By Rich Heidorn Jr.

FERC upheld its order approving funding for PJM’s state consumer advocates, rejecting contentions by Talen Energy and Essential Power that the commission exceeded its authority (ER16-561-001).

The commission in February approved PJM members’ vote granting the Consumer Advocates of the PJM States (CAPS) an initial annual budget of $450,000 to fund the advocates’ stakeholder activities through a charge to electric customers. Former Commissioner Tony Clark dissented from the vote, saying CAPS should be funded through the appropriations of state legislatures. (See FERC Approves PJM Funding of Consumer Advocates.)

Talen and Essential sought rehearing, saying the order exceeded the commission’s authority under Section 205 of the Federal Power Act because CAPS’s participation in the stakeholder process was not a jurisdictional service nor a practice that has a “direct effect” on jurisdictional rates.

In its Dec. 21 order, the commission said its authority came under Section 205’s direction to ensure just and reasonable rates. “The Supreme Court has held that this jurisdiction extends to rules and practices that directly affect wholesale rates. … The PJM stakeholder process is a practice that directly affects wholesale rates, and thus approval of a proposal that would enhance that process falls within the commission’s jurisdiction. … For example, stakeholder input is an essential element of a just and reasonable regional transmission planning process, a process that the courts have agreed is one that directly affects jurisdictional rates.”

The commission cited the Independent Market Monitor’s comment that “PJM consumers have been systematically underrepresented” in the stakeholder process, and that the funding was “a meaningful first step to obtain needed balance.”

In response to the complainants’ contention that the funding violated cost causation rules, the commission repeated its conclusion that funding CAPS benefits PJM’s ratepayers by increasing its responsiveness to customers and other stakeholders. “We disagree with Talen/Essential Power that making the stakeholder process more inclusive, transparent and robust through CAPS’s participation is not a legitimate reason to accept a tariff funding mechanism for CAPS,” FERC said.

FERC also rejected Talen and Essential’s complaint that the funding constituted “compelled speech” in violation of the First Amendment. “By contributing to funding CAPS’s participation in the stakeholder process, neither Talen/Essential Power nor any other stakeholder becomes identified with CAPS’s views in a way that causes them to become an instrument for fostering public adherence to them,” FERC said. “On the contrary, all stakeholders remain free to express their views within the stakeholder process and to support or oppose any position that CAPS advances.”