Power & Pipes

FERC, CFTC, and State Energy Law Developments

FERC issued a proposal on May 21 to modify its policy regarding requests for waiver of public utility tariff provisions that are subject to FERC’s review and approval under the Federal Power Act and the Natural Gas Act.

In light of federal court opinions that have discussed FERC’s authority to change a filed rate, the Commission acknowledged that past orders approving tariff waivers have “drifted beyond the limits imposed by the filed rate doctrine” and the related rule against retroactive ratemaking.

In its proposal, FERC concluded that, while it has the authority to grant prospective waivers of deadlines or other provisions established in tariffs, it may not grant retroactive waivers of tariff provisions unless (1) the request for relief does not violate the filed rate doctrine or the rule against retroactive ratemaking due to adequate prior notice, or (2) the requested relief is within the Commission’s remedial authority under the Federal Power Act and the Natural Gas Act.

With those limitations in mind, FERC introduced a modified policy that would narrow the circumstances in which it will grant retroactive waivers. To implement this policy, FERC proposed the following:

  1. Filing entities should limit their use of the term “waiver” to requests for (a) prospective relief when a requested future deviation from a tariff has not yet occurred at the time the request is filed; or (b) petitions for remedial relief when a tariff expressly authorizes an entity to seek a remedial waiver from the Commission for past noncompliance with a tariff provision. Furthermore, any filing seeking remedial relief related to an act or omission that has occurred prior to the date of the request should be characterized as a request for remedial relief.
  2. If a filing entity has, or believes it has, acted in a manner inconsistent with a filed tariff, and seeks remedial relief, such request should be filed as a petition for declaratory order under Rule 207 of the Commission’s Rules of Practice and Procedure. If, however, the filing entity alleges that a different entity has acted in a manner inconsistent with a filed tariff, such request should be filed as a complaint under Rule 206.
  3. Petitions or complaints seeking remedial relief for acts or omissions that occurred prior to the date of filing should expressly request that FERC exercise its authority to remedy past noncompliance under Federal Power Act Section 309 or Natural Gas Act Section 16.

FERC suggested that if the policy is adopted, entities may find themselves facing “harsh outcomes” compared to FERC’s past practices on tariff waivers. Therefore, FERC suggested certain tariff modifications that could relieve entities from needing to seek such waivers.

FERC also proposed to apply its existing four-part framework reserved for evaluating requests for waiver in wholesale power and electric transmission cases to cases involving natural gas pipeline rates and services. FERC emphasized that in cases involving petitions for remedial relief, it will only apply the four-part framework in the limited circumstances described above.

Finally, FERC proposed to require a stronger showing when a petitioner seeks remedial relief for its failure to comply with a tariff. As illustrative examples, FERC stated that a petition for remedial relief made in good faith will be more compelling than a petition resulting from something more than inadvertent error or administrative oversight. Conversely, a petition claiming a limited scope will be less compelling if it involves longstanding tariff provisions that would affect large numbers of similarly situated entities.

FERC also proposed that petitioners requesting remedial relief will generally be denied when a protestor credibly contends that the petition for remedial relief will result in undesirable consequences, such as harm to third parties.

Comments on the proposal are due by June 4, 2020, and reply comments are due by June 11, 2020.