Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Utilities Law
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The Supreme Court affirmed the order of the Public Service Commission of West Virginia (PSC) ordering Equitrans, LC, a natural gas interstate pipeline company, to permit Hope Gas to connect a natural gas field tap on property owned by Ronald and Ashton Hall to Equitrans' "gathering line," holding that the PSC properly exercised jurisdiction in this matter.Seeking to divest itself of its gathering facilities Equitrans applied to the Federal Energy Regulation Commission (FERC) to abandon and sell its gathering facilities. FERC approved the application. When Equitrans denied Hope Gas's request to reestablish a service connection to the Halls' residence the Halls filed their complaint with the PSC. The PSC found that it had jurisdiction over the gathering facilities. The Supreme Court affirmed, holding that the PSC properly exercised jurisdiction over the gathering facility at issue. View "Equitrans, L.P. v. Public Service Comm'n of W. Va." on Justia Law

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Warren tenders gasoline products to Colonial (a common carrier) for shipment on Colonial’s pipeline from Texas to New Jersey, where Warren has a gasoline-blending operation. The rates and conditions for the transportation services are specified in tariffs approved by the Federal Energy Regulation Commission (FERC). The tariff recognizes that the gasoline batches Colonial transports for Warren are fungible and allows Colonial to comingle gasoline from many shippers during transport. Colonial must deliver gasoline of the same volume and grade as the gasoline that was entrusted to it, with the same characteristics that influence the gasoline’s combustion performance (octane rating and distillation value), and its environmental impact, such as volatility. The tariff does not state whether “on specification” gasoline includes any “blend margin.” In 2016, FERC determined that the regulation of in-pipeline blending was outside its jurisdiction. Colonial continued giving Warren gasoline that complies with the relevant tariff but Warren claims that Colonial’s in-line blending of the gasoline with butane diminishes Warren’s ability to blend cheaper blendstocks into the gasoline. Warren regularly blends cheaper gasoline with more expensive gasoline to increase the amount of on-specification gasoline that it can sell,Warren sued for loss of profits (Carmack Amendment 49 U.S.C. 1590), conversion, unjust enrichment, and tortious interference. The Third Circuit affirmed the summary judgment rejection of the claims. Warren’s request seeks an enlargement of its rights under the FERC-approved tariff and violates the filed-rate doctrine’s nondiscrimination principle. View "George E. Warren LLC v. Colonial Pipeline Co" on Justia Law

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The Supreme Court reversed the order of the Florida Public Service Commission denying Duke Energy Florida, LLC's (DEF) request to recover approximately $16 from its customers for costs DEF incurred to meet its customers' demand for electricity, holding that the cost recovery should have been allowed.The costs at issue were incurred when a 420-megawatt (MW) steam-powered generating unit went offline at DEF's Bartow plant and was placed back in service at a derated capacity of 380 MW. After a hearing, an administrative law judge entered a recommended order denying cost recovery. The commission adopted the ALJ's recommendation in the final order on appeal. The Supreme Court reversed, holding that the factual findings forming the basis for the ALJ's ultimate causation determination were not supported by competent, substantial evidence. View "Duke Energy Florida, LLC v. Clark" on Justia Law

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The Supreme Court affirmed the order of the North Carolina Utilities Commission addressing Dominion Energy North Carolina's application for a general increase in its North Carolina retail rates, holding that Dominion's challenges to the Commission's order were unavailing.In the order at issue, the Commission authorized Dominion to calculate its North Carolina retail rates by, inter alia, amortizing certain costs. Dominion appealed, arguing that the Commission acted capriciously and arbitrarily in failing to follow applicable precedent. The Supreme Court affirmed, holding that the Commission's order was supported by competent, substantial evidence and that the Commission adequately explained the basis for the portions of its decision that Dominion challenged on appeal. View "State ex rel. Utilities Commission v. Virginia Electric & Power Co." on Justia Law

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LSP, an independent electric transmission developer, bids on proposals to build transmission projects throughout the U.S. LSP sought judicial review of a Federal Energy Regulatory Commission (FERC) decision under 16 U.S.C. 824e concerning ISO New England’s compliance with Commission Order 1000, which required “the removal from Commission-jurisdictional tariffs and agreements” of rights of first refusal to construct transmission facilities and directed incumbent transmission providers to engage in competitive selection of developers. FERC recognized an exception if the time needed to solicit and conduct competitive bidding would delay the project and thereby threaten system “reliability.” FERC found “insufficient evidence” that ISO was incorrectly implementing Order 1000.The D.C. Circuit denied LSP’s petition for judicial review, first holding that FERC’s ruling bears all the indicia of a substantive decision produced after a contested proceeding involving ISO and numerous intervenors and is subject to judicial review. The court found nothing irrational in FERC’s response to LSP’s general criticism of ISO’s use of more conservative assumptions regarding its system capacity and future management in determining when to apply the exception. Although the number of reliability projects exempted from competitive bidding exceeded those open to competition, the appropriate balance between competitive procurement and quick redress of reliability needs is a policy judgment for FERC. View "LSP Transmission Holdings II, LLC v. Federal Energy Regulatory Commission" on Justia Law

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The Federal Energy Regulatory Commission (FERC) awarded “incentive adders,” upward adjustments to utilities’ rate of return on equity, to three California-based public utilities. FERC regulations allow for incentive adders to induce voluntary membership in independent system operators. The Ninth Circuit previously concluded that FERC improperly awarded incentive adders to PG&E without considering the California Public Utilities Commission’s (CPUC) assertion that PG&E’s membership in the California independent system operator (CAISO) is mandated. The court directed FERC to “inquire into PG&E’s specific circumstances, i.e., whether it could unilaterally leave the C[AISO].” On remand, FERC concluded that membership in CAISO is voluntary.The Ninth Circuit upheld the decision, holding that its previous decision did not resolve whether California law prevented the utilities from leaving CAISO without approval. FERC did not deviate from the mandate on remand. There was no error in FERC’s conclusion that membership in CAISO was voluntary despite a contrary suggestion in a CPUC 1998 Decision. FERC was not required to apply the Erie doctrine and defer to California’s interpretation. The incentive adder and its requirements arose from federal law. The California Supreme Court has not decided whether membership in CAISO is voluntary; no California Code provision mandates CAISO membership, and no case law discusses whether CAISO members must remain such. California courts would not defer to the CPUC’s 1998 Decision because it was inconsistent with the statute. View "California Public Utilities Commission v. Federal Energy Regulatory Commission" on Justia Law

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The Supreme Court reversed a portion of the utility regulatory commission's order that approved in part Duke Energy's request to increase its rates for retail consumers, holding that, absent specific statutory authorization, a utility cannot recoup its past costs adjudicated under a prior rate case by treating the costs as a capitalized asset.In 2020, the commission granted Duke's petition for a rate increase in part permitting Duke to recover about $212 million for coal-ash site closures, remediation, and financing costs, with the bulk of the costs having been incurred from 2015 to 2018. At issue was whether the commission could approve reimbursement for a deferred asset without violating the statutory bar against retroactive ratemaking. The Supreme Court answered in the negative, holding that the commission acted without statutory authority in re-adjudicating expenses already governed by a prior rate order. View "Indiana Office of Utility Consumer Counselor v. Duke Energy Indiana, LLC" on Justia Law

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The Supreme Court affirmed the decision of the Public Utilities Commission (PUC) approving a power purchase agreement (PPA) between Maui Electric Company, Limited (MECO) and Paeahu Solar LLC (Paeahu), holding that the PUC satisfied its public trust duties in this case.Under the PPA, MECO would purchase renewable energy from Paeahu's solar-plus-battery plant located within the Ulupalakua Ranch on Maui. Pono Power Coalition, a Maui community group, challenging the winning bidders' post-selection use of the same counsel to negotiate non-price PPA terms and asserting that the PUC failed to fulfill its public trust duties. The Supreme Court affirmed, holding (1) this Court declines to inject antitrust standards into PPA approval proceedings; (2) the PUC appropriately evaluated the allegations of anticompetitive conduct; (3) the statutes governing the PUC's PPA review reflect the core public trust principles; and (4) the PUC properly approved the PPA. View "In re Maui Electric Company, Ltd." on Justia Law

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Citizens for Fair Rates and the Environment and New Energy Economy, Inc., two organizations that represented energy consumers (collectively, "New Energy"), intervened in the administrative proceedings before the New Mexico Public Regulation Commission. New Energy raised several issues for the New Mexico Supreme Court's review, most of which attacked the Energy Transition Act ("ETA") on constitutional grounds. In addition to these constitutional challenges, New Energy also raised a single claim of error in the findings of the Commission relating to the requirement that Public Service Company of New Mexico’s ("PNM") submit a “memorandum . . . from a securities firm” in support of its application for a financing order. The Supreme Court declined to reach two of New Energy’s issues because they were not properly before the Court and were not essential to the disposition of this appeal. The Court further declined to address New Energy’s arguments regarding an invasion of judicial powers under Section 62-18-8(B) and Section 62-18- 22. With respect to the issues it deemed properly presented, the Court rejected New Energy’s constitutional challenges to the ETA, and concluded the Commission’s final order was based on a reasonable construction of Section 62-18- 4(B)(5) and was supported by substantial evidence. View "Citizens for Fair Rates et al. v. NMPRC" on Justia Law

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For seven years, NTE worked to build a natural gas-fueled power plant in Killingly, Connecticut to sell electricity on the New England grid. NTE worked with ISO, the independent system operator authorized by the Federal Energy Regulatory Commission (FERC) to manage the regional grid, to have the project “qualified” to bid for the right to sell electricity. NTE secured a “capacity supply obligation” (CSO) for the 2022 commitment period. NTE secured a guaranteed income stream for the first seven years of the plant’s operation.NTE subsequently encountered setbacks that prevented it from meeting its financing and construction goals. On November 4, 2021, NTE told ISO that it remained confident it could complete construction on time but ISO-NE asked FERC to terminate the Killingly plant’s CSO. In January 2022, FERC did so. In February, the Second Circuit issued an emergency stay of FERC’s order. FERC likely fell short of its obligation under the Administrative Procedure Act to explain its decision. Absent emergency relief, FERC’s order would have irreparably harmed NTE, preventing it from participating in an auction to sell future electricity capacity to New England consumers. Nothing in FERC’s reasoning suggests the risk that incumbents may have to reallocate electricity capacity amongst themselves outweighs the harm of delaying NTE’s project, which could benefit consumers through more efficient, less expensive electricity. View "In re: NTE Connecticut, LLC" on Justia Law