posted on Tuesday, May 01, 2007 6:07 PM by Tracy Davis

DC Circuit Remands ISO-NE Installed Capacity Orders to FERC

The US Court of Appeals for the DC Circuit on April 20 issued a per curiam order that sends back to FERC the issue of whether the agency has jurisdiction to authorize ISO-New England's (ISO-NE) implementation of an installed capacity requirement.  The Connecticut Attorney General Richard Blumenthal and the Connecticut Department of Public Utility Control (CDPUC) had challenged FERC's jurisdiction over the contentious installed capacity requirement, which obligates load servers to control capacity in excess of peak load.  The AG and CDPUC argued that the Federal Power Act (FPA) entrusted such power supply decisions to the states, and not the federal government, to decide such matters.  While the court did not necessarily agree with the Connecticut parties' arguments that installed capacity is really a form of generation resource adequacy that should be left to the states, it directed FERC to articulate a justification for federal jurisdiction.

The AG and CDPUC have been vehement opponents of the installed capacity proposal from the outset.  In its briefs to the court, the CDPUC attempted to downplay the relationship of installed capacity requirements to wholesale rates, indicating the connection was only "tangential[] or incidental[]."  The CDPUC sought a court order defining the scope of FERC's authority over generation resource adequacy and directing that FERC must defer to Connecticut's jurisdiction regarding the generation capacity requirements.  For its part, FERC countered that authority over generation capacity was conferred to it by the FPA's general grant of federal jurisdiction over the sale of electric energy in interstate commerce.  But that wasn't clear enough for the court, which accordingly remanded the case back to FERC.  However, the court did not go as far as the CDPUC and AG would have liked; by simply remanding to FERC for further explanation of its jurisdiction, the court gave FERC another shot to explain how and why it should regulate installed capacity, and it left for another day the merits of ISO-NE's proposal.