The D.C. Circuit Court of Appeals vacated the Federal Energy Regulatory Commission’s ruling in a dispute over interconnection costs in PJM, calling the agency’s action “the very essence of unreasoned and arbitrary decision-making.”
At issue is whether the developers of a generating plant in West Deptford, N.J., should be liable for transmission improvements ordered before the developers entered PJM’s interconnection queue.
West Deptford Energy joined the queue in 2006 and was informed it would be assessed $10 million for improvements PJM ordered as a result of previous projects, including one that was later cancelled. In 2008, PJM won FERC approval to change the section of its Tariff that related to liability for prior transmission upgrades.
If the 2008 Tariff applies, West Deptford will not be liable for the cost; if the 2006 Tariff controls, West Deptford will have to pay the bill.
FERC ruled that West Deptford must pay “since, at the time when West Deptford entered the PJM interconnection queue, that provision was the one that established its financial responsibility.”
But the commission referred to the 2008 Tariff in ruling that West Deptford’s request for auction revenue rights was “not ripe.”
“The question in this case is, when a utility filed more than one rate with the commission during the time it was negotiating an agreement with a prospective customer, which of the two filed rates governs: the rate at the time negotiations commenced or the rate at the time the agreement was completed?” the court said (Case No. 12-1340).
“West Deptford argues that, as a matter of practice, the commission has used the rate on file at the time the agreement was finalized. The commission is of the view that it can pick and choose which rate applies on a case-by-case basis.”
The court vacated the commission’s ruling against West Deptford, saying it “has provided no reasoned explanation for how its decision comports with statutory direction, prior agency practice or the purposes of the filed rate doctrine.”
It ordered FERC to provide an “explanation consistent with” the court’s ruling.
