FERC owns more than one enforcement tool. Besides civil penalties, it can require compliance plans or disgorgement of unjust profits, or condition, suspend, or revoke market-based rate authority,...
Federal policy trumps state siting authority.
in its filed tariff. 12 State agencies are entitled to participate in that process. Against this backdrop, the action of a state commission rejecting the RTO’s conclusions after the regional collaborative process and simply superseding the RTO’s role in determining regional reliability needs undermines all the regional coordination objectives of FERC’s Orders 890 and 2000 and the authority bestowed by Section 215.
FERC is further fortifying this reliability arsenal through its recently issued Notice of Proposed Rulemaking (NOPR), Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities ,13 which seeks to bring more of the individual state issues into the regional planning process, to reduce the incidence of later disputes in state forums.
The filed-rate doctrine reinforces the conclusion that the determination made in the regional planning process by the RTO of the assumptions to use in applying those standards must be accepted in a state proceeding. The regional transmission planning process, as noted, is a part of the RTO’s OATT, i.e., its filed tariff. Under Sections 205 and 206 of the FPA, rates filed or fixed by FERC “must be given binding effect” by the state agency. 14 The filed-rate doctrine doesn’t mean that FERC can order what a state rate must be, or circumvent a state rate proceeding and set its own retail rates. Under the doctrine, however, a state commission in setting retail rates must give binding effect to the FERC-filed rate.
Under this filed-rate doctrine, the concept of rates is broad; it isn’t limited to rates per se , but includes utility practices that affect rates. 15 Focusing on this practice element, the D.C. Circuit found a violation of the doctrine with respect to a reliability rule in Keyspan-Ravenswood LLC v. FERC .16 There, the Court of Appeals held that failure by the New York ISO to follow NYSRC reliability rules incorporated in its tariff ( i.e., by using a formula for translating installed capacity into unforced capacity that significantly affected compliance with those rules) violated the filed-rate doctrine. Noting that “NYISO may only change its rates or ‘practices … affecting such rates’ by first filing with” FERC, 17 the D.C. Circuit found that NYISO’s decision to use different time spans for calculating outage rates for load-serving entities (LSEs) and generators in setting the required installed reserve margin made that calculation fall short of the installed capacity required under the NYSRC reliability rules, and thus contrary to the filed rate.
Like NYISO’s incorporation of the NYSRC reliability rules, many RTOs and transmission providers specifically incorporate compliance with NERC reliability standards into their tariffs’ Order 890-mandated transmission-planning process. In those cases, if a state’s deviation from the RTO’s assumptions violates the reliability standards, such actions would violate the filed-rate doctrine.
Precedent supports this. First, requiring the state agency to accept the assumptions and conclusions of the regional planning needs assessment doesn’t interfere with the state’s authority over siting, because nothing in the RTO’s reliability need conclusions compels construction. In ruling that establishing installed capacity requirements (ICR) was within the jurisdiction