On Friday, July 10, 2020, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) upheld the Federal Energy Regulatory Commission’s (“FERC”) Order Nos. 841 and 841A, which established a framework for electric storage resources’ (“ESRs”) participation in wholesale markets. The D.C. Circuit rejected the petitioners’ arguments that FERC exceeded its jurisdictional boundaries and intruded on regulatory matters left to the states in prohibiting states from barring ESRs located on their distribution and retail systems from participating in federal markets. The D.C. Circuit also held that FERC’s orders were not arbitrary and capricious, and that FERC adequately explained its decision to reject a state opt-out, a feature present in previous FERC programs addressing demand-response participation in wholesale markets.

In holding that FERC’s prohibition on state-imposed bans on local ESR participation in federal markets directly affects wholesale rates, the D.C. Circuit explained: “Keeping the gates open to all types of ESRs – regardless of their interconnection points in the electric energy systems – ensures that technological advances in energy storage are fully realized in the marketplace, and efficient energy storage leads to greater competition, thereby reducing wholesale rates.” The D.C. Circuit concluded that FERC did not unlawfully regulate matters left to the States: “There is little doubt that favorable participation models will lure local ESRs to the federal marketplace, which will require use of States’ distribution systems, but that is the type of permissible effect of direct regulation of federal wholesale sales that the FPA allows. . . . Nothing in Order No. 841 directly regulates those distribution systems.” The court noted that states retain their authority to prohibit local ESRs from participating in both the interstate and intrastate markets simultaneously, retain their authority to impose safety and reliability requirements, and remain unimpeded in their ability to manage utilities and allocate costs incurred in operating and maintaining their systems. Finally, the court concluded that FERC adequately explained its refusal to permit a state opt-out, determining that burdens on the states were outweighed by the benefits of increased participation of ESRs in wholesale markets.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Jessica Bayles Jessica Bayles

Jessica Bayles is a partner in Stoel Rives’ Energy Development group, where she focuses her practice on energy regulatory support for renewable project development and transactions, compliance counseling, and regulatory controversies. Jessica counsels renewable energy developers and asset managers on compliance with the…

Jessica Bayles is a partner in Stoel Rives’ Energy Development group, where she focuses her practice on energy regulatory support for renewable project development and transactions, compliance counseling, and regulatory controversies. Jessica counsels renewable energy developers and asset managers on compliance with the requirements of the Federal Energy Regulatory Commission (FERC). She has significant experience in complex litigation and settlement proceedings before FERC. She also advises large electric customers in state public utility commission proceedings.

Click here for Jessica Bayles’ full bio.

Photo of Jason Johns Jason Johns

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations…

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations at the ISO/RTO level, where he represents independent power developers and utilities. His experience includes negotiating major facility contracts, such as interconnection, transmission, and power purchase agreements; prosecuting disputes at FERC; and counseling and defending clients on issues related to regulatory compliance.

Jason also works closely with large commercial and industrial users of electricity and gas, such as aerospace companies, pulp and paper mills, steel mills, and tech company data centers. In that role, Jason helps clients negotiate power and gas supply contracts, interstate pipeline capacity asset management agreements, and pipeline bypass agreements. Jason has also assisted these clients with demand management agreements, the installation of on-site resources (such as battery storage, fuel cells, and solar PV), and with retail and wholesale power purchase agreements for renewable energy and other resources. Jason also serves as a board member of The Climate Trust, a national leader in carbon offset projects and innovative climate change solutions.

Jason and his wife are parents to two growing boys, and they live just outside of Portland, Oregon.

Click here for Jason John’s full bio.

Photo of Jennifer Mersing Jennifer Mersing

Jennifer Mersing, an attorney in Stoel Rives’ Energy & Regulatory group, focuses her practice on electric regulatory issues including Federal Energy Regulatory Commission (FERC) and certain state law matters. She advises electric utilities, transmission providers, large industrial consumers of power and energy…

Jennifer Mersing, an attorney in Stoel Rives’ Energy & Regulatory group, focuses her practice on electric regulatory issues including Federal Energy Regulatory Commission (FERC) and certain state law matters. She advises electric utilities, transmission providers, large industrial consumers of power and energy marketers regarding issues under the US Federal Power Act (FPA), the Public Utility Regulatory Policies Act of 1978 (PURPA), and the Public Utility Holding Company Act (PUHCA).