FERC dealt critics of the Southeast Energy Exchange Market (SEEM) yet another setback on Thursday, rejecting their request for a rehearing of the commission’s acceptance of proposed changes by the market’s founders (ER22-476).

SEEM’s opponents, two unconnected collections of activist organizations calling themselves the Clean Energy Coalition (CEC) and the Public Interest Organizations (PIOs), have filed several challenges to the SEEM agreement both before and after it took effect by force of law last October. (See SEEM to Move Ahead, Minus FERC Approval.)

So far, the commission has refused to entertain any of their rehearing requests. For example, in March FERC rejected an attempt to overturn its acceptance of key tariff changes needed to deliver the market’s energy transactions. (See FERC Again Rejects Efforts to Overturn SEEM.)

The opponents’ latest attack on SEEM stems from a set of changes that the commission accepted in January. (See FERC Accepts SEEM Revisions on Transparency.) The changes are aimed at closing a gap that FERC identified last year in a deficiency letter expressing concerns about market power and seeking assurances about the transparency of the planned market, but that the commission was unable to address because of how the agreement took effect.

At the time FERC only had four members, who split 2-2 on whether to accept the proposal. Under Section 205 of the Federal Power Act the agreement therefore became effective by default.

Opponents Cite Batavia Order, FERC Precedent

CEC and the PIOs claimed in their rehearing request that the commission had “improperly evaluated the proposed revisions in isolation,” counter to a decision by the U.S. Court of Appeals (Cities of Batavia v. FERC) that requires FERC to review a revised rate “completely to assure that its parts … ensure a ‘just and reasonable’ result.” In this case, the filers claimed that rather than reviewing only the proposed changes, FERC should have reviewed the entire agreement to consider the interactions between the changed and unchanged portions.

The opponents also charged that FERC had failed to properly consider whether the proposal to have most SEEM rules fall under the “just and reasonable standard” rather than the lower Mobile-Sierra public interest standard was lawful. CEC and the PIOs said that “the commission was obligated to determine whether [Mobile-Sierra] is appropriate for the … provisions to which [it] will continue to apply,” and that “a proper review [would] have rejected the proposed revisions … based on precedent where the commission did not” apply Mobile-Sierra in similar cases.

However, FERC concluded that the decision in its January order was appropriate on both counts. Regarding the opponents’ first argument, the commission observed that since the Batavia decision, the Court of Appeals has clarified the application of its requirement to review a revised rate completely. FERC said that the “justness and reasonableness of the [provisions] to which the members do not propose revisions … is not pending.”

Moreover, the PIOs and CEC neglected to explain how the proposed revisions will interact with the agreement’s other provisions to create unjust and unreasonable results. Because FERC could not find any such interactions either, it determined that further review would be unproductive.

The commission also rejected the standard of review argument, stating that the opponents “improperly [focused] on the form of the revisions rather than their substance.” Specifically, FERC said that while the proposed changes list “the provisions of the SEEM agreement for which changes will be subject to” Mobile-Sierra, the revisions do not actually change the standard of review for those provisions; they merely provide an explicit statement of their coverage where none was available before.

Unlike the last time FERC rejected a rehearing request on SEEM, no commissioners filed a dissent. SEEM’s supporters are aiming to launch the market in the fourth quarter, and recently held the first of three planned introductory webinars to introduce existing and prospective participants to the details of its expected functionality. (See SEEM Members Launch Engagement Series for Participants.)