal. Motor Transp. Co. v. Trucking
Unlimited, 404 U.S. 508, 510 (1972); White v. Lee, 227 F.3d 1214,
1231 (9th Cir. 2000)).
\314\ Id. at 30-32 (citing PG&E, 475 U.S. at 12-14; Moody v.
Netchoice, LLC, 603 U.S. 707, 726-33 (2024); Wooley v. Maynard, 430
U.S. 705, 714 (1977); United States v. United Foods, Inc., 533 U.S.
405, 409-10 (2001)).
\315\ Id. at 30 (citing Moody, 603 U.S. at 726-33).
\316\ See id. (discussing PG&E, 475 U.S. at 12-14).
---------------------------------------------------------------------------
95. Indicated PJM TOs state that the Order No. 1920-A compliance
filing requirement at issue here would not meet the strict scrutiny
standard under the First Amendment, asserting that it is not content
neutral because it is ``intended to give more weight to the views of
[Relevant State Entities] in the Order No. 1920 context than it
normally would give in other proceedings'' and that there is no
compelling government interest justifying the requirement.\317\
Indicated PJM TOs also argue that the compliance filing requirement
would not survive the intermediate scrutiny standard, stating that it
is not narrowly tailored to achieve the Commission's stated interest,
and burdens substantially more of transmission providers' First
Amendment petitioning right than necessary to advance that
interest.\318\
---------------------------------------------------------------------------
\317\ Id. at 31-32.
\318\ Id. at 32-33 (arguing that states have other opportunities
to make their views known, rendering the requirement unnecessary).
---------------------------------------------------------------------------
96. Indicated PJM TOs assert that the limitations the Commission
imposed on the compliance filing requirement--that transmission
providers do not need to separately characterize or justify Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process--do not obviate
this alleged First Amendment violation.\319\ They also state that it is
``inconsequential that the Commission knows and understands that the
[Relevant State Entities'] proposal is not the public utility
transmission provider's proposal.'' \320\ Indicated PJM TOs assert
specifically that the state-generated information at issue is not
relevant to the transmission provider's rate proposal, but rather the
compliance
[[Page 17715]]
filing requirement mandates that transmission providers submit
information that ``undermines the public utility transmission
provider's own advocacy.'' \321\
---------------------------------------------------------------------------
\319\ See id. at 33.
\320\ Id. at 33-34 (citing Moody, 603 U.S. at 739-40; Turner
Broad. Sys., Inc. v. FCC, 512 U.S. 622, 655 (1994)).
\321\ Id. at 34.
---------------------------------------------------------------------------
ii. Commission Determination
97. We disagree with the arguments raised on rehearing by Indicated
PJM TOs that the requirement that transmission providers include
Relevant State Entities' agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process in their Order
No. 1920 regional transmission planning and cost allocation compliance
filings violates the First Amendment.\322\ We agree as a general matter
that transmission providers have First Amendment rights.\323\ However,
Order No. 1920-A does not implicate those rights. Order No. 1920-A
imposes no actual burden or limitation on transmission providers'
speech, but instead requires nothing more than the attachment of one or
more files, containing the information provided by Relevant State
Entities, to transmission providers' compliance proposals under FPA
section 206.
---------------------------------------------------------------------------
\322\ See id. at 29-34; cf. SPP TOs Rehearing Request at 13-14.
\323\ PG&E, 475 U.S. at 8.
---------------------------------------------------------------------------
98. As explained, given states' unique role in Long-Term Regional
Transmission Planning and the heightened importance of state-developed
cost allocation methods and State Agreement Processes, the Commission
will consider the entire record--including the Relevant State Entities'
agreed-upon Long-Term Regional Transmission Cost Allocation Method(s)
and/or State Agreement Process and the transmission provider's
proposal--when setting the replacement rate.\324\ The requirement that
transmission providers include Relevant State Entities' agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process in their compliance filings assists the Commission in
monitoring compliance with the requirements related to the Engagement
Period, allows the Commission to efficiently consider the views of both
Relevant State Entities and transmission providers, and helps ensure
that the Commission has a sufficient record on compliance to set a just
and reasonable replacement rate.\325\ Correctly viewed in this light,
the compliance requirements of Order No. 1920-A do not compel speech in
violation of the First Amendment. Indeed, a myriad of Commission orders
have similarly directed public utilities, following a finding that an
existing rate is unjust, unreasonable, and unduly discriminatory, to
submit information they otherwise would not submit that is necessary
for the Commission to determine whether they have met the relevant
orders' requirements.\326\ Considering the critical importance of
Relevant State Entities' views as to how the costs of Long-Term
Regional Transmission Facilities will be allocated,\327\ the
requirement that transmission providers include information concerning
those views in their compliance filings is akin to any other
``informational requirement[ ] that public utilities must follow to
support their filings'' \328\ and, therefore, does not implicate any
First Amendment concerns.\329\
---------------------------------------------------------------------------
\324\ Order No. 1920-A, 189 FERC ] 61,126 at P 659; supra P 29.
\325\ See supra Requirements Concerning Relevant State Entities'
Agreed-upon Cost Allocation Methods, Statutory Filing Rights Under
the FPA section.
\326\ For example, transmission providers' First Amendment
rights were not implicated by Order No. 1000's directive that
transmission providers propose on compliance an ex ante method(s)
for allocating the costs of new transmission facilities selected in
the regional transmission plan for purposes of cost allocation and
show on compliance (i.e., provide record evidence) that this
proposed method(s) is just and reasonable and not unduly
discriminatory by, inter alia, demonstrating that it satisfies the
regional cost allocation principles. Order No. 1000, 136 FERC ]
61,051 at PP 558, 603. As in Order No. 1000, Order No. 1920-A
requires that transmission providers provide the necessary record
evidence--which, given the importance of states' views on cost
allocation, necessarily includes those views--for the Commission to
act on transmission providers' compliance filings.
\327\ Order No. 1920-A, 189 FERC ] 61,126 at P 649.
\328\ Indicated PJM TOs Rehearing Request at 29. See also Order
No. 1920-A, 189 FERC ] 61,126 at P 657 (``[W]e direct these
facilitation and informational requirements on compliance pursuant
to the Commission's authority under FPA section 206.''); supra The
Statutory Text and Structure, and Applicable Precedent, Support the
Commission's Order No. 1920-A Approach section.
\329\ Full Value Advisors, LLC v. SEC, 633 F.3d 1101, 1108-09
(D.C. Cir. 2011) (holding that required disclosures of information
related to the securities over which institutional managers exercise
control ``are indistinguishable from other underlying and oft
unnoticed forms of disclosure the Government requires for its
`essential operations.' '' (quoting W. Va. State Bd. of Educ. v.
Barnette, 319 U.S. 624, 645 (1943) (Murphy, J., concurring)); United
States v. Sindel, 53 F.3d 874, 878 (8th Cir. 1995) (holding that
disclosures required by the Internal Revenue Service did not
implicate the First Amendment); Scahill v. District of Columbia, 909
F.3d 1177, 1185 (D.C. Cir. 2018); see also Ohralik v. Ohio State Bar
Ass'n, 436 U.S. 447, 456 (1978) (``Numerous examples could be cited
of communications that are regulated without offending the First
Amendment, such as the exchange of information about securities,
corporate proxy statements, the exchange of price and production
information among competitors, and employers' threats of retaliation
for the labor activities of employees.'' (citations omitted)).
---------------------------------------------------------------------------
99. Further, we disagree with Indicated PJM TOs' contention that
``the Commission is not requiring the transmission provider to file
state-generated information that is relevant to the Commission's
decision on the transmission provider's rate proposal.'' \330\ Given
the importance of Relevant State Entities' views as to how the costs of
Long-Term Regional Transmission Facilities will be allocated, we find
that those views--and any agreed-upon Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process--are relevant
to the Commission's decision on the transmission provider's rate
proposal.\331\ Moreover, even if this material were not relevant to the
assessment of transmission providers' proposals, this would not alter
our conclusion that Order No. 1920-A's requirements do not impinge on
transmission providers' First Amendment rights, as discussed
below.\332\
---------------------------------------------------------------------------
\330\ Indicated PJM TOs Rehearing Request at 34 (emphasis in
original). Cf. Order No. 1920-A, 189 FERC ] 61,126 at P 659 (``[T]he
Commission will consider the entire record--including the Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method and/or State Agreement Process and the
transmission provider's proposal--when setting the replacement
rate.'').
\331\ See Order No. 1920-A, 189 FERC ] 61,126 at P 657 (``We
find that these additional requirements will allow the Commission to
better evaluate whether transmission providers have complied with
Order No. 1920's requirement to provide a forum for negotiation that
enables meaningful participation by Relevant State Entities during
the Engagement Period.'' (citing Order No. 1920, 187 FERC ] 61,068
at P 1357)).
\332\ We further note that the Commission regularly requires
public utilities to submit information relevant to other entities'
proposals or positions on issues. See, e.g., pro forma Large
Generator Interconnection Procedures, Sec. 11.3 (Execution and
Filing) (requiring, when an interconnection customer determines that
negotiations with the transmission provider on the terms of the
Large Generator Interconnection Agreement (LGIA) are at an impasse
and requests that the transmission provider submit the unexecuted
LGIA to the Commission, that the transmission provider ``shall file
the LGIA with FERC, together with its explanation of any matters as
to which Interconnection Customer and Transmission Provider
disagree''); Wholesale Competition in Regions with Organized Elec.
Mkts., Order No. 719, 73 FR 64100 (Oct. 28, 2008), 125 FERC ]
61,071, at P 274 (2008), order on reh'g, Order No. 719-A, 74 FR
37776 (Jul. 29, 2009), 128 FERC ] 61,059, order on reh'g, Order No.
719-B, 129 FERC ] 61,252 (2009) (requiring RTOs/ISOs to submit a
compliance filing identifying any significant minority views as to
remaining barriers to comparable treatment of jurisdictional demand
response resources); Allegheny Elec. Coop., Inc. v. PJM
Interconnection, L.L.C, 119 FERC ] 61,165, at P 14, app., attach.
(Data and Document Request to PJM Interconnection, L.L.C) (2007)
(directing PJM, in response to a complaint alleging tariff
violations by PJM related to actions taken by PJM management with
respect to the submission of reports by the PJM Market Monitoring
Unit (MMU), to provide ``[c]omplete details of any communications .
. . with any MMU personnel regarding suggested alterations to the
State of the Market Report . . . [and] [a]ny and all documents made
in connection with such communication(s)'').
---------------------------------------------------------------------------
[[Page 17716]]
100. Turning to Indicated PJM TOs' specific First Amendment claims,
as a preliminary matter it is unclear which rights protected by the
First Amendment Indicated PJM TOs believe are implicated by Order No.
1920-A. The First Amendment protects against government action
abridging both ``the freedom of speech'' and the right ``to petition
the government for a redress of grievances.'' \333\ Although the
Supreme Court has described these two rights as ``cognate rights,''
\334\ the Court has also explained that courts ``should not presume
there is always an essential equivalence in the two Clauses or that
Speech Clause precedents necessarily and in every case resolve Petition
Clause claims.'' \335\ We assume that Indicated PJM TOs' position is
that Order No. 1920-A violates both transmission providers' freedom of
speech and their right to petition the government,\336\ and we
therefore address these claims separately.\337\
---------------------------------------------------------------------------
\333\ U.S. Const. amend. I.
\334\ Thomas v. Collins, 323 U.S. 516, 530 (1945).
\335\ Borough of Duryea v. Guarnieri, 564 U.S 379, 388 (2011).
\336\ See Indicated PJM TOs Rehearing Request at 29-30 (arguing
that Order No. 1920-A ``compel[s] speech in violation of the First
Amendment'' and ``violat[es] First Amendment petitioning rights'').
\337\ Borough of Duryea, 564 U.S at 388 (there is not a
presumption of ``essential equivalence'' in the speech and petition
clauses negating the need to address them individually).
---------------------------------------------------------------------------
101. As to the First Amendment right to petition, we disagree with
Indicated PJM TOs that the requirement that transmission providers
include Relevant State Entities' agreed-upon Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement Process
in their compliance filings violates transmission providers' ``First
Amendment petitioning rights.'' \338\ The Supreme Court has described
the First Amendment right to petition as ``allow[ing] citizens to
express their ideas, hopes, and concerns to their government,'' and a
petition as ``convey[ing] the special concerns of its author to the
government and, in its usual form, request[ing] action by the
government to address those concerns.'' \339\ Assuming, arguendo, that
transmission providers' filings made in compliance with the
requirements of Order Nos. 1920 and 1920-A--or filings made in
compliance with the requirements of any Commission order for that
matter \340\--constitute petitions under the First Amendment,\341\ we
find that the requirement that transmission providers include Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process in their compliance
filings does not infringe on transmission providers' right to petition.
Order No. 1920-A does not prevent transmission providers from
``express[ing] their ideas'' to the Commission or ``request[ing] action
by the [Commission] to address [their] concerns.'' \342\ Rather, Order
No. 1920-A makes clear that ``transmission providers decide what to
submit as their actual Order No. 1920 compliance proposal, including
relevant tariff language and supporting evidence or arguments, whether
they decide to propose the Relevant State Entities' agreed-upon Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process or a different Long-Term Regional Transmission Cost
Allocation Method.'' \343\
---------------------------------------------------------------------------
\338\ Indicated PJM TOs Rehearing Request at 30.
\339\ Borough of Duryea, 564 U.S at 388-89 (citing Sure-Tan,
Inc. v. NLRB, 467 U.S. 883, 896-97 (1984)).
\340\ S. Co. Svcs., 61 FERC at 62,328-29 (1992) (``A compliance
filing is not a change initiated by a utility, but rather is a
change expressly directed by the Commission . . . which the utility
is merely implementing or carrying out.''); id. at 62,330 (``A
public utility submits compliance filings in response to Commission
directives. The Commission issues these directives under its
authority to fix a rate by order.'').
\341\ Indicated PJM TOs contend that ``a public utility's right
to present its rates and charges and proposals that affect such
rates and charges with the Commission are protected speech under the
First Amendment'' based on the general observation that ``[m]aking a
submission or filing with a governmental body is First Amendment
protected petitioning.'' Indicated PJM TOs Rehearing Request at 29
(citing Noerr Motor Freight, Inc., 365 U.S. at 138; Trucking
Unlimited, 404 U.S. at 510; White v. Lee, 227 F.3d at 1231).
However, we find no relevant parallels between, on the one hand, the
compliance requirements adopted in Order No. 1920-A and, on the
other, the ``publicity campaign designed to influence the passage of
state laws'' in Noerr Motor Freight, Inc., 365 U.S. at 131, the
alleged conspiracy ``to institute state and federal proceedings to
resist and defeat applications . . . to acquire [highway carrier]
operating rights or to transfer or register those rights'' in
Trucking Unlimited, 404 U.S. at 509, or the opposition to a zoning
permit in White v. Lee.
\342\ See Borough of Duryea, 564 U.S at 388-89.
\343\ Order No. 1920-A, 189 FERC ] 61,126 at P 654 n.1651.
---------------------------------------------------------------------------
102. As to the First Amendment guarantee of freedom of speech, we
find that the line of cases Indicated PJM TOs rely on in support of
their argument that the compliance requirements of Order No. 1920-A
violate transmission providers' right not to speak are inapposite. In
both PG&E and Moody, the Supreme Court reviewed government action
regulating the communication of political messages to and amongst the
public.\344\ In contrast with the political discourse at issue in PG&E
and Moody, the Supreme Court has held that under the standard
articulated in Central Hudson Gas & Electric Corp. v. Public Service
Commission of New York,\345\ commercial speech--``that is, expression
related solely to the economic interests of the speaker and its
audience'' \346\--is entitled to a ``limited measure of protection,
commensurate with its subordinate position in the scale of First
Amendment values.'' \347\ Further, courts have held that the First
Amendment is not violated when agencies require the disclosure of
information, not to influence public debate, but instead as a means to
fulfilling the agencies' statutory mandates.\348\ Given that Relevant
State
[[Page 17717]]
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process relate ``solely to the
economic interests'' \349\ of those who will be allocated the costs of
Long-Term Regional Transmission Facilities, and that disclosure of this
information is made to the Commission so that it may ensure compliance
with its directives,\350\ we find Indicated PJM TOs' reliance on PG&E
and Moody misplaced.\351\
---------------------------------------------------------------------------
\344\ PG&E concerned an order issued by the California Public
Utilities Commission requiring PG&E to include third-party political
editorials in its monthly billing statements to its customers. PG&E,
475 U.S. at 5-6, 12 (describing the audience of these editorials as
the ``public at large''). In Moody, the Supreme Court reviewed a
Texas law banning censorship on social-media platforms with over 50
million monthly active users, which officials justified on the basis
that those platforms ``skewed against politically conservative
voices.'' Moody, 603 U.S. at 718-19, 721.
\345\ 447 U.S. 557 (1980) (Central Hudson).
\346\ Id. at 561; see also Md. Shall Issue, Inc. v. Anne Arundel
Cnty., 91 F.4th 238, 248 (4th Cir. 2024) (rejecting the argument
that ``commercial speech'' is limited to speech that ``propose[s] a
commercial transaction'' and describing that argument as
``understand[ing] `commercial' far too narrowly'').
\347\ See Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S.
469, 477 (1989) (``Our jurisprudence has emphasized that `commercial
speech' . . . is subject to `modes of regulation that might be
impermissible in the realm of noncommercial expression.' '' (quoting
Ohralik, 436 U.S. at 456)); Central Hudson, 447 U.S. at 563 (``The
Constitution therefore accords a lesser protection to commercial
speech than to other constitutionally guaranteed expression.'');
Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 64-65 (1983). See
also Rubin v. Coors Brewing Co., 514 U.S. 476, 492 (1995) (Stevens,
J., concurring) (``The First Amendment generally protects the right
not to speak as well as the right to speak. In the commercial
context, however, government . . . often requires affirmative
disclosures that the speaker might not make voluntarily.'' (internal
citations omitted)).
\348\ See Full Value Advisors, LLC, 633 F.3d at 1108-09 (``Here
the Commission--not the public--is [the regulated entity's] only
audience. The [Dodd-Frank Wall Street Reform and Consumer
Protection] Act is an effort to regulate complex securities markets,
inspire confidence in those markets, and protect proprietary
information in the process. It is not a veiled attempt to `suppress
unpopular ideas or information or manipulate the public debate
through coercion rather than persuasion' '' (citing Turner Broad.
Sys., Inc., 512 U.S. at 641)); Sindel, 53 F.3d at 878 (``There is no
right to refrain from speaking when `essential operations of
government may require it for the preservation of an orderly
society,--as in the case of compulsion to give evidence in court.'
The IRS summons requires [appellant] only to provide the government
with information which his clients have given him voluntarily, not
to disseminate publicly a message with which he disagrees.''
(quoting West Va. State Bd. of Educ. v. Barnette, 319 U.S. at 645
(Murphy, J., concurring))).
\349\ See Central Hudson, 447 U.S. at 561; Md. Shall Issue,
Inc., 91 F.4th at 248.
\350\ S. Co. Svcs., 61 FERC at 62,330. See also Order No. 1920,
187 FERC ] 61,068 at P 1768 (requiring each transmission provider to
submit a compliance filing ``as necessary to demonstrate that it
meets all of the requirements adopted in [Order No. 1920]'').
\351\ Indicated PJM TOs cite to, but do not discuss, several
additional Supreme Court decisions in stating that ``the
Commission's desire to receive the views of the [Relevant State
Entities] on cost allocation does not justify mandating that the
public utility present those views when filing its own proposal.''
Indicated PJM TOs Rehearing Request at 31 (citing Turner Broad.
Sys., Inc., 512 U.S. at 647; Hurley v. Irish-Am. Gay, Lesbian, &
Bisexual Grp. of Bos., Inc., 515 U.S. 557, 570 (1995); Mia. Herald
Publ'g Co. v. Tornillo, 418 U.S. 241, 256-58 (1974)). These cases
are distinguishable on the facts from Order No. 1920-A. Hurley and
Tornillo, like PG&E and Moody, concerned expression in the public
sphere on matters beyond those of a purely commercial nature. See
Hurley, 515 U.S. at 561-62, 570 (discussing whether a public
accommodations law prohibiting discrimination on the basis of sexual
orientation compelled organizers of Boston's St. Patrick's Day
parade to allow a group of openly gay, lesbian, and bisexual
descendants of Irish immigrants to march in the parade in violation
of organizers' First Amendment rights); Tornillo, 418 U.S. at 243
(reviewing a statute ``granting a political candidate a right to
equal space to reply to criticism and attacks on his record by a
newspaper''). Further, the portion of Turner cited by Indicated PJM
TOs merely discusses why the requirements at issue there were
``unrelated to the content of speech'' (i.e., content-neutral), and
does not explore the appropriate standard of review for regulations
concerning a particular category of speech, such as commercial
speech. Turner Broad. Sys., Inc., 512 U.S. at 647.
---------------------------------------------------------------------------
103. Even assuming for the sake of argument that the compliance
requirements of Order No. 1920-A implicate transmission providers'
freedom of speech under the First Amendment, we disagree with Indicated
PJM TOs' contention that any infringement on transmission providers'
rights should be judged under strict scrutiny or the form of
intermediate scrutiny described by Indicated PJM TOs.\352\ In arguing
that strict scrutiny should apply because the compliance requirements
of Order No. 1920-A are not content-neutral,\353\ Indicated PJM TOs
ignore that the Supreme Court ``has consistently applied intermediate
scrutiny to commercial speech restrictions, even those that were
content- and speaker-based.'' \354\ We find, assuming Order No. 1920-
A's compliance requirements implicate transmission providers' First
Amendment rights at all, the less demanding standard applied to
commercial speech set forth in Central Hudson, should apply to the
requirement that transmission providers include Relevant State
Entities' agreed-upon Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process in their compliance filings
given that these requirements ``relate[ ] solely to [transmission
providers'] economic interests.'' \355\ Furthermore, we find that this
requirement satisfies Central Hudson. Under Central Hudson, the Supreme
Court undertakes a four-part analysis to determine whether a regulation
that infringes on an entity's First Amendment rights is
unconstitutional:
---------------------------------------------------------------------------
\352\ Indicated PJM TOs Rehearing Request at 31.
\353\ Id. at 31 n.116 (``Here, the requirement to file the
[Relevant State Entities'] proposal is applied only when the
transmission provider disagrees with the content of the [Relevant
State Entities'] proposal.'' (citing Reed v. Town of Gilbert, 576
U.S. 155, 171 (2015); Turner Broad. Sys., Inc., 512 U.S. at 642)).
\354\ Greater Phila. Chamber of Com. v. Philadelphia, 949 F.3d
116, 138 (3rd Cir. 2020). See also Sorrell v. IMS Health Inc., 564
U.S. 552, 571-72 (2011) (applying Central Hudson intermediate
scrutiny to a law imposing a ``targeted, content-based burden'').
The Supreme Court has described a content-based regulation as being
``targeted at specific subject matter . . . even if it does not
discriminate among viewpoints within that subject matter. Reed, 576
U.S. at 169. While content-based regulations of noncommercial speech
are typically subject to strict scrutiny, content-based regulations
of commercial speech are not. See, e.g., SEC v. AT&T, Inc., 626 F.
Supp. 3d 703, 743 (S.D.N.Y 2022) (``[D]efendants' suggestion that
all content-based regulations must satisfy strict scrutiny overlooks
the significant body of decisions involving laws and regulations
mandating affirmative disclosures of information . . . . These
disclosure provisions are explicitly content based.'').
\355\ Central Hudson, 447 U.S. at 561; Recht v. Morrisey, 32
F.4th 398, 409 (4th Cir. 2022) (``To be clear: Commercial speech
regulations are analyzed under Central Hudson.''); Stuart v.
Camnitz, 774 F.3d 238, 244 (4th Cir. 2014). See also Ohralik, 436
U.S. at 456 (``To require a parity of constitutional protection for
commercial and noncommercial speech alike could invite dilution,
simply by a leveling process, of the force of the Amendment's
guarantee with respect to the latter kind of speech.'').
At the outset, we must determine whether the expression is
protected by the First Amendment. For commercial speech to come
within that provision, it at least must concern lawful activity and
not be misleading. Next, we ask whether the asserted governmental
interest is substantial. If both inquiries yield positive answers,
we must determine whether the regulation directly advances the
governmental interest asserted, and whether it is not more extensive
than is necessary to serve that interest.\356\
---------------------------------------------------------------------------
\356\ Central Hudson, 447 U.S. at 566. Courts have described the
Central Hudson analysis as a type of intermediate scrutiny. See
Recht v. Morrisey, 32 F.4th at 408.
104. First, the Commission has a substantial interest in monitoring
transmission providers' compliance with the requirements concerning the
Engagement Period, being able to efficiently consider the views of both
Relevant State Entities and transmission providers, and ensuring that
when setting the replacement rate on compliance, the record before it
includes Relevant State Entities' views concerning how the cost of
Long-Term Regional Transmission Facilities will be allocated,\357\ and
the Commission directly and materially advances that substantial
interest by requiring that transmission providers document those views
in their compliance filings.\358\ Additionally, Order No. 1920-A is not
more extensive than is necessary to serve the Commission's substantial
interest because it requires only the attachment of one or more files,
containing the information provided by Relevant State Entities, to
transmission providers' proposal and does not require that transmission
providers separately characterize any of this information.\359\
---------------------------------------------------------------------------
\357\ Central Hudson, 447 U.S. at 569 (``The State's concern
that rates be fair and efficient represents a clear and substantial
governmental interest.''); Order No. 1920-A, 189 FERC ] 61,126 at PP
649, 659.
\358\ Edenfield v. Fane, 507 U.S. 761, 767 (1993).
\359\ Contrary to Indicated PJM TOs' contention, the fact that
Relevant State Entities could alternatively submit their agreed-upon
Long-Term Regional Transmission Cost Allocation Method(s) and/or
State Agreement Process in comments in response to transmission
providers' compliance filings is immaterial under intermediate
scrutiny. Indicated PJM TOs Rehearing Request at 32-33. Under
intermediate scrutiny, both for content-neutral regulations of
noncommercial speech and for commercial speech, regulations need not
be the least restrictive means of achieving the government's
substantial interest. Recht v. Morrisey, 32 F.4th at 409; Bd. of
Trs. of State Univ. of N.Y., 492 U.S. at 477 (``The ample scope of
regulatory authority [with respect to commercial speech] would be
illusory if it were subject to a least-restrictive means
requirement, which imposes a heavy burden on the State.''); Turner
Broad. Sys., Inc., 520 U.S. at 217-18 (``Our precedents establish
that when evaluating a content-neutral regulation which incidentally
burdens speech, we will not invalidate the preferred remedial scheme
because some alternative solution is marginally less intrusive on a
speaker's First Amendment interests.'').
---------------------------------------------------------------------------
B. Consultation With Relevant State Entities After the Engagement
Period
1. Order Nos. 1920 and 1920-A
105. In Order No. 1920, the Commission declined to require future
Engagement Periods but noted that transmission providers may hold
future Engagement Periods if they believe that such periods would be
beneficial.\360\
---------------------------------------------------------------------------
\360\ Order No. 1920, 187 FERC ] 61,068 at P 1368.
---------------------------------------------------------------------------
[[Page 17718]]
106. In Order No. 1920-A, the Commission set aside Order No. 1920,
in part, and required that, as part of transmission providers'
obligations with respect to transmission planning and cost allocation,
transmission providers shall consult with Relevant State Entities: (1)
prior to amending the Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process; or (2) if Relevant State
Entities seek, consistent with their chosen method to reach agreement,
for the transmission provider to amend that method(s) or process.\361\
The Commission found that the consultation requirement will provide a
mechanism through which transmission providers and Relevant State
Entities can engage with each other regarding possible future FPA
section 205 filings that seek to change cost allocation methods
accepted by the Commission in compliance with Order No. 1920.\362\ The
Commission further required transmission providers to include in their
OATTs a description of how they will consult with Relevant State
Entities in these circumstances. Additionally, for a consultation
initiated by a transmission provider, the Commission required the
transmission provider to document publicly on their OASIS or other
public website the results of their consultation with Relevant State
Entities prior to filing their amendment. For a consultation initiated
by Relevant State Entities, if the transmission provider chooses not to
propose any amendments to the Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process preferred by
Relevant State Entities during the required consultation, the
Commission also required the transmission provider to document publicly
on their OASIS or other public website the results of their
consultation with Relevant State Entities, including an explanation for
why they have chosen not to propose any amendments.\363\
---------------------------------------------------------------------------
\361\ Order No. 1920-A, 189 FERC ] 61,126 at P 691.
\362\ Id. The Commission clarified that this consultation
requirement neither requires transmission providers to submit, nor
prohibits transmission providers from submitting, FPA section 205
filings to modify cost allocation methods accepted in compliance
with Order No. 1920, and transmission providers therefore retain
their currently effective FPA section 205 rights. Id. P 691 n.1747.
\363\ Id.
---------------------------------------------------------------------------
107. The Commission found that these requirements will ensure that
states have the opportunity to be involved in establishing cost
allocation methods for Long-Term Regional Transmission Facilities
subsequent to the Commission's acceptance of transmission providers'
filings made in compliance with Order No. 1920, which has the potential
to minimize additional costs and delays in the siting process and to
facilitate the development of Long-Term Regional Transmission
Facilities.\364\ The Commission noted that, while it provided
transmission providers with flexibility as to the form and duration of
their required consultation with Relevant State Entities, one way
transmission providers could satisfy the requirement to consult with
Relevant State Entities is by revising their OATTs to include a process
under which the transmission provider must present to the Commission,
in addition to its own FPA section 205 proposal, an alternative cost
allocation method proposed by Relevant State Entities for evaluation by
the Commission on equal footing.\365\ The Commission noted that
transmission providers could also satisfy the requirement to consult
with Relevant State Entities by revising their OATTs to include
mechanisms similar to those used in SPP \366\ and MISO.\367\
---------------------------------------------------------------------------
\364\ Id. P 692 (citing Order No. 1920, 187 FERC ] 61,068 at PP
124, 126).
\365\ Id. (citing ISO New England Inc., FERC FPA Electric
Tariff, ISO New England Inc. Agreements and Contracts, TOA,
Transmission Operating Agreement (5.0.0), 3.04(h)(vi)(C); The
Governors of Conn., Me., Mass., N.H., R.I., Vt., 112 FERC ] 61,049,
at P 25 (2005)).
\366\ Id. (citing SPP, Governing Documents Tariff, Bylaws, First
Revised Volume No. 4 (0.0.0), 7.2 (Regional State Committee); Sw.
Power Pool, Inc., 106 FERC ] 61,110, at PP 218-220, order on reh'g,
109 FERC ] 61,010, at PP 92-94 (2004); Sw. Power Pool, Inc., 108
FERC ] 61,003, at P 127 & n.90 (2004), order on reh'g, 110 FERC ]
61,138, at P 33 (2005)).
\367\ Id. (citing MISO, FERC Electric Tariff, MISO Rate
Schedules, MISO Transmission Owner Agreement, app. K (Filing Rights
Pursuant To Section 205 Of The FPA) (3.0.0), II.E.3.a.i-ii; Midwest
Indep. Transmission Sys. Operator, Inc., 143 FERC ] 61,165, at PP
30, 32 (2013)).
---------------------------------------------------------------------------
2. Challenges to Order No. 1920-A
a. Statutory Filing Rights Under the FPA
i. Rehearing Requests
108. Several rehearing petitioners argue that the consultation
requirement unlawfully impinges on transmission providers' FPA section
205 filing rights by conditioning the exercise of those rights on
consultation with Relevant State Entities before filing a proposed
tariff amendment.\368\ They argue that FPA section 205 is intended for
the benefit of the public utilities, that this provision provides
public utilities with the unilateral and exclusive right to make
filings setting their rates (subject to Commission approval), and that
the Commission cannot encumber this right by conditioning it on such
consultation.\369\ In support, some rehearing petitioners cite Atlantic
City I as reflecting that the Commission cannot abridge the statutory
rights afforded to public utilities by Congress.\370\ MISO TOs, SPP
TOs, and WIRES also rely on a statement in City of Cleveland v. Federal
Power Commission that a public utility ``may, without negotiation or
consultation with anyone, set the rates it will charge prospective
customers, and change them at will, so long as they have not been set
aside by the Commission on grounds of inconsistency with the [FPA].''
\371\
---------------------------------------------------------------------------
\368\ See MISO TOs Rehearing Request at 5-9, 27-31; Indicated
PJM TOs Rehearing Request at 3, 7; SPP TOs Rehearing Request at 2,
7, 10-12; EEI Rehearing Request at 7, 11-12; WIRES Rehearing Request
at 5-9.
\369\ See, e.g., MISO TOs Rehearing Request at 29-31 (citing
Atlantic City I, 295 F.3d at 9-10; Emera Maine, 854 F.3d at 24;
Vistra Corp. v. FERC, 80 F.4th 302, 318 (D.C. Cir. 2023); MISO
Transmission Owners v. FERC, 45 F.4th 248, 253 (D.C. Cir. 2022); EEI
Rehearing Request at 13-14 (``In seeking to create such a condition,
the Commission seeks to fundamentally and unlawfully alter its role,
as well as transmission providers' and public utilities' rights,
under section 205.''); WIRES Rehearing Request at 7-8.
\370\ See, e.g., MISO TOs Rehearing Request at 27-28; EEI
Rehearing Request at 13-14; WIRES Rehearing Request at 7-8; SPP TOs
Rehearing Request at 11 (also asserting that this approach
contravenes Massachusetts Department of Public Utilities, 729 F.2d
at 888).
\371\ 525 F.2d 845, 855 (D.C. Cir. 1976) (City of Cleveland)
(citing United Gas Pipe Line Co., 350 U.S. at 338-344; Permian Basin
Area Rate Cases, 390 U.S. 747, 822 (1968)); see MISO TOs Rehearing
Request at 30-31 (also noting the Commission's passive role under
FPA section 205); SPP TOs Rehearing Request at 7; WIRES Rehearing
Request at 6, 8.
---------------------------------------------------------------------------
109. MISO TOs argue that the requirement that transmission
providers consult with Relevant State Entities prior to amending the
Long-Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process ``encumbers the transmission providers' ability to
exercise their FPA section 205 rights to amend their tariffs `at any
time.' '' \372\ SPP TOs similarly argue that the Commission cannot
``impos[e] pre-conditions that could delay section 205 filings,
potentially for an indefinite time.'' \373\ WIRES argues that this
requirement is a pre-condition to transmission providers exercising
their filing rights that is not
[[Page 17719]]
contemplated under the statute which could, ``[i]n the extreme, . . .
serve as a prohibition to a public utility's ability to file revisions
under FPA section 205,'' in contrast to the intent of the FPA to allow
public utilities to act quickly and without obstacles.\374\
---------------------------------------------------------------------------
\372\ MISO TOs Rehearing Request at 27-29 (quoting Atlantic City
I, 295 F.3d at 9) (asserting that this aspect of Order No. 1920-A
``provides Relevant State Entities with the ability to delay and
exert statutorily inappropriate influence or control over the
transmission providers' statutory right to file rate changes'').
\373\ SPP TOs Rehearing Request at 11 (citing NRG Power Mktg.,
862 F.3d at 115; Western Resources, 9 F.3d at 1578; Midwest Indep.
Transmission Sys. Operator, Inc., 133 FERC ] 61,221 (2010), order on
reh'g, 137 FERC ] 61,074, at P 187 (2011), vacated in part sub nom.
Ill. Com. Comm'n v. FERC, 721 F.3d 764 (7th Cir. 2013)).
\374\ WIRES Rehearing Request at 8-9.
---------------------------------------------------------------------------
110. EEI asserts that the consultation requirement impermissibly
changes the Commission's role from passively considering rate proposals
to actively infringing upon public utilities' exclusive power under FPA
section 205 to initiate rate changes.\375\ EEI contends that the
structure of the consultation requirement implicitly shows that the
Commission recognizes that it cannot reject a tariff filing by a public
utility for failing to consult a Relevant State Entity.\376\
---------------------------------------------------------------------------
\375\ EEI Rehearing Request at 13.
\376\ Id. at 14.
---------------------------------------------------------------------------
111. A number of the rehearing requests also argue that decisions
by public utilities to adopt a similar consultation mechanism in
certain circumstances, allow greater state participation in regional
transmission planning or cost allocation, or otherwise cede their FPA
section 205 filing rights to other entities do not support the
Commission's decision here because those decisions were voluntary,
rather than compelled by the Commission.\377\ EEI recommends that the
Commission reconsider the consultation requirement, averring that
uncoerced, voluntary agreements, such as when transmission owners in
the MISO region voluntarily ceded certain rights to the Organization of
MISO States in 2013, offer a lawful and more appropriate means of
ensuring engagement between transmission providers and Relevant State
Entities.\378\
---------------------------------------------------------------------------
\377\ See MISO TOs Rehearing Request at 29; SPP TOs Rehearing
Request at 5-6; EEI Rehearing Request at 14-15.
\378\ EEI Rehearing Request at 14-15 (citing Midwest Indep.
Transmission Sys. Operator, Inc., 143 FERC ] 61,165 at P 30).
---------------------------------------------------------------------------
112. MISO TOs, Indicated PJM TOs, and SPP TOs contend that Order
No. 1920-A is also inconsistent with the FPA in requiring, in certain
circumstances, that transmission providers publicly document the
results of their consultations with Relevant State Entities on
transmission providers' OASIS or other public website.\379\ In
particular, SPP TOs assert that the Commission may not ``require a
public utility to justify a decision not to make a section 205 filing
when the filing decision is wholly voluntary under the FPA.'' \380\
Indicated PJM TOs argue, citing Atlantic City I, that ``inherent in a
public utility's right to file to change its own rates under section
205 is its right to not change its own just and reasonable rates'' and
that ``nothing in section 205 requires a utility to explain why it is
not changing a just and reasonable rate.'' \381\
---------------------------------------------------------------------------
\379\ See MISO TOs Rehearing Request at 5 (``These changes
reframe the roles of the entities involved, blurring the FPA's
division of authority.''); Indicated PJM TOs Rehearing Request at 7,
15-17; SPP TOs Rehearing Request at 2, 7, 10-11.
\380\ SPP TOs Rehearing Request at 11.
\381\ Indicated PJM TOs Rehearing Request at 16; id. at 16-17
(arguing that the statutory vehicle for Relevant State Entities to
attempt to change a Commission-approved cost allocation method is a
complaint pursuant to FPA section 206).
---------------------------------------------------------------------------
ii. Commission Determination
113. We disagree with the arguments that Order No. 1920-A's cost
allocation consultation requirement is unlawful because it infringes on
or abridges transmission providers' FPA section 205 filing rights. The
consultation requirement does not regulate transmission providers'
filing rights under FPA section 205, but rather addresses the practices
through which cost allocation methods for Long-Term Regional
Transmission Facilities are developed, which is integrally tied to the
likelihood of the construction of those facilities and their associated
costs.\382\
---------------------------------------------------------------------------
\382\ South Carolina, 762 F.3d at 48; see id. at 82-83
(discussing how ``the lack of methods that ascertain the
beneficiaries of new and improved transmission facilities and
allocate costs to entities that benefit'' creates risks to
transmission providers and results in misaligned incentives).
---------------------------------------------------------------------------
114. In Order No. 1000, the Commission required--and the D.C.
Circuit upheld--that transmission providers' transmission planning
processes ``have a method for allocating ex ante among beneficiaries
the costs of new transmission facilities in the regional transmission
plan, and the method must satisfy six regional cost allocation
principles.'' \383\ In doing so, the Commission regulated not only the
substantive content of such cost allocation methods (i.e., consistency
with the six regional cost allocation principles), but also the very
practice of developing cost allocation methods by ``[r]eforming the
practice[ ] of failing to engage in . . . ex ante cost allocation.''
\384\ Order No. 1920-A's consultation requirement, similarly, aims to
ensure the development and application of cost allocation methods that
will themselves facilitate the timely, efficient development of Long-
Term Regional Transmission Facilities, through states' critical role in
that process.
---------------------------------------------------------------------------
\383\ Id. at 48.
\384\ Id. at 57 (holding that this reform was within the
Commission's jurisdiction to regulate); see also id. at 84-87.
---------------------------------------------------------------------------
115. In Order No. 1920-A, the Commission determined--and we here
sustain--that requiring transmission providers to consult with Relevant
State Entities will provide an opportunity for state input, which ``has
the potential to minimize additional costs and delays in the siting
process and to facilitate the development of Long-Term Regional
Transmission Facilities.'' \385\ As the Commission explained in the
NOPR, Long-Term Regional Transmission Planning ``may entail a more
complex set of considerations compared to existing regional
transmission planning requirements, which, in turn, may increase the
importance of ensuring that the cost allocations method for projects
identified and developed through these processes are perceived as
fair.'' \386\ ``As such, . . . state entities charged with siting
transmission facilities within their state may, at least in certain
circumstances, take a more skeptical approach to evaluating
applications to site Long-Term Regional Transmission Facilities.''
\387\ To address this problem, the Commission proposed that providing
opportunities for state
[[Page 17720]]
involvement in establishing a cost allocation method ``would help to
address any such concerns on the part of state regulators, increasing
the likelihood that Long-Term Regional Transmission Facilities are
actually developed, and without delay.'' \388\
---------------------------------------------------------------------------
\385\ Order No. 1920-A, 189 FERC ] 61,126 at P 692 (``We find
that these requirements will ensure that states have the opportunity
to be involved in establishing cost allocation methods for Long-Term
Regional Transmission Facilities subsequent to the Commission's
acceptance of transmission providers' filings made in compliance
with Order No. 1920.'').
\386\ NOPR, 179 FERC ] 61,028 at P 54 (proposing to ``address
these concerns in part through greater state involvement,
particularly in the development of cost allocation methods''); see
id. P 244; id. PP 297-300 (discussing the challenges associated with
developing cost allocation methods perceived as fair, especially in
multi-state transmission planning regions, and how this may
undermine the development of more efficient or cost-effective
regional transmission facilities; discussing the critical role of
states in such processes); id. P 301 (``We believe that providing an
opportunity for state involvement in regional transmission planning
cost allocation processes is becoming more important as states take
a more active role in shaping the resource mix and demand, which, in
turn, means that those state actions are increasingly affecting the
long-term transmission needs for which we are proposing to require
public utility transmission providers to plan in this NOPR.'').
\387\ Id. P 317; see also id. P 314 (discussing how additional
state involvement in cost allocation may ``decrease the controversy
over development of such facilities,'' and thereby ``reduce
instances in which a Long-Term Regional Transmission Facility is
selected, has an established ex ante cost allocation method that
applies to it, but nevertheless fails to be developed because it
cannot receive a necessary state regulatory approval. After all,
states retain siting authority over transmission facilities and will
review whether Long-Term Regional Transmission Facilities are
consistent with the public interest and state siting
regulations.''); cf. id. P 321 (``Moreover, state siting proceedings
may proceed more efficiently if states have better information about
the costs and benefits of such regional transmission facilities.'').
\388\ Id. P 317.
---------------------------------------------------------------------------
116. Order No. 1920 sustained these preliminary findings from the
NOPR, which provide the foundation for the expanded opportunities for
state participation in cost allocation adopted in that order and in
Order No. 1920-A.\389\ The Commission in Order No. 1920-A recognized
that such concerns over inadequate state participation--and the
Commission's findings as to how increased state involvement in cost
allocation can help ensure that the benefits of Long-Term Regional
Transmission Planning are realized--will also arise in the future, as
transmission providers consider whether changes are warranted to the
cost allocation process.\390\ Likewise, the same dynamic may occur
where Relevant State Entities have identified an alternative approach
to the existing cost allocation mechanism; consulting with the Relevant
State Entities regarding alternative approaches may increase Relevant
State Entities' confidence in Long-Term Regional Transmission Planning
processes, thereby minimizing delays, disputes, and costs associated
with those processes.
---------------------------------------------------------------------------
\389\ See Order No. 1920, 187 FERC ] 61,068 at P 124 (``As the
Commission discussed in the NOPR and we continue to find in this
final rule, facilitating state regulatory involvement in the cost
allocation process could minimize delays and additional costs
associated with state and local siting proceedings.''); id. P 126
(concluding that ensuring a dedicated process through which states
have an opportunity to participate in the development of regional
cost allocation ``is particularly relevant to Long-Term Regional
Transmission Planning, given: (1) the lengthy planning horizon . . .
; (2) the resultant increased uncertainty for Long-Term Regional
Transmission Facilities; and (3) accordingly, the increased
importance for state engagement regarding cost allocation to
increase the likelihood such facilities obtain needed siting
approvals from the states and are thus timely and cost-effectively
developed''); id. PP 1293, 1295, 1362, 1404, 1411; Order No. 1920-A,
189 FERC ] 61,126 at P 659 (``[G]iven the inherent uncertainty
involved in planning to meet Long-Term Transmission Needs, state-
developed cost allocation methods and State Agreement Process take
on heightened importance.''); id. PP 10, 59; 632, 671-673, 677-678.
\390\ See Order No. 1920-A, 189 FERC ] 61,126 at P 692 (``We
find that these requirements will ensure that states have the
opportunity to be involved in establishing cost allocation methods
for Long-Term Regional Transmission Facilities subsequent to the
Commission's acceptance of transmission providers' filings made in
compliance with Order No. 1920, which has the potential to minimize
additional costs and delays in the siting process and to facilitate
the development of Long-Term Regional Transmission Facilities.'');
see also id. P 688 (summarizing NESCOE's argument that ``a
transmission provider could undo the efforts of Relevant State
Entities in agreeing to a Long-Term Regional Transmission Cost
Allocation Method during the initial Engagement Period by filing a
new Long-Term Regional Transmission Cost Allocation Method without
consulting with Relevant State Entities''); id. P 691 (``We are
persuaded by NARUC's and NESCOE's arguments raised on rehearing.'').
---------------------------------------------------------------------------
117. The Commission in Order No. 1920-A therefore addressed
transmission providers' processes for developing cost allocation
methods for Long-Term Regional Transmission Facilities by requiring
that transmission providers engage in consultation with Relevant State
Entities on cost allocation to receive input from these key
stakeholders.\391\ Specifically, it required the adoption of the
consultation mechanisms discussed above, and required ``transmission
providers to include in their OATTs a description of how they will
consult with Relevant State Entities in these circumstances.'' \392\
These consultation practices occur prior to any FPA section 205 filing
that transmission providers might make addressing cost allocation and
are directed toward transmission providers' communications with
Relevant State Entities regarding cost allocation, rather than any such
FPA section 205 filing.\393\
---------------------------------------------------------------------------
\391\ Order No. 1920-A also provided examples of how
transmission providers could satisfy these consultation
requirements, including revising their OATTs to adopt mechanisms
similar to those used in SPP and MISO, id. P 692, but it did not
rely on the voluntary decision of RTOs/ISOs to adopt such mechanisms
as support for establishing these requirements. Thus, arguments on
rehearing that such voluntary decisions are distinguishable from a
Commission-imposed consultation requirement, see MISO TOs Rehearing
Request at 29; SPP TOs Rehearing Request at 5-6; EEI Rehearing
Request at 14-15, are beside the point.
\392\ Order No. 1920-A, 189 FERC ] 61,126 at P 691.
\393\ Indeed, there may not be any FPA section 205 filing
associated with any such consultation, as the transmission provider
has full discretion on whether or not to proceed with any FPA
section 205 filing.
---------------------------------------------------------------------------
118. We agree with rehearing petitioners that FPA section 205
expressly grants rights to transmission providers. But contrary to the
arguments raised on rehearing,\394\ regulation of these consultation
practices does not infringe on those rights.\395\ Transmission
providers retain their full and exclusive discretion as to whether to
file--or not file--proposed changes to Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process under FPA
section 205. Transmission providers likewise retain their full and
exclusive discretion to determine the content of any such proposal,
notwithstanding that transmission providers are required to engage in
this consultation process. Transmission providers also control the
timing of when they choose to make any such filing, including, to
reiterate, whether to make such a filing at all.\396\ Under this
framework, the Commission demonstrably retains its passive and reactive
role of reviewing the transmission providers' FPA section 205
filings.\397\ As a result, FPA section 205 continues to function to the
benefit of the transmission providers in allowing them, subject to
Commission review and approval, to propose to set and change their own
rates.\398\
---------------------------------------------------------------------------
\394\ See supra P 108.
\395\ Order No. 1920-A, 189 FERC ] 61,126 at P 691 n.1747 (``We
clarify that this consultation requirement neither requires
transmission providers to submit, nor prohibits transmission
providers from submitting, FPA section 205 filings to modify cost
allocation methods accepted in compliance with Order No. 1920, and
transmission providers therefore retain their currently effective
FPA section 205 rights.'').
\396\ The Commission also afforded ``transmission providers
flexibility as to the form and duration of their required
consultation with Relevant State Entities.'' Id. P 692.
\397\ Emera Maine, 854 F.3d at 24.
\398\ See, e.g., id. (contrasting FPA sections 205 and 206,
noting that FPA section 205 is intended for the benefit of the
utility, allowing it to propose to change its own rates, subject to
the Commission's passive and reactive oversight); Vistra Corp., 80
F.4th at 318; MISO Transmission Owners, 45 F.4th at 253.
---------------------------------------------------------------------------
119. Thus, the precedent relied on by rehearing petitioners
challenging these requirements is inapposite. As discussed in greater
detail above, the court in Atlantic City I \399\ was not addressing a
Commission regulation akin to the regulation of transmission providers'
consultation practices relating to cost allocation for Long-Term
Regional Transmission Facilities.\400\ Rather, the court there
overturned a Commission order requiring that public utilities clearly
cede to an ISO their FPA section 205 rights, such that only the ISO
could propose changes in rate design. Here, by contrast, transmission
providers retain the full scope of their FPA section 205 filing rights.
For similar reasons, this consultation requirement does not contravene
Massachusetts Department of Public Utilities \401\ because transmission
providers retain their full authority to file only the FPA section 205
proposals of their own choosing, as well as the right to file nothing
at all.\402\
---------------------------------------------------------------------------
\399\ 295 F.3d at 9-11.
\400\ See supra P 55 (discussing the facts and holding of
Atlantic City I).
\401\ 729 F.2d at 886-87.
\402\ See supra P 57 (discussing the facts and holding of
Massachusetts Department of Public Utilities). For similar reasons,
we are not persuaded by Indicated PJM TOs' suggestion of a tension
between this consultation requirement and the availability of a
complaint under FPA section 206 as a mechanism to compel a change to
a transmission provider's cost allocation method. See Indicated PJM
TOs Rehearing Request at 16-17. The consultation requirement does
not allow Relevant State Entities to compel a transmission provider
to change or not change its cost allocation method.
---------------------------------------------------------------------------
[[Page 17721]]
120. We are also not persuaded by challenges to this consultation
requirement relying on City of Cleveland.\403\ In that case, the court
considered ``whether the Federal Power Commission erred in adopting a
rate structure specified in a schedule filed by a public electric
utility without resolving its municipal customer's contention that the
schedule contravenes a preexisting agreement between the parties.''
\404\ The court held that where a public utility has actually agreed to
particular rates, by contract, the Commission cannot overlook that
agreement and approve different rates.\405\ While the court in that
case stated that a utility ``may, without negotiation or consultation
with anyone, set the rates it will charge prospective customers, and
change them at will, so long as they have not been set aside by the
Commission on grounds of inconsistency with the [FPA],'' \406\ the
court was not called upon to address the Commission's authority, under
FPA section 206, to regulate transmission providers' practices for
developing cost allocation methods.\407\ Moreover, that decision
substantially pre-dates the Supreme Court and D.C. Circuit's precedent
affirming the Commission's authority over the practices of public
utilities that directly affect the areas subject to the Commission's
jurisdiction.\408\ Regardless, under Order No. 1920-A, transmission
providers are still entitled, subject to Commission review and
approval, ``without negotiation or consultation with anyone, [to] set
the rates [they] will charge prospective customers, and change them at
will,'' \409\ including as to cost allocation. Despite Order No. 1920-
A's regulation of their pre-filing practices, transmission providers'
filing rights as set forth by FPA section 205 \410\ remain wholly
intact and unchanged; any FPA section 205 filing that transmission
providers make seeking to set or change their rates does not need to
reflect a compromise proposal resulting from negotiation or
consultation.
---------------------------------------------------------------------------
\403\ See MISO TOs Rehearing Request at 30-31; SPP TOs Rehearing
Request at 7; WIRES Rehearing Request at 6, 8.
\404\ See City of Cleveland, 525 F.2d at 846, 853-54.
\405\ See id. at 855 (explaining that the petitioner's ``thesis
is that . . . it had reached agreement with CEI as to the rates to
be charged for the proposed load transfer service, and that a
racheting of contract demand was not a part of the bargain'' such
that a ``rachet clause'' included in the public utility's proposed
rate schedule had been impermissibly included); id. at 855-56 (``[A]
utility is no more at liberty to alter an agreed rate as yet unfiled
than it is to depart from one that has been filed.'').
\406\ Id. at 855; see also United Gas Pipe Line Co., 350 U.S. at
343 (``The obvious implication is that, except as specifically
limited by the Act, the rate-making powers of natural gas companies
were to be no different from those they would possess in the absence
of the Act: to establish ex parte, and change at will, the rates
offered to prospective customers . . . .'').
\407\ See City of Cleveland, 525 F.2d at 851-57.
\408\ See EPSA, 577 U.S. at 288; South Carolina, 762 F.3d at 48;
cf. CAISO, 372 F.3d at 403 (overturning Commission order, finding
that it did not meet the ``directly affects'' test).
\409\ City of Cleveland, 525 F.2d at 855 (emphasis added).
\410\ See 16 U.S.C. 824d(c) (providing that ``every public
utility shall file with the Commission . . . schedules showing all
rates and charges for any transmission or sale subject to the
jurisdiction of the Commission, and the classifications, practices,
and regulations affecting such rates and charges'').
---------------------------------------------------------------------------
121. MISO TOs, SPP TOs, and WIRES assert that the requirement that
transmission providers consult with Relevant State Entities prior to an
FPA section 205 filing unlawfully limits their ability to propose to
change their rates at any time.\411\ We disagree. Order No. 1920-A's
regulation of transmission provider practices in this respect may
result in practical considerations affecting the timing of transmission
providers' FPA section 205 filings, which transmission providers must
plan for in order to file their proposal at their preferred time, but
it does not amount to a curtailment of transmission providers' filing
rights. Indeed, the same challenge could be leveled at essentially any
Commission order that imposes a requirement on a public utility that
may affect the contents of a FPA section 205 filing, because meeting
this requirement could impose a practical constraint on the timing of
that filing.\412\ We note that transmission providers must follow any
applicable stakeholder processes to that effect under their currently
effective governing documents, and we view those to be functionally
similar to the consultation requirement.\413\
---------------------------------------------------------------------------
\411\ See supra P 109.
\412\ For instance, where the Commission imposes a requirement
on a public utility to consider a certain issue (e.g., a category of
factors affecting Long-Term Transmission Needs) in support of
ensuring just and reasonable rates, doing so could delay the
utility's ability to make an FPA section 205 filing as compared to a
situation without that requirement.
\413\ See e.g., PJM Interconnection, L.L.C., Intra-PJM Tariffs,
OA, Sec. 18.6(a) (requiring the support of PJM stakeholders for
certain FPA section 205 filings to amend PJM's Operating Agreement).
---------------------------------------------------------------------------
122. None of the precedent cited by MISO TOs, SPP TOs, or WIRES
holds to the contrary. While Atlantic City I states that under FPA
section 205(d) ``a public utility may file changes to rates, charges,
classification, or service at any time upon 60 days notice,'' \414\ it
does not suggest that a Commission regulation that might, as a
practical matter, affect the timing of such filings is unlawful as an
intrusion on public utilities' filing rights.\415\ Neither do the cases
on which SPP TOs rely,\416\ which addressed Commission attempts to
modify a FPA section 205 filing made by a public utility \417\ or
explained that, where a filing is made under FPA section 205, the
Commission has ``a statutory obligation to process the filing in a
timely manner.'' \418\
---------------------------------------------------------------------------
\414\ 295 F.3d at 9; see MISO TOs Rehearing Request at 28.
\415\ See 295 F.3d at 9-11; see supra P 55 (discussing the
holding of Atlantic City I).
\416\ See SPP TOs Rehearing Request at 11 (citing NRG Power
Mktg., 862 F.3d at 115; City of Winnfield, 774 F.2d at 876; Western
Resources, 9 F.3d at 1578; Midwest Indep. Transmission Sys.
Operator, Inc., 137 FERC ] 61,074 at P 187).
\417\ See NRG Power Mktg., 862 F.3d at 115; City of Winnfield,
774 F.2d at 876; Western Resources, 9 F.3d at 1578. That these cases
discuss notice requirements under FPA section 205 does not support
SPP TOs' suggestion that a Commission regulation is invalid as
abridging FPA section 205 filing rights if it may, as a practical
matter, require greater planning on a public utilities' part to make
their filing at a desired time.
\418\ Midwest Indep. Transmission Sys. Operator, Inc., 137 FERC
] 61,074 at P 187.
---------------------------------------------------------------------------
123. Challenges to Order No. 1920-A's requirements that
transmission providers publicly document the results of their
consultation with Relevant State Entities \419\ do not change our
analysis. Here, too, these documentation requirements do not impinge on
or alter transmission providers' FPA section 205 filing rights, as
transmission providers retain their full, exclusive, and unilateral
right to file, or not file,\420\ FPA section 205 proposals of their own
choosing. This aspect of Order No. 1920-A regulates only transmission
providers' practices around publicly documenting their consultation
with Relevant State Entities, pursuant to the Commission's authority
under FPA section 206. The Commission has often introduced
documentation requirements aimed at increasing transparency.\421\
[[Page 17722]]
Nothing in FPA section 205 precludes the Commission from exercising
that FPA section 206 authority to require documentation of these
discussions, including in scenarios where the transmission provider
elects not to file an FPA section 205 proposal to change its approach
to cost allocation.
---------------------------------------------------------------------------
\419\ See MISO TOs Rehearing Request at 5; Indicated PJM TOs
Rehearing Request at 7, 15-17; SPP TOs Rehearing Request at 2, 7,
10-11.
\420\ See Indicated PJM TOs Rehearing Request at 16 (arguing
that inherent in a public utility's right to change its own rates
under FPA section 205 is the right not to seek to change its rates
under that provision); SPP TOs Rehearing Request at 11 (arguing that
the filing decision is wholly voluntary under FPA section 205).
\421\ See, e.g., Order No. 1920, 187 FERC ] 61,068 at P 1753
(requiring transmission providers to publicly document certain
information, including Long-Term Transmission Needs discussed in
interregional transmission coordination meetings); id. PP 1625-1630
(establishing documentation and transparency requirements for local
transmission planning processes); Order No. 2023, 184 FERC ] 61,054
at PP 135-137 (requiring transmission providers to publicly post
available generator interconnection information); Order No. 1000,
136 FERC ] 61,051 at P 458 (directing transmission providers ``to
maintain a website or email list for the communication of
information related to interregional transmission coordination
procedures'' to stakeholders); id. PP 668-669 (requiring that ``cost
allocation methods and their corresponding data requirements for
determining benefits and beneficiaries [of regional and
interregional transmission facilities] must be open and
transparent'' in order to ``ensure[] that such methods are just and
reasonable and not unduly discriminatory or preferential''); Reform
of Generator Interconnection Procs. & Agreements, Order No. 845, 163
FERC ] 61,043, at PP 305, 307 (requiring transmission providers to
post interconnection study metrics, in order to ``increase the
transparency of interconnection study completion timeframes''),
order on reh'g, Order No. 845-A, 166 FERC ] 61,137 (2018), order on
reh'g, Order No. 845-B, 168 FERC ] 61,092 (2019); Uplift Cost
Allocation & Transparency in Mkts. Operated by Reg'l Transmission
Orgs. & Indep. Sys. Operators, Order No. 844, 163 FERC ] 61,041, at
PP 27, 30-34 (2018) (finding that certain RTO/ISO reporting
practices were insufficiently transparent, resulting in unjust and
unreasonable rates, and establishing four public reporting
requirements).
---------------------------------------------------------------------------
124. Moreover, the Commission has authority under the FPA to
require the disclosure of information as necessary or appropriate to
assist the Commission in the administration of its duties under the
FPA, in the ``manner or form'' as the Commission may prescribe and
providing ``specific answers to all questions upon which the Commission
may need information.'' \422\ Order No. 1920-A's requirements that
transmission providers publicly document the results of their
consultation with Relevant State Entities fall comfortably within this
broad authority.\423\
---------------------------------------------------------------------------
\422\ 16 U.S.C. 825c(a) (``[E]very public utility shall file
with the Commission such annual and other periodic or special
reports as the Commission may by rules and regulations or order
prescribe as necessary or appropriate to assist the Commission in
the proper administration of this chapter''); see also id. 825f(a),
825h; INGAA, 285 F.3d at 39; PJM Interconnection ] 61,224, at P 26
(2015) (``Court and Commission precedent recognize that the
Commission retains the ability to require informational filings
without exceeding its authority under section 205. The Commission's
authority to prescribe informational filings and require
informational reports, moreover, is statutory.''); PJM
Interconnection, L.L.C., 123 FERC ] 61,037, at P 12 (2008); supra
note 421 (public documentation requirements issued pursuant to FPA
section 206).
\423\ For instance, these requirements will help ensure that
consultations with Relevant State Entities are occurring consistent
with transmission providers' tariffs.
---------------------------------------------------------------------------
b. Compliance With the APA
i. Rehearing Requests
125. MISO TOs, SPP TOs, and WIRES assert that Order No. 1920-A's
consultation requirement is inconsistent with the objectives of Order
No. 1920 and insufficiently supported and is therefore arbitrary and
capricious under the APA.\424\ MISO TOs argue that the requirement
contravenes the stated purpose of Order No. 1920 of promoting
efficiency and cost-effectiveness of transmission solutions stating
that ``when the Commission places roadblocks, such as additional
consultations and detailed explanations of decisions, in the way of
reaching appropriate [c]ost [a]llocation [m]ethods, it belies the
purpose of the reforms, does not demonstrate a clear path of reasoning,
and is, thus, arbitrary and capricious.'' \425\ SPP TOs broadly
challenge Order No. 1920-A's consultation requirement as insufficiently
supported by the Commission's explanation that states have a unique
role and voice in regional transmission planning, given that states
have other avenues to be heard and transmission providers have every
incentive to consult voluntarily with Relevant State Entities.\426\
WIRES argues that ``[b]ecause the record demonstrates that there are
other less intrusive means by which states can meaningfully participate
in the development of Long-Term Regional [Transmission] Cost Allocation
[M]ethods and State Agreement Processes, the Commission's revisions are
arbitrary and capricious.'' \427\
---------------------------------------------------------------------------
\424\ MISO TOs Rehearing Request at 32-33 (citing 5 U.S.C. 706;
Hoopa Valley Tribe v. FERC, 913 F.3d 1099, 1102 (D.C. Cir. 2019));
SPP TOs Rehearing Request at 28 (citing State Farm, 463 U.S. at 43);
WIRES Rehearing Request at 15 (citing 5 U.S.C. 706(2)(A); Am. Gas
Ass'n v. FERC, 593 F.3d 14, 19 (D.C. Cir. 2010); Rio Grande Pipeline
Co. v. FERC, 178 F.3d 533, 541 (D.C. Cir. 1999)).
\425\ MISO TOs Rehearing Request at 32-33; see also id. at 27.
\426\ SPP TOs Rehearing Request at 28-29 (arguing that there is
no need to ``create preferential filing privileges'' not
contemplated by the FPA and ``that statutory limits exist and may
frustrate some parties cannot be a reasoned basis for evading those
limits''); see also id. at 11-12 (arguing that the Commission's
explanation for the consultation requirements cannot support
infringing on transmission providers' FPA section 205 filing rights,
and that ``public utilities will continue to have every incentive to
voluntarily consult with Relevant State Entities and to consider
their input before making section 205 filings'').
\427\ WIRES Rehearing Request at 16-17 (asserting that the same
set of facts relied on in Order No. 1920 were used to justify the
requirements of Order No. 1920-A, such that ``there seems little
connection between what are essentially the same facts and the
choices made.''). WIRES here challenges both the consultation
requirements and the compliance filing requirements adopted in Order
No. 1920-A, discussed above, see supra Requirements Concerning
Relevant State Entities' Agreed-upon Cost Allocation Methods
section, as arbitrary and capricious for the same reasons.
---------------------------------------------------------------------------
ii. Commission Determination
126. We disagree with the arguments raised on rehearing that the
Commission failed to comply with the APA in adopting the requirement
that transmission providers consult with Relevant State Entities prior
to amending the Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process.\428\ First, MISO TOs
mischaracterize the consultation requirement in calling it a
``roadblock[ ] . . . in the way of reaching appropriate [c]ost
[a]llocation [m]ethods,'' \429\ as Order No. 1920-A provides
transmission providers flexibility as to both the form and duration of
the required consultation.\430\ Moreover, Order No. 1920-A does not
require that transmission providers post any detail beyond the results
of any consultation,\431\ and for consultations initiated by Relevant
State Entities, Order No. 1920-A requires only an explanation for why
the transmission provider has chosen not to propose any amendments to
the Long-Term Regional Transmission Cost Allocation Method(s) and/or
State Agreement Process preferred by Relevant State Entities during the
required consultation.\432\ Contrary to MISO TOs' contention that the
consultation requirement contravenes the purpose of Order No. 1920, we
find that the consultation requirement directly furthers the essential
purpose of Long-Term Regional Transmission Planning to develop more
efficient or cost-effective regional transmission facilities.\433\ The
consultation requirement, in ensuring that states have the opportunity
to be involved in development of cost allocation methods for Long-Term
Regional Transmission Facilities subsequent to the Commission's
acceptance of transmission providers' filings made in compliance with
Order No. 1920, has the potential to minimize additional costs and
delays in the siting process and to facilitate the development of Long-
Term Regional
[[Page 17723]]
Transmission Facilities.\434\ Therefore, on balance, we find that the
consultation requirement adopted in Order No. 1920-A is an appropriate,
tailored means of furthering Order No. 1920's essential purpose.
---------------------------------------------------------------------------
\428\ See MISO TOs Rehearing Request at 32-33; SPP TOs Rehearing
Request at 28; WIRES Rehearing Request at 15.
\429\ MISO TOs Rehearing Request at 33.
\430\ Order No. 1920-A, 189 FERC ] 61,126 at P 692.
\431\ See MISO TOs Rehearing Request at 33 (asserting that that
this requirement obligates transmission providers to provide
``detailed explanations of decisions'').
\432\ Order No. 1920-A, 189 FERC ] 61,126 at P 691.
\433\ Order No. 1920, 187 FERC ] 61,068 at P 125.
\434\ Order No. 1920-A, 189 FERC ] 61,126 at P 692.
---------------------------------------------------------------------------
127. We also disagree with SPP TOs' and WIRES' arguments that the
Commission's adoption of the consultation requirement is arbitrary or
capricious because Relevant State Entities have other means of
participating in the development of Long-Term Regional Transmission
Cost Allocation Methods and/or State Agreement Process, or because
transmission providers would otherwise be incented to consult with
Relevant State Entities and consider their input before making FPA
section 205 filings.\435\ In Order No. 1920-A, the Commission found
that the consultation requirement will ensure that states have the
opportunity to be involved in developing cost allocation methods for
Long-Term Regional Transmission Facilities subsequent to the
Commission's acceptance of transmission providers' filings made in
compliance with Order No. 1920.\436\ Transmission providers may already
have an incentive to provide states with an opportunity to be involved
in establishing cost allocation methods for Long-Term Regional
Transmission Facilities subsequent to the Commission's acceptance of
transmission providers' filings made in compliance with Order No.
1920--given such involvement has the potential to minimize additional
costs and delays in the siting process and to facilitate the
development of Long-Term Regional Transmission Facilities.\437\
However, the consultation requirement adopted in Order No. 1920-A
ensures that Relevant State Entities have such an opportunity.
---------------------------------------------------------------------------
\435\ See SPP TOs Rehearing Request at 28-29; WIRES Rehearing
Request at 16-17.
\436\ Order No. 1920-A, 189 FERC ] 61,126 at P 692.
\437\ Id. P 692 (citing Order No. 1920, 187 FERC ] 61,068 at PP
124, 126).
---------------------------------------------------------------------------
c. First Amendment
i. Rehearing Requests
128. Indicated PJM TOs argue that the requirement that transmission
providers explain why they have chosen not to propose any amendments to
the Long-Term Regional Transmission Cost Allocation Method(s) and/or
State Agreement Process preferred by Relevant State Entities during the
required consultation violates the First Amendment to the United States
Constitution.\438\ Indicated PJM TOs contend that the First Amendment
protects transmission providers' right to speak as well as their right
not to speak, and that this requirement constitutes governmentally
compelled speech that the Commission cannot require.\439\
---------------------------------------------------------------------------
\438\ Indicated PJM TOs Rehearing Request at 29.
\439\ Id. at 29-30, 33-34 (citing Wooley, 430 U.S. at 714;
United Foods, Inc., 533 U.S. at 409-10; PG&E, 475 U.S. at 10-19;
Central Hudson, 447 U.S. 557).
---------------------------------------------------------------------------
ii. Commission Determination
129. Above, we address Indicated PJM TOs' argument that
transmission providers' First Amendment rights are violated by Order
No. 1920-A's requirement that transmission providers include in the
transmittal or as an attachment to their Order No. 1920 regional
transmission planning and cost allocation compliance filing the Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process agreed to by Relevant State Entities during the
Engagement Period.\440\ For similar reasons, we find that the
requirement that transmission providers explain why they have chosen
not to propose any amendments to the Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process preferred by
Relevant State Entities during the required consultation does not
implicate transmission providers' rights under the First Amendment. As
discussed above,\441\ the requirement that transmission providers
explain why they have chosen not to propose any amendments to the Long-
Term Regional Transmission Cost Allocation Method(s) and/or State
Agreement Process preferred by Relevant State Entities during the
required consultation is a regulation of the practices surrounding cost
allocation to ensure the development of cost allocation methods that
will facilitate the timely, efficient development of Long-Term Regional
Transmission Facilities, given the critical role of states in that
process. This requirement is not a ``veiled attempt to . . .
`manipulate the public debate through coercion' '' \442\ but rather an
integral component in Order No. 1920's reforms facilitating the timely,
efficient development of Long-Term Regional Transmission Facilities,
and thus ensuring just and reasonable Commission-jurisdictional rates.
We therefore find no difference for the purposes of the First Amendment
between this requirement and Order No. 1000's reform, necessary to
ensure just and reasonable Commission-jurisdictional rates, of the
``practices of failing to engage in . . . ex ante cost allocation for
development of new regional transmission facilities.'' \443\
---------------------------------------------------------------------------
\440\ See supra Requirements Concerning Relevant State Entities'
Agreed-upon Cost Allocation Methods section.
\441\ Consultation with Relevant State Entities After the
Engagement Period, Statutory Filing Rights Under the FPA section.
\442\ Full Value Advisors, LLC, 633 F.3d at 1108-09 (rejecting a
First Amendment challenge to a statute ``indistinguishable from
other underlying and oft unnoticed forms of disclosure the
Government requires for its `essential operations' '' (first quoting
Turner Broad. Sys., Inc., 512 U.S. at 641; then quoting W. Va. State
Bd. of Educ. v. Barnette, 319 U.S. at 645)). See also Sindel, 53
F.3d at 878; Scahill v. District of Columbia, 909 F.3d at 1185.
\443\ South Carolina, 762 F.3d at 57 (describing this Order No.
1000 reform as ``involv[ing] a core reason underlying Congress'
instruction in [FPA] Section 206'').
---------------------------------------------------------------------------
130. As with Indicated PJM TOs' First Amendment arguments with
respect to the requirement that transmission providers include Relevant
State Entities' agreed-upon Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process in their compliance
filings, we find that Indicated PJM TOs' reliance on cases concerning
compelled expression of political and ideological messages such as
Wooley and PG&E is misplaced. The Supreme Court has consistently held
that ``expression related solely to the economic interests of the
speaker and its audience'' \444\ is entitled to only a ``limited
measure of protection, commensurate with its subordinate position in
the scale of First Amendment values.'' \445\ The requirement that
transmission providers explain why they have chosen not to propose any
amendments to the Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process preferred by Relevant State
Entities during the required consultation does not compel transmission
providers to utter phrases ``repugnant to their moral, religious, and
political beliefs,'' \446\ but instead simply requires that they
explain their disagreement with Relevant State Entities as to the
economic matter of how the cost of Long-Term Regional Transmission
Facilities ought to be allocated.\447\ Therefore, at most, the
requirement that transmission providers explain why they have chosen
not to propose any amendments to the Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process preferred by
[[Page 17724]]
Relevant State Entities during the required consultation should be
judged under the Central Hudson standard applied to regulations on
commercial speech.\448\ We find that this requirement satisfies Central
Hudson, as it directly advances the Commission's substantial interest
in ensuring that states have the opportunity to be involved in
establishing cost allocation methods for Long-Term Regional
Transmission Facilities subsequent to the Commission's acceptance of
transmission providers' filings made in compliance with Order No. 1920,
which has the potential to minimize additional costs and delays in the
siting process and to facilitate the development of Long-Term Regional
Transmission Facilities,\449\ and is ``in proportion to'' and not more
extensive than is necessary to serve the Commission's substantial
interest.\450\
---------------------------------------------------------------------------
\444\ Central Hudson, 447 U.S. at 561; see also Md. Shall Issue,
Inc., 91 F.4th at 248.
\445\ See Bd. of Trs. of State Univ. of N.Y., 492 U.S. 469; see
supra Requirements Concerning Relevant State Entities' Agreed-upon
Cost Allocation Methods section.
\446\ Wooley, 430 U.S. at 707.
\447\ Md. Shall Issue, Inc., 91 F.4th at 248.
\448\ Recht, 32 F.4th at 409. While Indicated PJM TOs argue that
either strict or intermediate scrutiny should apply to the
requirement that transmission providers include in their compliance
filings the Long-Term Regional Transmission Cost Allocation
Method(s) and/or State Agreement Process agreed upon by Relevant
State Entities, Indicated PJM TOs do not specify the level of
constitutional scrutiny they believe should apply to the requirement
that transmission providers explain why they have chosen not to
propose any amendments to the Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process preferred by
Relevant State Entities during the required consultation. Indicated
PJM TOs Rehearing Request at 31-33. For the avoidance of doubt, we
find that strict scrutiny is inapplicable to the requirement that
transmission providers explain why they have chosen not to propose
any amendments to the Long-Term Regional Transmission Cost
Allocation Method(s) and/or State Agreement Process preferred by
Relevant State Entities during the required consultation after the
Engagement Period.
\449\ Order No. 1920-A, 189 FERC ] 61,126 at P 692 (citing Order
No. 1920, 187 FERC ] 61,068 at PP 124, 126).
\450\ See Bd. of Trs. of State Univ. of N.Y., 492 U.S. at 480
(quoting In re R.M.J., 455 U.S. 191, 203 (1982)). As discussed above
at note 359, regulations on commercial speech such as the
requirement that transmission providers explain why they have chosen
not to propose any amendments to the Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process preferred
by Relevant State Entities during the required consultation need not
be the least restrictive means of achieving the government's
substantial interest. Id. Thus, the fact that Relevant State
Entities could alternatively ``file their own proposal under FPA
section 206'' has no bearing on the constitutionality of this
requirement. Indicated PJM TOs Rehearing Request at 33.
---------------------------------------------------------------------------
C. Definition of Relevant State Entities
1. Order Nos. 1920 and 1920-A
131. In Order No. 1920, the Commission defined a ``Relevant State
Entity'' as ``any state entity responsible for electric utility
regulation or siting electric transmission facilities within the state
or portion of a state located in the transmission planning region,
including any state entity as may be designated for that purpose by the
law of such state.'' \451\ In response to comments on the NOPR, the
Commission declined to expand the definition of Relevant State Entities
to include additional entities, including electric cooperatives, and
explained that providing state regulators with a formal opportunity to
develop cost allocation methods in Long-Term Regional Transmission
Planning could increase state support for Long-Term Regional
Transmission Facilities that transmission providers select and that
this may increase the likelihood that such facilities are sited and
ultimately developed with fewer costly delays and better ensure just
and reasonable Commission-jurisdictional rates.\452\ The Commission
made clear, however, that nothing in Order No. 1920 diminishes the role
of stakeholders that are not Relevant State Entities nor absolves
transmission providers of any existing obligations that they may have
to provide opportunities for stakeholder input.\453\
---------------------------------------------------------------------------
\451\ Order No. 1920, 187 FERC ] 61,068 at PP 44, 1355; see also
Order No. 1920-A, 189 FERC ] 61,126 at P 701.
\452\ Order No. 1920, 187 FERC ] 61,068 at P 1364.
\453\ Id. P 1000.
---------------------------------------------------------------------------
132. Order No. 1920 provided opportunities for Relevant State
Entities to participate in Long-Term Regional Transmission Planning,
including, but not limited to, the requirements that transmission
providers in each transmission planning region: (1) consult with and
seek support from Relevant State Entities regarding the evaluation
process, including selection criteria, that transmission providers
propose to use to identify and evaluate Long-Term Regional Transmission
Facilities for selection; \454\ (2) include in their OATTs a process to
provide Relevant State Entities and interconnection customers with the
opportunity to voluntarily fund the cost of, or a portion of the cost
of, a Long-Term Regional Transmission Facility that otherwise would not
meet the transmission providers' selection criteria; \455\ and (3)
provide a forum for negotiation of a Long-Term Regional Transmission
Cost Allocation Method(s) and/or a State Agreement Process that enables
meaningful participation by Relevant State Entities.\456\ The
Commission declined to expand participation in the Engagement Period
beyond Relevant State Entities but stated that other participants
beyond Relevant State Entities may participate in the State Agreement
Process, if agreed to by Relevant State Entities.\457\
---------------------------------------------------------------------------
\454\ Id. P 994.
\455\ Id. P 1012.
\456\ Id. P 1354.
\457\ Id. PP 1364 & n.2914, 1402, 1416, 1421.
---------------------------------------------------------------------------
133. In Order No. 1920-A, the Commission recognized the valuable
insight that municipal electric regulatory bodies and non-public
utilities provide as stakeholders in Commission-sanctioned processes
but declined requests to expand the definition of Relevant State Entity
to encompass other entities.\458\ In support of its decision, the
Commission emphasized that state entities responsible for electric
utility regulation or siting electric transmission facilities are
uniquely situated to influence whether or not a Long-Term Regional
Transmission Facility reaches completion.\459\ The Commission continued
to find that ``regional transmission facilities face significant
uncertainty and risk of not reaching construction if certain
stakeholders--in particular, a state regulator responsible for
permitting transmission facilities--do not perceive the regional
transmission facilities' value as commensurate with their costs.''
\460\ However, the Commission did not make a determination on whether
an individual state's laws, regulations, and/or policies, or inclusion
in a larger association of regulators, deem any particular entity to be
a Relevant State Entity, though the Commission noted that state law may
be a persuasive or dispositive factor in such determinations.\461\
---------------------------------------------------------------------------
\458\ Order No. 1920-A, 189 FERC ] 61,126 at PP 700-701.
\459\ Id. P 701 (citing Order No. 1920, 187 FERC ] 61,068 at P
1364).
\460\ Id. P 700 (citing Order No. 1920, 187 FERC ] 61,068 at P
1364).
\461\ Id. P 703.
---------------------------------------------------------------------------
2. Rehearing Requests
134. NRECA requests that the Commission modify the definition of
Relevant State Entity to include any entity that establishes or
regulates electric rates under state law, in light of Order No. 1920-
A's modifications to the roles played by Relevant State Entities.\462\
NRECA states that Order No. 1920-A substantially changes the final rule
by creating expanded and additional opportunities for Relevant State
Entities to influence and determine Long-Term Regional Transmission
Planning and associated cost allocation methods, such as requiring
incorporation of input from Relevant State Entities in developing Long-
Term Scenarios and requiring compliance filings to include any Long-
Term Regional Transmission Cost
[[Page 17725]]
Allocation Method or State Agreement Process agreed upon by Relevant
State Entities.\463\
---------------------------------------------------------------------------
\462\ NRECA Rehearing Request at 12.
\463\ Id. at 5-8.
---------------------------------------------------------------------------
135. NRECA argues that Order No. 1920-A's modifications to the
final rule are incomplete, and the Commission's goal of giving the
entities that represent electric consumers under state law a greater
voice in transmission planning and cost allocation decisions is not
met, because the order does not ensure comparable representation of all
electric consumers in a state.\464\ NRECA points out that many state
public utility commissions do not regulate the rates of all electric
utilities in their respective states and that often electric
cooperatives establish their rates independently of their state's
utility commission. NRECA asserts that the Commission arbitrarily and
without explanation excluded or allowed transmission planning regions
to exclude the representatives of some electric consumers from the more
robust process created by Order No. 1920-A.\465\ NRECA states that the
Commission's definition of Relevant State Entity in Order Nos. 1920 and
1920-A is not bound by statute or prior regulations, as the Commission
crafted this definition for the purpose of Order Nos. 1920 and 1920-
A.\466\
---------------------------------------------------------------------------
\464\ Id. at 9.
\465\ Id. at 10.
\466\ Id. at 11-12 (citing Order No. 1920-A, 189 FERC ] 61,126
at P 704).
---------------------------------------------------------------------------
136. NRECA argues that the FPA's prohibition on undue
discrimination or preference extends to practices affecting
jurisdictional rates as well as the rates themselves.\467\ Accordingly,
NRECA claims that Order No. 1920-A is arbitrary, capricious, not in
accordance with law, and not the product of reasoned decision-making,
as it does not require transmission providers to provide the expanded
opportunities for participation in transmission planning and cost
allocation decision-making processes on a nondiscriminatory and non-
preferential basis to all entities ``responsible for electric utility
regulation'' under state law.\468\
---------------------------------------------------------------------------
\467\ Id. at 13.
\468\ Id. at 4, 13-14.
---------------------------------------------------------------------------
137. Finally, NRECA argues that the Commission should clarify or
modify Order No. 1920-A to require transmission providers to
demonstrate in their compliance filings how they are ensuring that all
entities that establish or regulate electric rates under state law will
be treated without undue discrimination or preference.\469\
---------------------------------------------------------------------------
\469\ Id. at 15.
---------------------------------------------------------------------------
3. Commission Determination
138. We are not persuaded by NRECA's request to expand the
definition of Relevant State Entity to include any entity that
establishes or regulates electric rates under state law.\470\ As
discussed in Order No. 1920-A, while we recognize the important role
that many stakeholders, including municipal electric regulatory bodies
and non-public utility entities, play in Commission-sanctioned
processes, we continue to find that the definition of Relevant State
Entities should encompass only state entities responsible for electric
utility regulation or siting electric transmission facilities within
the state or portion of a state located in the transmission planning
region, including any state entity as may be designated for that
purpose by the law of such state.\471\
---------------------------------------------------------------------------
\470\ Id. at 12.
\471\ Order No. 1920-A, 189 FERC ] 61,126 at P 701.
---------------------------------------------------------------------------
139. In Order No. 1920-A, the Commission reaffirmed and enhanced
the important role of states in the Long-Term Regional Transmission
Planning process by recognizing that meaningful engagement with states
is critical to the success of the Long-Term Regional Transmission
Planning reforms established in Order No. 1920.\472\ Specifically, the
Commission in Order No. 1920-A better integrated states' input into
regional transmission planning and cost allocation processes, both in
the transmission providers' development of Order No. 1920 compliance
filings and the ongoing implementation of these reforms in the future.
---------------------------------------------------------------------------
\472\ Id. P 3.
---------------------------------------------------------------------------
140. Importantly, however, this strengthened role of Relevant State
Entities does not limit or inhibit other entities from engaging
robustly via the Commission's or state's standard procedures for public
participation. We also reiterate that Order No. 1920 allows other
participants, including the municipal electric regulatory bodies and
non-public utility entities mentioned above that do not otherwise meet
the definition of a Relevant State Entity, to participate in a State
Agreement Process, if agreed to by Relevant State Entities.\473\
Further, we emphasize that nothing in Order No. 1920 or Order No. 1920-
A prevents transmission providers generally from consulting or working
closely with stakeholders in addition to Relevant State Entities to
ensure the success of Long-Term Regional Transmission Planning. Indeed,
we welcome such collaboration.
---------------------------------------------------------------------------
\473\ Order No. 1920, 187 FERC ] 61,068 at PP 1364 n.2914, 1402;
Order No. 1920-A, 189 FERC ] 61,126 at P 701.
---------------------------------------------------------------------------
141. We disagree with NRECA's argument that the definition of
Relevant State Entity allows for unduly discriminatory and preferential
transmission planning and cost allocation practices by not expressly
encompassing any entity that establishes or regulates electric rates
under state law.\474\ As discussed in Order No. 1920, allowing Relevant
State Entities to better realize Long-Term Regional Transmission
Facilities' value through an enhanced role in the regional transmission
planning process greatly increases the likelihood of their support for
those facilities. Relevant State Entities play a unique role in that
they retain a variety of authorities that are integral to the success
of Long-Term Regional Transmission Planning.\475\ Therefore, the
support of Relevant State Entities may increase the likelihood that
those facilities are sited and ultimately developed with fewer costly
delays, and thus better ensures just and reasonable Commission-
jurisdictional rates.\476\ Additionally, we reiterate that we are not
excluding any specific entities from this process; instead, we make no
findings regarding whether any individual municipal electric regulatory
body or non-public utility entity meets the definition of a Relevant
State Entity, as those determinations properly rest with entities in a
state, based upon their interpretation of their state laws.\477\
---------------------------------------------------------------------------
\474\ NRECA Rehearing Request at 13.
\475\ Order No. 1920, 187 FERC ] 61,068 at P 1000.
\476\ Id. P 1364.
\477\ Order No. 1920-A, 189 FERC ] 61,126 at P 703.
---------------------------------------------------------------------------
142. We further are not persuaded by NRECA's request for a
requirement that transmission providers demonstrate in their compliance
filings how they are ensuring that all entities that establish or
regulate electric rates under state law will be treated without undue
discrimination or preference.\478\ Nothing in Order No. 1920 diminishes
the role of stakeholders that are not Relevant State Entities, nor
absolves transmission providers of any existing obligations that they
may have to provide opportunities for stakeholder input.\479\
---------------------------------------------------------------------------
\478\ NRECA Rehearing Request at 15.
\479\ See Order No. 1920, 187 FERC ] 61,068 at P 1000.
---------------------------------------------------------------------------
D. Other Cost Allocation Issues
1. Order Nos. 1920 and 1920-A
143. In Order No. 1920, the Commission found that there is
substantial evidence to support the determination that sufficiently
long-term, forward-looking, and
[[Page 17726]]
comprehensive regional transmission planning and cost allocation to
meet Long-Term Transmission Needs is not occurring on a consistent and
sufficient basis, and that the absence of such processes is resulting
in piecemeal transmission expansion to address relatively near-term
transmission needs. The Commission found that the status quo approach
results in transmission providers undertaking investments in relatively
inefficient or less cost-effective transmission infrastructure, the
costs of which are ultimately recovered through Commission-
jurisdictional rates.\480\
---------------------------------------------------------------------------
\480\ Id. P 112.
---------------------------------------------------------------------------
144. The Commission concluded that revisions to the Commission's
regional transmission planning and cost allocation requirements are
necessary to ensure that Commission-jurisdictional rates, terms, and
conditions are just, reasonable, and not unduly discriminatory or
preferential. The Commission found that, absent the reforms instituted
by Order No. 1920, regional transmission planning processes will
continue to fail to identify, evaluate, and select regional
transmission facilities that can more efficiently or cost-effectively
meet Long-Term Transmission Needs, requiring customers to pay for
relatively inefficient or less cost-effective transmission
development.\481\
---------------------------------------------------------------------------
\481\ Id. P 113.
---------------------------------------------------------------------------
145. The Commission therefore concluded, based on the record in the
proceeding, that there is substantial evidence to support the
conclusion that deficiencies in the Commission's existing regional
transmission planning and cost allocation requirements are resulting in
Commission-jurisdictional rates that are unjust, unreasonable, and
unduly discriminatory or preferential.
146. As relevant here, the Commission specifically found that the
Commission's current cost allocation requirements, which were designed
and established in the context of existing Order No. 1000 regional
transmission planning processes, are insufficient to appropriately
allocate costs associated with regional transmission facilities that
are selected in accordance with the new Long-Term Regional Transmission
Planning requirements that the Commission established in Order No.
1920. Accordingly, the Commission found that it is both necessary and
appropriate to establish specific cost allocation requirements that are
tailored to the Long-Term Regional Transmission Planning reforms in
Order No. 1920.\482\
---------------------------------------------------------------------------
\482\ Id. P 126.
---------------------------------------------------------------------------
147. In Order No. 1920-A, the Commission responded to rehearing
requests that argued that the Commission had failed to satisfy its FPA
section 206 burden to demonstrate that existing Order No. 1000 regional
transmission planning and cost allocation processes are unjust,
unreasonable, or unduly discriminatory or preferential \483\ and
sustained its Order No. 1920 determinations as to its action under the
first prong of FPA section 206.\484\ As relevant here, the Commission
continued to find that the Commission made adequate findings and
marshalled substantial evidence under the first prong of FPA section
206, and that it found rehearing petitioners' arguments to the contrary
to be unpersuasive. The Commission concluded that the evidence on which
it relied--both empirical and generic factual predictions--was more
than sufficient to meet its evidentiary burden under FPA section
206.\485\
---------------------------------------------------------------------------
\483\ See Order No. 1920-A, 189 FERC ] 61,126 at PP 70-71
(describing rehearing requests received from Designated Retail
Regulators, Undersigned States, Arizona Commission, and Industrial
Customers challenging the sufficiency under the first prong of FPA
section 206 of the evidence relied upon by the Commission in Order
No. 1920).
\484\ Id. P 72.
\485\ Id. PP 72-83.
---------------------------------------------------------------------------
2. Rehearing Requests
148. Indicated PJM TOs and SPP TOs argue that the Commission failed
to make an adequate finding under the first prong of FPA section 206
that substantial evidence supports the determination that existing
regional cost allocation methods are unjust and unreasonable.\486\
Indicated PJM TOs state that FPA section 206 requires the Commission to
prove that each rate or practice affecting such rate that it seeks to
change is unlawful based on substantial evidence.\487\ Indicated PJM
TOs assert that ``[t]he Commission makes several findings that the
existing regional planning process is unjust and unreasonable but makes
no findings that the existing regional cost allocation method[ ] is
unjust and unreasonable.'' \488\ Indicated PJM TOs aver that the
findings in Order Nos. 1920 and 1920-A that an existing rate is unjust
and unreasonable are confined to the transmission planning process, and
that the Commission ``simply assume[d]'' that existing regional cost
allocation methods are unjust and unreasonable on the basis of evidence
that existing regional transmission planning processes are unjust and
unreasonable.\489\
---------------------------------------------------------------------------
\486\ Indicated PJM TOs Rehearing Request at 7, 23-27; SPP TOs
Rehearing Request at 7-8, 21-28.
\487\ Indicated PJM TOs Rehearing Request at 24-25 (citing 16
U.S.C. 825l(b); Emera Maine, 854 F.3d at 24; South Carolina, 762
F.3d at 56-69).
\488\ Id. at 5; see id. at 7 (emphasis in original).
\489\ Id. at 24 (citing Order No. 1920-A, 189 FERC ] 61,126 at
PP 47 & n.80, 52 & n.92).
---------------------------------------------------------------------------
149. Indicated PJM TOs argue that the Commission justified its
decision by stating that existing cost allocation methods do not
properly reflect the benefits to be considered in the new Order No.
1920 long-term transmission planning requirements and that there is no
process to engage states in the development of regional cost allocation
methods, but there is not substantial evidence in the record or
analysis supporting these determinations.\490\ Indicated PJM TOs argue
that the Commission acknowledged that it may be just and reasonable to
continue to apply existing regional cost allocation methods, that the
Commission cannot conclude that a rate is unjust and unreasonable
simply because it differs from the rate the Commission seeks to impose,
and that the Commission has shifted the burden onto public utilities to
demonstrate their cost allocation methods are consistent with the
requirements of Order No. 1920.\491\ Indicated PJM TOs contend that
because the Commission has not carried its burden under the first prong
of FPA section 206 with respect to the cost allocation methods for
Long-Term Regional Transmission Facilities, any proposals related to
such cost allocation methods must be made and considered under FPA
section 205 and approved if just and reasonable.\492\
---------------------------------------------------------------------------
\490\ Id. at 25 (arguing that the Commission failed to consider
the example of whether PJM's cost allocation method for multi-driver
projects would be appropriate under Order No. 1920 or whether PJM's
existing State Agreement Approach provided sufficient state
involvement in cost allocation processes).
\491\ See id. at 26 (citing Emera Maine, 854 F.3d at 22-26;
Order No. 1920-A, 189 FERC ] 61,126 at P 714).
\492\ Id. at 26-27 (citing 16 U.S.C. 824d(e); Sw. Power Pool,
Inc., 189 FERC ] 61,128, at P 60 n.230 (2024)).
---------------------------------------------------------------------------
150. SPP TOs assert that Order Nos. 1920 and 1920-A do not present
substantial evidence establishing a causal link between the
Commission's changes to its transmission planning requirements and the
need for replacement rates on cost allocation.\493\ SPP TOs acknowledge
that the Commission made such findings in Order Nos. 1920 and 1920-A
but contend that these findings fall short of statutory
requirements.\494\ Specifically, they argue that ``[t]he creation of
new
[[Page 17727]]
benefits in the transmission planning process does not support the
Commission's conclusion that a new transmission cost allocation scheme
is also needed'' because costs need not be allocated with exacting
precision and there is more than one just and reasonable rate, such
that existing rates may still be just and reasonable.\495\ Further, SPP
TOs contend that the Commission disavowed in Order No. 1920 any causal
link between the benefits required to be used and measured for planning
purposes and the proposed replacement rate such that an acceptable cost
allocation method need not include a mechanism for allocating the costs
of Long-Term Regional Transmission Facilities in line with the
measurement of benefits. Therefore, SPP TOs argue, the Commission was
required to make additional factual findings, such as showing that
Order No. 1920's transmission planning requirements would cause
existing cost allocation methods to fail to meet the cost causation
principle.\496\
---------------------------------------------------------------------------
\493\ SPP TOs Rehearing Request 22-23; see also id. at 7-8.
\494\ Id. at 21-22 (citing Order No. 1920, 187 FERC ] 61,068 at
PP 113-114; Order No. 1920-A, 189 FERC ] 61,126 at PP 34-124, 652).
\495\ Id. at 23-24.
\496\ Id.
---------------------------------------------------------------------------
151. SPP TOs assert that the holding in South Carolina that
```substantial evidence' is not limited to empirical evidence and may
include generic factual predictions'' \497\ does not support the
Commission's decision because ``the Commission fails to show any
support for `generic factual predictions' related to supposed cost
allocation deficiencies.'' \498\ SPP TOs further contend that the
Commission's discussion of the need for reform in Order Nos. 1920 and
1920-A does not support a finding under the first prong of FPA section
206 as to cost allocation, because the relevant material in the record
addresses the need for improved transmission planning, not cost
allocation.\499\ In addition, SPP TOs argue that the Commission does
not cite any record evidence that existing cost allocation methods fail
to adequately consider the views of states, does not support the need
for a dedicated process through which states have the opportunity to
participate in regional cost allocation methods, and does not show that
existing methods are insufficient to appropriately allocate costs in
this context.\500\
---------------------------------------------------------------------------
\497\ South Carolina, 762 F.3d at 65.
\498\ SPP TOs Rehearing Request at 25 (discussing Order No.
1920, 187 FERC ] 61,068 at PP 113-114, and asserting that ``[b]oth
paragraphs merely state conclusions regarding the need for cost
allocation reforms'').
\499\ Id. at 25-26 (discussing Order No. 1920-A, 189 FERC ]
61,126 at P 77, and associated record material, as well as Order No.
1920, 187 FERC ] 61,068 at PP 117, 121, 123).
\500\ Id. at 27-28 (citing Order No. 1920-A, 189 FERC ] 61,126
at P 83; Order No. 1920, 187 FERC ] 61,068 at P 126).
---------------------------------------------------------------------------
3. Commission Determination
152. FPA section 313(a) provides that a party aggrieved by an order
issued by the Commission ``may apply for a rehearing within thirty days
after the issuance of such order.'' \501\ That provision further
requires that ``[t]he application for rehearing shall set forth
specifically the ground or grounds upon which such application is
based.'' \502\ An aggrieved party is entitled to one opportunity to ask
the Commission to reconsider a decision.\503\ Arguments that are not
made at the first opportunity cannot be made later unless there is
reasonable ground for failure to do so.\504\ Successive rehearing
requests are only proper when the order on rehearing modifies the
result reached in the original order in a manner that gives rise to a
``wholly new objection.'' \505\
---------------------------------------------------------------------------
\501\ 16 U.S.C. 825l(a); see also 18 CFR 385.713(b) (rehearing
request must be filed not later than 30 days after issuance of a
final decision or order).
\502\ 16 U.S.C. 825l(a).
\503\ See Tenn. Gas Pipeline Co. v. FERC, 871 F.2d 1099, 1110
n.18 (D.C. Cir. 1989) (``[I]f a party does not raise an argument
that it could have raised in its first petition for review of a
Commission action, it cannot preserve that argument for judicial
review simply by filing a second petition for rehearing from a
subsequent Commission order which implicates the same action.''
(emphasis in original)); Smith Lake Improvement & Stakeholders
Ass'n, 809 F.3d at 58 (holding that, when a Commission rehearing
order does not alter an aspect of the underlying order, seeking
further rehearing as to that unchanged aspect does not toll the 60-
day period for requesting judicial review).
\504\ Columbia Gas Transmission Corp. v. FERC, 477 F.3d 739,
741-42 (D.C. Cir. 2007); Appalachian Power Co., 149 FERC ] 61,137,
at P 8 (2014); accord N.C. Utils. Comm'n v. FERC, 741 F.3d 439, 449
(4th Cir. 2014).
\505\ Appalachian Power Co., 149 FERC ] 61,137 at P 8 (citing,
inter alia, S. Nat. Gas Co. v. FERC, 877 F.2d 1066, 1073 (D.C. Cir.
1989)); see also Smith Lake Improvement & Stakeholders Ass'n, 809
F.3d at 58 (finding, in a case ``where the result did not change on
first rehearing and petitioner sought a second rehearing
nonetheless,'' that ``there can be no dispute that [precedent]
precludes judicial review of an untimely petition'').
---------------------------------------------------------------------------
153. Here, Indicated PJM TOs did not request rehearing of this
aspect of Order No. 1920,\506\ and SPP TOs did not request rehearing of
Order No. 1920. Nor have Indicated PJM TOs or SPP TOs provided a
reasonable ground for their failure to timely raise their objections to
Order No. 1920's findings under the first prong of FPA section 206.
Nevertheless, the concerns they raise regarding the Commission's
findings under the first prong of FPA section 206 and sufficiency of
evidence to support its exercise of authority in Order No. 1920 \507\
were thoroughly addressed in Order No. 1920-A,\508\ which sustained
Order No. 1920's outcome on this issue.\509\ The reasoning therein
fully responds to the challenges on this issue raised here by the
Indicated PJM TOs and SPP TOs.
---------------------------------------------------------------------------
\506\ See generally Indicated PJM TOs June 12, 2024 Rehearing
Request.
\507\ Indicated PJM TOs Rehearing Request at 23-27; SPP TOs
Rehearing Request at 21-28.
\508\ See Order No. 1920-A, 189 FERC ] 61,126 at PP 70-71
(describing rehearing requests received from Designated Retail
Regulators, Undersigned States, Arizona Commission, and Industrial
Customers challenging the sufficiency under the first prong of FPA
section 206 of the evidence relied upon by the Commission in Order
No. 1920).
\509\ Id. P 72 (``We continue to find that the Commission made
adequate findings under the first prong of FPA section 206 and
marshalled substantial evidence to support those findings. We are
therefore not persuaded by rehearing parties' arguments to the
contrary.''). See Appalachian Power Co., 149 FERC ] 61,137 at P 10
n.18 (``An `improved rationale' for the Commission's underlying
decision . . . does not support a second request for rehearing.''
(citing Erie Boulevard Hydropower, L.P., 118 FERC ] 61,196, at P 8
(2007))); Smith Lake Improvement & Stakeholders Ass'n, 809 F.3d at
56-57 (``We have made clear that a second rehearing petition must be
filed if--and only if--the first rehearing order `modifie[d] the
results of the earlier one in a significant way.' We subsequently
explained that means a change in the `outcome,' not merely a change
in reasoning.'' (internal citations omitted)).
---------------------------------------------------------------------------
154. Accordingly, we find that successive requests for rehearing of
this determination in Order No. 1920 do not lie, and SPP TOs' arguments
regarding the sufficiency of the Commission's findings in Order No.
1920,\510\ as well as both Indicated PJM TOs' and SPP TOs' objections
to the sufficiency of statements made in Order No. 1920-A that merely
sustain Order No. 1920,\511\ are rejected.\512\
---------------------------------------------------------------------------
\510\ See SPP TOs Rehearing Request at 23-24 nn.64-65, 25 nn.68-
70, 26-27 nn.77-79.
\511\ See Indicated PJM TOs Rehearing Request at 24 nn.89-91, 25
n.94; SPP TOs Rehearing Request at 22-23 nn.58-60, 24-25 n.67, 25-26
nn.71-73, 26 nn.75-76, 27 nn.80-82. See also Indicated PJM TOs
Rehearing Request at 5 (``Order No. 1920-A fails to make the finding
required by the first prong and to establish a replacement rate
under the second prong.'' (emphasis added)).
\512\ See NEXUS Gas Transmission, LLC, 187 FERC ] 61,098, at P
13 (2024) (citing Calpine Corp., 173 FERC ] 61,061, at P 144 (2020)
(rejecting an argument as an impermissible request for rehearing of
an order on rehearing)).
---------------------------------------------------------------------------
IV. Document Availability
155. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov).
156. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary
[[Page 17728]]
in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
157. User assistance is available for eLibrary and the Commission's
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
public.referenceroom@ferc.gov.
V. Effective Date
158. The effective date of the document published on December 6,
2024 (89 FR 97,174), is confirmed: January 6, 2025.
By the Commission. Commissioner See is not participating.
Issued: April 11, 2025.
Carlos D. Clay,
Deputy Secretary.
NOTE: The following appendix will not appear in the Code of
Federal Regulations.
Appendix A--Abbreviated Names of Rehearing Petitioners
------------------------------------------------------------------------
Abbreviation Rehearing party(ies)
------------------------------------------------------------------------
Developers Advocating Ameren Services Company; Eversource
Transmission Advancements. Energy; Exelon Corporation; ITC Holdings
Corp., National Grid USA; Xcel Energy.
EEI.......................... Edison Electric Institute.
Indicated PJM TOs............ American Electric Power Service
Corporation on behalf of its affiliates,
Appalachian Power Company, Indiana
Michigan Power Company, Kentucky Power
Company, Kingsport Power Company, Ohio
Power Company, Wheeling Power Company,
AEP Appalachian Transmission Company,
Inc., AEP Indiana Michigan Transmission
Company, Inc., AEP Kentucky Transmission
Company, Inc., AEP Ohio Transmission
Company, Inc., and AEP West Virginia
Transmission Company, Inc.; the Dayton
Power and Light Company; Dominion Energy
Services, Inc. on behalf of Virginia
Electric and Power Company; Duke Energy
Corporation on behalf of its affiliates
Duke Energy Ohio, Inc., Duke Energy
Kentucky, Inc., and Duke Energy Business
Services LLC; Duquesne Light Company;
East Kentucky Power Cooperative; Exelon
Corporation on behalf of its affiliates
Atlantic City Electric Company,
Baltimore Gas and Electric Company,
Commonwealth Edison Company, Delmarva
Power & Light Company, PECO Energy
Company, and Potomac Electric Power
Company; FirstEnergy Service Company, on
behalf of its affiliates American
Transmission Systems, Incorporated,
Jersey Central Power & Light Company,
Mid-Atlantic Interstate Transmission
LLC, West Penn Power Company, Potomac
Edison Company, Monongahela Power
Company, Keystone Appalachian
Transmission Company, and Trans-
Allegheny Interstate Line Company; PPL
Electric Utilities Corporation; Public
Service Electric and Gas Company;
Rockland Electric Company; and UGI
Utilities Inc.
MISO TOs..................... AEP Indiana Michigan Transmission
Company; Ameren Services Company, as
agent for Union Electric Company, Ameren
Illinois Company, and Ameren
Transmission Company of Illinois;
American Transmission Company LLC; Big
Rivers Electric Corporation; Central
Minnesota Municipal Power Agency; City
Water, Light & Power (Springfield, IL);
Cleco Power LLC; Dairyland Power
Cooperative; Duke Energy Business
Services, LLC for Duke Energy Indiana,
LLC; Great River Energy; Hoosier Energy
Rural Electric Cooperative, Inc.;
Indiana Municipal Power Agency;
Indianapolis Power & Light Company;
Lafayette Utilities System; MidAmerican
Energy Company; Minnesota Power (and its
subsidiary Superior Water, L&P); Montana-
Dakota Utilities Co.; Northern Indiana
Public Service Company LLC; Northern
States Power Company, a Minnesota
corporation, and Northern States Power
Company, a Wisconsin corporation,
subsidiaries of Xcel Energy Inc.;
Northwestern Wisconsin Electric Company;
Otter Tail Power Company; Prairie Power,
Inc.; Southern Illinois Power
Cooperative; Southern Indiana Gas &
Electric Company; Southern Minnesota
Municipal Power Agency; Wabash Valley
Power Association, Inc.; and Wolverine
Power Supply Cooperative, Inc.
NRECA........................ National Rural Electric Cooperative
Association.
SPP TOs...................... American Electric Power Service
Corporation, on behalf of Southwestern
Electric Power Company, Public Service
Company of Oklahoma, AEP Oklahoma
Transmission Company, Inc., and AEP
Southwestern Transmission Company, Inc.;
the Evergy Companies; and Xcel Energy
Services Inc. on behalf of Southwestern
Public Service Company.
WestConnect CTOs............. Colorado Springs Utilities; Imperial
Irrigation District; Los Angeles
Department of Water and Power; Platte
River Power Authority; Sacramento
Municipal Utility District; Salt River
Project Agricultural Improvement and
Power District; and the Transmission
Agency of Northern California.
WIRES........................ WIRES.
------------------------------------------------------------------------
[FR Doc. 2025-06941 Filed 4-25-25; 8:45 am]
BILLING CODE 6717-01-P