Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Consumer Law
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PJM Interconnection, LLC (“PJM”)  authorized a series of upgrades to facilities owned by the Public Service Electric and Gas Company (“PSE&G”). PSE&G’s Bergen and Linden switching stations; a second involved repairs to and around PSE&G’s Sewaren substation. Together, these two projects cost around $1.3 billion. Initially, PJM assigned most of the projects’ costs to entities that reroute electricity from northern New Jersey into the New York market. Thereafter, the New York-based entities gave up their rights to withdraw electricity from New Jersey, and PJM reassigned their costs to PSE&G. The Federal Energy Regulatory Commission (“FERC” or “the Commission”) approved both rounds of cost allocations. The petitions for review in these two cases are about whether these cost allocations were “just and reasonable” under the Federal Power Act, and whether FERC’s orders were “arbitrary [and] capricious” in violation of the Administrative Procedure Act (“APA”).   The DC Circuit denied the petitions for review in New Jersey Board v. FERC, and granted in part and denied in part the petitions in ConEd v. FERC. In denying the New York entities’ applications for rehearing of both the First and Second Linden Complaint Orders, the court explained that FERC failed to adequately distinguish its decision in Artificial Island from its treatment of the Bergen and Sewaren projects. Further, FERC upheld the de minimis threshold in its orders denying rehearing of the First and Second Linden Complaint Orders and the ConEd Complaint Order. The court, therefore, vacated FERC’s denial of Linden’s two complaints. The court also vacated its denial of ConEd’s complaint and remanded for further proceedings solely on the de minimis issue. View "New Jersey Board of Public Utilities v. FERC" on Justia Law

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The Federal Energy Regulatory Commission is responsible for ensuring that interstate electricity rates are “just and reasonable.” Midcontinent Independent System Operator, Inc. (“MISO”) administers the electric grid on behalf of the companies that own transmission lines. Those transmission owners invested money to build their transmission lines, and MISO must charge customers electricity transmission rates that provide those companies an appropriate return on their investment. That return-on-equity component of the transmission rates, which we’ll just call the Return, is at issue in this case. In this case, a group of customers thought MISO provided transmission owners a too-generous Return. They asked FERC to reduce that aspect of MISO’s rates. FERC did. In the process, it completely overhauled its approach to setting an appropriate Return. Both the customers and transmission owners challenged several aspects of the FERC proceedings as unlawful or arbitrary and capricious.   The DC Circuit agreed with the customers that FERC’s development of the new Return methodology was arbitrary and capricious, thus the court vacated its rate-determination orders and remanded for further proceedings. Because the other challenged aspects of FERC’s orders flow from FERC’s rate determination, the court did not reach them. The court explained that FERC Failed to offer a reasoned explanation for its decision to reintroduce the risk-premium model after initially, and forcefully, rejecting it. Because FERC adopted that significant portion of its model in an arbitrary and capricious fashion, the new Return produced by that model cannot stand. View "MISO Transmission Owners v. FERC" on Justia Law

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The Wabash Valley Power Association is an Indiana-based cooperative established to generate and transmit electricity. This case centers on a provision newly added to the 2020 contracts. Section 22 of these contracts purport to subject any changes to the Formulary Rate Tariff to the Mobile-Sierra presumption of justness and reasonableness. After Wabash submitted the new contracts to FERC, Tipmont Rural Electric Membership Cooperative, one of the two-member utilities that did not sign, filed a protest arguing that the Mobile-Sierra presumption should not apply to changes to the Formulary Rate Tariff. The Commission agreed. After FERC failed to act on an application for rehearing within 30 days, Wabash filed a petition for review.   The DC Circuit denied the petitions for review finding that the Commission reasonably rejected Wabash’s new contracts. The court wrote that  FERC reasonably determined that the 2020 contracts do not set a contractually negotiated rate. Under the Mobile Sierra doctrine, the key question is whether rates are set bilaterally or unilaterally. Here, the governing contracts give the Wabash board broad discretion to raise rates unilaterally: The board may approve rates that it believes are necessary to cover Wabash’s expenses and to maintain a reasonable profit margin, which is what any utility filing a unilateral tariff rate may seek to do. View "Wabash Valley Power Association, Inc. v. FERC" on Justia Law

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Adelphia Gateway, LLC, applied to the Federal Energy Regulatory Commission (Commission)_  for a certificate of public convenience and necessity to acquire an existing pipeline system. It also sought authorization to construct two short lateral pipeline segments extending from the existing pipeline infrastructure it would acquire. Adelphia also sought approval to construct facilities necessary to operate the pipeline. Together, these acquisitions and improvements would comprise the Adelphia Gateway Project (“the Project”).   In their joint brief, Petitioners challenge: (1) the Commission’s finding of market need for the Project under the Natural Gas Act; (2) the sufficiency of the Commission’s environmental review under the National Environmental Policy Act (“NEPA”); and (3) the constitutionality of the Commission’s purported preemption of state and local authorities’ ability to protect public health.   The Court is persuaded that the Commission did not act arbitrarily and capriciously. The court explained that as in Birckhead v. FERC, 925 F.3d 510 (D.C. Cir. 2019), Petitioners here “have identified no record evidence that would help the Commission predict the number and location of any additional wells that would be drilled as a result of production demand created by the Project.” Further, Petitioner did not argue before the Commission that section 1502.21(c) required the use of the Social Cost of Carbon tool. Their rehearing request referred to the regulation once in a footnote, and only in the context of the version of the argument petitioners then relied on and that passing reference was not enough to “alert the Commission” to the position Petitioners now take. View "Delaware Riverkeeper Network v. FERC" on Justia Law

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Until 1997, Illinois residents could only purchase power from a public utility, with rates regulated by the ICC. The Electric Service Customer Choice and Rate Relief Law allows residents to buy electricity from their local public utility, another utility, or an Alternative Retail Electric Supplier (ARES). The ICC was not given rate-making authority over ARESs, but was given oversight responsibilities. The Law did not explicitly provide a mechanism for recovering damages from an ARES related to rates. Zahn purchased electricity from NAPG, after receiving an offer of a “New Customer Rate” of $.0499 per kilowatt hour in her first month, followed by a “market-based variable rate.” Zahn never received NAPG’s “New Customer Rate.” NAPG charged her $.0599 per kilowatt hour for the first two months, followed by a rate higher than Zahn’s local public utility charged. Zahn filed a class-action complaint, claiming violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of contract, and unjust enrichment. The court dismissed for lack of subject-matter jurisdiction, or for failure to state a claim. After the Illinois Supreme Court answered a certified question, stating that the ICC does not have exclusive jurisdiction to hear Zahn’s claims, the Seventh Circuit reversed. The district court had jurisdiction and Zahn alleged facts that, if true, could constitute a breach of contract or a deceptive business practice. View "Zahn v. North American Power & Gas, LLC" on Justia Law

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Plaintiff-appellee Randy Howard sought to bring a class action suit against Ferrellgas Partners, LP in federal district court for allegedly overcharging him and other customers. Ferrellgas moved to force plaintiff to pursue his individual claim alone, in arbitration, arguing that arbitration was the procedure the parties had agreed to. The district court was unable to conclude that the parties agreed to arbitrate. Rather than proceed to trial as the Federal Arbitation Act required, the district court entered an order denying arbitration outright. The Tenth Circuit concluded that denial was error: "When it's apparent from a quick look at the case that no material disputes of fact exist, it may be permissible and efficient for a district court to decide the arbitration question as a matter of law through motions practice and viewing the facts in the light most favorable to the party opposing arbitration. . . . Parties should not have to endure years of waiting and exhaust legions of photocopiers in discovery and motions practice merely to learn where their dispute will be heard. The Act requires courts process the venue question quickly so the parties can get on with the merits of their dispute in the right forum. It calls for a summary trial — not death by discovery." View "Howard v. Ferrellgas Partners, et al" on Justia Law

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Plaintiff, on behalf of an asserted class, brought this action in state court against MFA, Casey's General Stores, and Quicktrip Corporation (the operators) under the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.020, alleging that defendants misrepresented the grade of gas pumped at their stations. Casey's General Stores removed the case to the federal district court asserting that plaintiff's claim was completely preempted by the Petroleum Practices Act (PMPA), 15 U.S.C. 2801 et seq., or alternatively, that there was diversity jurisdiction under the Class Action Fairness Act (CAFA), 28 U.S.C. 1711 et seq. The court concluded that the absence of a federal cause of action in Subchapter II meant that plaintiff's claim was not completely preempted and that there was no federal jurisdiction over that claim. Since the question of whether there was jurisdiction under CAFA would benefit from full development and adversarial briefing, the court remanded those issues in order for the district court to consider whether there was federal jurisdiction over this case under CAFA. Accordingly, the court reversed the ruling that plaintiff's state claim was completely preempted and remanded for further proceedings. View "Johnson v. MFA Petroleum Co., et al" on Justia Law

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Plaintiffs appealed the district court's dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) of their putative consumer class action against defendants. Plaintiffs also appealed the district court's denial of leave to amend their second amended complaint, alleging that the design of defendants' retail gasoline dispensers was fundamentally flawed due to a residual fuel occurrence: when plaintiffs purchased premium grade fuel, they received between two and three-tenths of a gallon of residual fuel from the previous transaction, and therefore were overcharged when the previous purchaser had selected mid-range or regular grade fuel. The court agreed with the district court that plaintiffs' well-pleaded factual allegations, accepted as true, did not give rise to a reasonable inference that defendants have committed any misconduct for which the court could grant relief. Accordingly, further amendment would be futile and the district court did not abuse its discretion in denying leave to amend. View "Alvarez, et al. v. Chevron Corp., et al." on Justia Law

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The trial court dismissed a third amended class action complaint filed in connection with power outages during severe storms. The complaint alleged negligence, breach of contract, and violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1). The appellate court and Illinois Supreme Court affirmed. The electric utility's tariff precludes an award of damages; even if such claims were not barred, jurisdiction over matters relating to the utility's service and infrastructure lies with the Illinois Commerce Commission. The Consumer Fraud Act claim alleged that that the company knew or should have known that it failed to sufficiently establish policies and procedures to prevent controllable interruptions of power and to timely respond to those interruptions, in order to protect the health, safety, comfort and convenience of its customers, including those on the life support registry. The claim failed because the company is not required to prioritize those on the life support registry and does not intend that those on the registry rely on it doing so.

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Appellants challenged a district courtâs discovery order that directed them to disclose what they called privileged information. To achieve this end, the Appellants filed an interlocutory appeal and a petition for writ of mandamus with the Tenth Circuit. The Appellants in this case include motor fuel retailers and the retail motor fuel trade associations to which the retailers belong. The Plaintiffs in this case are consumers and other interested parties. Collectively they filed twelve putative class action cases in seven federal district courts. The Plaintiffs alleged that the retailersâ âvolumetric pricing systemâ for retail motor fuel overcharges customers. When the temperature of the fuel rises, the fuelâs volume expands, but the actual energy content stays the same â customers pay for âmoreâ fuel but half the energy. Plaintiffs allege that the temperature fluctuations and fuel volumes are accounted for in every aspect of the Appellantsâ âvolumetric pricing systemâ except at the retail level, thus overcharging retail customers. The Tenth Circuit held that Appellants devoted a majority of their appellate brief to their contention that a First Amendment privilege should be presumed with respect to the information Plaintiffs sought to discover. However, Appellants made an âunwise strategic decisionâ by seeking a presumption when they failed to prove the information was indeed privileged. The Court dismissed Appellantsâ interlocutory appeal and denied their application for writ of mandamus.