Opponents of the Southeast Energy Exchange Market (SEEM) filed rehearing requests with FERC on Friday in the hopes of persuading it to revisit its indecision over expanded bilateral trading in 11 Southeastern states, instituted last month automatically because commissioners were split (ER21-1111, et al.).

In two separate filings, the market’s opponents — an ad hoc group of environmental and clean energy organizations calling themselves the Public Interest Organizations (PIOs), along with a separate group billed as the Clean Energy Coalition — called the SEEM construct “unjust, unreasonable and unduly discriminatory.” The PIOs also called, once again, for a “broader technical conference on wholesale market development in the Southeast.”

FERC Chairman Richard Glick and Commissioner Allison Clements, both Democrats, were against the proposed SEEM agreement in October, while Republican Commissioners James Danly and Mark Christie approved of it. According to Section 205 of the Federal Power Act, the commissioners’ failure to take action by Oct. 11, 60 days after SEEM’s supporters responded to its latest deficiency letter, meant that the agreement took effect Oct. 12 “by operation of law.” (See SEEM to Move Ahead, Minus FERC Approval.)

FERC has since approved revisions to four of the participating utilities’ tariffs implementing the special transmission service used to deliver the market’s energy transactions. (See related story, FERC Accepts Key Tariff Revisions to SEEM.) That decision was made by majority vote, with Glick joining Danly and Christie in approval and Clements opposed. The PIOs — whose members include the Sierra Club, the Southern Alliance for Clean Energy, the Natural Resources Defense Council and others — indicated they will request rehearing on this decision as well.

SEEM Participants’ Power Seen as Unfair

Both the PIOs and the Clean Energy Coalition — which comprises Advanced Energy Economy, the Advanced Energy Buyers Group, Renewable Energy Buyers Alliance and Solar Energy Industries Association — prominently cited the arguments of Glick and Clements from their October statements explaining their opinions. (See FERC’s Christie Accuses Glick, Clements of Prejudice for RTOs.)

Glick indicated in October that he was prepared to approve SEEM despite his belief that an RTO would have served Southeastern consumers better; however, the proposed market’s use of the Mobile-Sierra doctrine, which presumes that any freely negotiated wholesale energy contract is just and reasonable, proved to be the sticking point. The chairman warned that FERC’s monitoring capabilities and enforcement authority would be “hamstrung” by the doctrine’s use.

The PIOs picked up this thread, arguing that the use of Mobile-Sierra “violates well established commission and federal court precedent” because the SEEM agreement deprives any potential signatories of the opportunity to negotiate — a fundamental assumption of the doctrine. Even market participants’ offer in their previous deficiency response to restrict the doctrine’s application to a more limited set of provisions would unacceptably limit market participants’ negotiating power, they said. (See SEEM Members Offer Rule Changes.)

In its filing, the Clean Energy Coalition concurred, saying that the application of Mobile-Sierra “in a manner contrary to commission precedent” made the approval of SEEM “arbitrary and capricious.” Quoting Glick, the coalition said SEEM members “have not shown ‘extraordinary’ or ‘compelling’ circumstances that … would merit application of Mobile-Sierra here as a matter of agency discretion.”

The groups also sided with Clements, who in her statement on the decision agreed with Glick’s concerns on Mobile-Sierra but went further, saying that the SEEM proposal “fails to abide by the bedrock principles of open access and non-discrimination that were crystallized in … Order No. 888.”

Expanding on Clements’ argument, the Clean Energy Coalition warned that accessing the non-firm energy exchange transmission service that is central to SEEM would require participants to get approval of an agent overseen by the market’s operating committee, which is controlled by current members, and to execute enabling agreements with at least three other participants. The coalition noted that FERC rejected a similar “two-class membership system” in the Mid-Continent Area Power Pool case and argued that approving it in this situation is unfair and inconsistent.

Danly, Christie Accused of Ignoring Precedent

The groups also criticized Danly and Christie, arguing that they dismissed commission precedent and the concerns of objectors.

“Neither Commissioner Danly nor Commissioner Christie acknowledged what SEEM is: a loose power pool,” the Clean Energy Coalition said. “The commission has been clear that a loose power pool is ‘any multilateral arrangement, other than a tight power pool or a holding company arrangement, that explicitly or implicitly contains discounted and/or special transmission arrangements.’ … The SEEM proposal is a multilateral arrangement and explicitly contains discounted and/or special transmission arrangements. … It was arbitrary and capricious for the commission to accept [it].”

The PIOs added that while Danly acknowledged the “cavalcade of existing commission precedent [that] supports protesters’ position” on Mobile-Sierra, he maintained that “both commission and judicial precedent are ‘in error.’” Although Danly justified his vote by stating that Mobile-Sierra is intended to “ensure that … contracts can be relied upon,” the PIOs called this a “fundamental misapprehension” of the doctrine.

“The Supreme Court, and numerous others, have explained that the justification for applying the heightened public interest standard is premised on the fact that the contract was negotiated at arm’s length between ‘sophisticated businesses enjoying presumptively equal bargaining power.’ … Those circumstances are why a contract with these exact characteristics — and only these exact characteristics — can be uniquely relied upon,” the PIOs said, concluding that it is Danly’s position that introduces “contractual uncertainty.”

30 Days to Act

FERC has 30 days to act on the merits of the rehearing request; if it fails to do so because it is still divided 2-2, the petitioners may appeal to the D.C. Circuit Court of Appeals. However, it may be possible to break the deadlock earlier if the Senate approves President Biden’s nomination of D.C. Public Service Commission Chair Willie Phillips to join FERC, which would give Democrats a 3-2 majority. The Senate Energy and Natural Resources Committee voted earlier this month to advance Phillips’ nomination to the full Senate. (See Senate Energy Committee Advances Phillips.)