Commissioner James Danly Statement
June 17, 2022
Docket No. ER22-1247-000
I dissent from today’s letter order.[1]
Do not be fooled. The filing at issue is not a typical settlement agreement and today’s letter order wrongly—one might say misleadingly—treats it as such. It is no more than a bilateral agreement that sets in motion the potential regionalization of transmission costs, without prior notice, without affording stakeholders a seat at the table, without regard to our obligation to ensure proper cost allocation and, most fundamentally and irredeemably, without the protections of section 205 of the Federal Power Act (FPA).[2] Today’s letter order gets ahead of our ongoing rulemaking on transmission planning,[3] setting the stage for a potential end-run around that proceeding. And this is only the start. The record already shows that another filing will shortly follow on the heels of this one. Today’s order will be the first of many.
The letter order approves the instant filing, styled as a pre-arranged TSA, submitted under Rule 207(a)(5) of the Commission’s Rules of Practice and Procedure.[4] The Commission should have rejected it without prejudice to the parties’ refiling pursuant to FPA section 205. The Commission further should require that the Settling Parties must serve a copy of their filing on all potentially affected third parties, including ISO New England Inc. (ISO-NE) and each of the state public service commissions, load serving entities, and consumer advocates in the ISO-NE states.[5]
According to the letter order, the “TSA commits [NSTAR Electric Company (NSTAR)] to construct certain transmission facilities required to interconnect [Park City Wind LLC’s (PCW)] proposed offshore wind farm to the NSTAR transmission system and sets forth the Settling Parties’ respective responsibilities to finance and pay for those facilities.”[6] This squarely fits within FPA section 205(a).[7]
While styled as a “settlement agreement,” there is no evidence whatsoever that this “settlement” was the result of an actual dispute of the kind that typically leads to a settlement agreement other than a statement that there were “certain disagreements” regarding “rights, obligations and cost responsibilities.”[8] As far as I can tell, this is indistinguishable from any other type of bilateral agreement. Parties to a contract can be fairly said, amidst negotiations, to be in “disagreement” with one another until the final terms are agreed upon and the contract is consummated. This agreement bears all the indicia of a bilateral contract and it should be treated as such by being considered under FPA section 205.
The protections of FPA section 205 are particularly important in this case because it appears that the filing parties are trying to use an inappropriate procedural vehicle by filing pursuant to Rule 207(a)(5) to achieve an objective that ought to be subject to more scrutiny by the Commission.[9] Considering the fact that the parties plan to request that ISO-NE approve the regionalization of costs[10] associated with Phase I (approximately $13.7 million) and Phase II (approximately $151.5 million) of the TSA,[11] it appears that no potentially-affected third parties (such as states or ISO-NE customers) were invited to participate in any “settlement” discussions that may have taken place. It is obvious that if this were a “settlement,” which explicitly contemplated a potential cost shift from Connecticut and Connecticut’s ratepayers to other states and their ratepayers, other parties would have had an interest in being part of the negotiations. No “settlement” is either a “settlement” nor is it “fair” or “reasonable” or “in the public interest” to the extent it can harm others who were not afforded an opportunity to object—or even know about—the terms being discussed. It is also simply disingenuous for the majority to contend that the Phase II costs will only be paid by PCW,[12] that the TSA assigns costs only as between NSTAR and PCW, and that the TSA does not impose costs on other entities,[13] when in the same breath the majority acknowledges that the parties intend to seek regionalization of those costs which, if permitted by ISO-NE, would obviate PCW’s payment obligations.[14]
I take no solace in the boilerplate in the letter order. While it states that the Commission’s approval “does not constitute approval of, or precedent regarding, any principle or issue in this proceeding,”[15] a commenter in this very proceeding has already expressed interest in having a similar agreement[16] to which NSTAR affirmatively responded.[17] Clearly, there does not appear to be any conflict to be resolved for the imminent filing. And so, with the issuance of the instant letter order, the floodgates have been thrown wide open.
The fact that the parties are directed to make a compliance filing[18] also does not solve the underlying procedural problems.
The orders relied upon by the Commission support my position. In Dominion,[19] the parties sought amendments to four existing settlements approved by the Commission, that were jointly sponsored by Dominion Transmission, Inc. and the Public Service Commission of the State of New York, and that were “either supported or not opposed by customers representing at least 85 percent of Dominion’s annual jurisdictional revenue.”[20] This is not the case here. Duke Energy Florida[21] involved a settlement between Duke Energy Florida, Seminole Electric Cooperative, Inc. (Seminole) and Florida Municipal Power Agency (FMPA) that provided a one-time credit to thirteen entities (including Seminole and FMPA) regarding service under Duke Energy Florida’s Commission-approved open access transmission tariff, which is not the case here.[22] In New England Hydro-Transmission Electric Company, Inc.,[23] the settlement, negotiated over a five year period, amended four Support Agreements and a Use Agreement that previously were accepted by the Commission under section 205 of the FPA and the filing was served on the governors and electric utility regulatory agencies for the six New England states that comprise the New England Control Area, the New England Conference of Public Utility Commissioners, Inc., the New England States Committee on Electricity, ISO-NE and the New England Power Pool, as well as the renewing Interconnection Rights Holders,[24] also not the case here. And yet, in her separate statement, Commissioner Clements fails to grapple with the questions of why notice was not provided to third parties and no invitation to participate in settlement negotiations were extended to those with interests at stake.[25]
The filing is no more than a bilateral agreement, and we have a mechanism and mandate set forth in FPA section 205 for acting upon it. Rule 207 does not apply.
For these reasons, I respectfully dissent.
[1] NSTAR Elec. Co., 179 FERC ¶ 61,200 (2022).
[2] 16 U.S.C. § 824d (applying the just and reasonable standard). The
Rule 602 standard of review generally applied to uncontested settlements is that it appears to be “fair and reasonable and in the public interest.” 18 C.F.R. § 385.602(g)(3). The Commission has applied the Rule 602 standard with respect to settlements under Rule 207(a)(5). Id. § 385.207(a)(5). The instant order finds that the Settlement Transmission Support Agreement (TSA) “appears to be fair and reasonable, and in the public interest.” NSTAR Elec. Co., 179 FERC ¶ 61,200 at P 9.
[3] See Building for the Future Through Elec. Reg’l Transmission Planning & Cost Allocation & Generator Interconnection, 179 FERC ¶ 61,028 (2022).
[4] 18 C.F.R. § 385.207(a)(5) (“A person must file a petition when seeking: . . . (5) Any other action which is in the discretion of the Commission and for which this chapter prescribes no other form of pleading.”).
[5] See 18 C.F.R. § 385.2010(a)(1)(ii) (“Any participant filing a document in a proceeding must serve a copy of the document on: . . . (ii) Any other person required to be served under Commission rule or order or under law.”).
[6] NSTAR Elec. Co., 179 FERC ¶ 61,200 at P 1 n.2 (citing Transmittal at 1).
[7] 16 U.S.C. § 824d(a) (“All rates and charges made, demanded, or received by any public utility for or in connection with the transmission or sale of electric energy subject to the jurisdiction of the Commission, and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.”).
[8] NSTAR Electric Co. & Park City Wind LLC March 8, 2022 Petition at 2 (Petition).
[9] While the majority contends that the standard of review of Rule 207(a)(5) is the same as FPA section 205, NSTAR Elec. Co., 179 FERC ¶ 61,200 at P 8, even if that were true, one cannot say that we give the same scrutiny for a Rule 207 settlement that makes clear that the Commission is not approving any principle or issue in the settlement. Id. P 10. One cannot imagine saying in an order on an FPA section 205 filing that the determinations therein do not constitute precedent.
[10] See Petition at 16-17.
[11] Id. at 7.
[12] NSTAR Elec. Co., 179 FERC ¶ 61,200 at P 6.
[13] Id. P 9.
[14] Id.
[15] Id. P 10.
[16] See Mayflower Wind Energy LLC March 22, 2022 Comments at 3 (“As a similarly situated interconnection customer, Mayflower Wind should be accorded comparable treatment by NSTAR in any future transmission support agreement regarding the Mayflower Wind transmission upgrades, notwithstanding any ‘no precedent’ provisions of the Settlement TSA.”) (footnote omitted).
[17] See NSTAR Electric Co. March 25, 2022 Limited Answer at 2 (“Although the issue is not before the Commission in this proceeding, in order to allay Mayflower Wind’s specific concern, NSTAR commits that should ISO New England Inc. . . . determine that Network Upgrades are needed to interconnect Mayflower Wind’s project, NSTAR will, as it committed to do in the Settlement TSA, either support or not oppose the regionalization of costs . . . .”); id. at 3 (“NSTAR intends to offer Mayflower Wind the same flexibility that is reflected in the [agreement] with PCW . . . .”); id. at 5 (“NSTAR wishes to emphasize that it believes it has a responsibility to facilitate the successful interconnection of offshore wind projects that are approved by the States in New England, subject to protecting the reliability of its system and its legitimate business interests. That is the approach that NSTAR took in the negotiation with PCW, and it will be the approach that NSTAR takes in negotiating any future transmission support agreement with Mayflower Wind or other developers of State-approved projects.”).
[18] NSTAR Elec. Co., 179 FERC ¶ 61,200 at P 11.
[19] See Dominion Transmission, Inc., 111 FERC ¶ 61,285 (2005) (Dominion).
[20] Id. P 1; see also id. P 32 (“In future situations of this kind, when a pipeline has negotiated an agreement with its customers and others to change its rates or terms and conditions of service and the pipeline desires approval of the agreement before making an actual section 4 tariff filing, the pipeline should simply file, pursuant to section 385.207(a)(5), a petition for approval of the agreement . . . . The Commission will act expeditiously on the proposal to ensure any reduced rates are implemented as quickly as possible. If the Commission approves the agreement, it will direct that the pipeline file, pursuant to NGA section 4(d) and section 154.203 of the Commission’s regulations, actual tariff sheets implementing the agreement consistent with the terms of the agreement as approved by the Commission. The Commission will treat such a filing as a filing to comply with the Commission’s order approving the agreement, and the Commission will place tariff sheets that properly implement the agreement, as approved, into effect on the date provided for in the agreement.”) (emphasis added) (citation omitted).
[21] Duke Energy Fla., LLC, 175 FERC ¶ 61,101 (2021) (Duke Energy Florida) (providing a one-time credit to transmission customers taking Network Integration Transmission Service and Long-Term Firm Point-to-Point Transmission Service over the Duke Energy Florida transmission system under the open access transmission tariff in the 2020 calendar year in accordance with their usage of the Duke Energy Florida system in the 2019 calendar year as well as a moratorium on certain filing rights for a defined period of time).
[22] Duke Energy Florida, LLC December 16, 2020 Petition for Approval of Uncontested Settlement Agreement, Docket No. ER21-672-000, at 2-3; id. at Settlement Exhibit A (listing rate credit parties as City of Quincy, City of Chattahoochee, City of Mt. Dora, City of Wauchula, City of Winter Park, FMPA, Reedy Creek Imp. District, Seminole, City of Bartow, City of Williston and The Energy Authority).
[23] New England Hydro-Transmission Elec. Co., Inc., 175 FERC ¶ 61,140 (2021).
[24] New England Hydro-Transmission Electric Co., Inc. December 18, 2020 Petition for Approval of Offer of Settlement, Docket No. ER21-712, at 2, 27.
[25] NSTAR Elec. Co., 179 FERC ¶ 61,200 (Clements, Comm’r, concurring at P 4 n.2).