Academic journal article Energy Law Journal

Report of the Judicial Review Committee

Academic journal article Energy Law Journal

Report of the Judicial Review Committee

Article excerpt


A. Jurisdiction

1. Subject Matter Jurisdiction

In Pacific Gas & Electric Co. v. FERC,1 the court dismissed two petitions for review in cases arising out of the California electricity crisis on the basis that it lacked subject matter jurisdiction over both. The court dismissed the California Independent System Operator (CAISO) petition "because it implicate[d] [the] FERC's prosecutorial discretion," and it dismissed Pacific Gas & Electric Company's (PG&E) petition "because it [was] an impermissible collateral attack on a prior FERC order."2

In the CAISO orders under review, the FERC had denied certain tariff amendments proposed by the CAISO. In order to correct alleged double-selling, the CAISO had filed the proposed amendments to allow it to perform a preliminary "re-run" of Settlement Statements submitted to it during the California electricity crisis.3 The FERC denied the proposed amendments because they would have varied in scope from what the FERC had ordered the CAISO to undertake in a separate, investigatory proceeding.4

The court held that it lacked subject matter jurisdiction over the CAISO's claim on the grounds that an agency "retains almost unfettered discretion to initiate investigations and prosecute violations of the [Federal Power Act] . . . ."5 In reaching this decision, the court acknowledged that it was the CAISO, not the FERC, that was seeking to investigate and remedy violations of the Federal Power Act, but it also recognized that the "FERC has exclusive jurisdiction to regulate electricity markets" so that its decision not to allow the CAISO to proceed to "re-run" the Settlement Statements equaled a decision not to exercise its enforcement powers.6

PG&E's petition for review concerned the FERC's approval of CAISO tariff provision amendments concerning the appropriate accounting method for performing a preliminary re-run of energy exchange transactions. In a separate proceeding prior to the FERC's approval of this tariff amendment, the FERC had approved a specific accounting method for performing this re-run.7 The question the court addressed was "whether the order upon which the petition is based 'was merely a "clarification"' of a prior order, or whether it 'was a "modification"' . . . ."8 The court determined that the FERC's order was a "clarification" because it did not "alter the meaning or scope of its prior order and thus was not reviewable on appeal.9

2. Standing

Virginia Electric and Power Co. (Dominion) sought the FERC's approval to recognize Regulated Transmission Organization (RTO) start-up costs as a regulatory asset and to defer recovery of those costs until after a state-imposed retail rate cap expired.10 The Virginia State Corporation Commission (Virginia Commission) raised questions as to whether the start-up costs were actually unrecoverable and whether it was probable that the costs would be recovered in future rates.11 The FERC refused to rule on whether the costs were unrecoverable and whether they would be found to be recoverable and guided the utility to make its own assessment and record a regulatory asset for the costs if it determined that it was probable the costs would be recovered in rates.12

The Virginia Commission appealed the FERC's ruling. The D.C. Circuit held that the Virginia Commission lacked standing because it could not show an injury-in-fact.13 The court elaborated on its ruling with the following statement as to the necessary showing to establish standing in these circumstances: "[r]eliance on standing in the form of probabilistic injury-here, an increase in the probability the investors will inaccurately evaluate Dominion's financial position-requires a showing of a 'substantial probability' of the alleged injury."14 The court reasoned that the FERC's failure to decide the issue did not affect the ultimate rate treatment of the start-up costs and that any increase in likelihood that investors would inaccurately evaluate the utility's financial position was not shown to be more than trivial. …

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