Decision on Direct and Indirect Transmission Owners Funding Interconnection Upgrades

The DC Court of Appeals remanded to FERC its decision whereby it determined that direct and indirect transmission owners could unilaterally decide to fund interconnection upgrades and charge the interconnection customer over time for such upgrades, including a return on investment. The Court found that FERCR did not reasonably explain its decision that the unilateral funding option was not unjust and unreasonable or discriminatory, including as to transmission owners that own generation and those that do not. Here are some quotes from the Court decision: 

“…the Petitioner presented evidence to FERC that, contrary to the facts before the Ameren court, a majority of transmission owners in the MISO region own generators. Putting those pieces together, the Petitioner showed that many transmission owners have an incentive to discriminate between their own generators and would-be competitor generators. FERC was obligated to respond to that evidence, which the Petitioner said was enough to render unilateral funding “unjust, unreasonable, unduly discriminatory, or preferential.” 16 U.S.C. § 824e(a). Instead, FERC simply said that the evidence of generation ownership was inadequate to demonstrate discrimination, without explaining why this was so. That was not enough. Petitioner’s evidence, coupled with Ameren’s observation about the potential for discrimination, showed that restoring and extending the unilateral funding option posed a discrimination risk. FERC acted arbitrarily and capriciously by failing to meaningfully respond to Petitioner’s arguments.” 

“There was, however, something important missing from FERC’s orders: an assessment of the risk of discrimination and an explanation of why individualized proceedings provide generators with sufficient protection against that risk.” 

“We therefore remand for FERC to adequately explain its decision. But we do so without vacating FERC’s orders “[b]ecause there seems to be a significant possibility that [FERC] may find an adequate explanation for its actions, and, in any event, it appears that the consequences of its current ruling can be unraveled if it fails to.”