Insouciant? FERC? The 7th Circuit US Court of Appeals has said so, and it makes for a delightful picture. The Federal Energy Regulatory Commission as a Parisian devil-may-care, stirring in some of us a vague, sweet longing for a summer of lazy ripostes on the Left Bank.
The Chicago court didn't describe FERC as an insouciant agency, of course. But its refreshingly plain-English opinion on August 6 did apply "insouciance" to the approach FERC took to approving PJM Interconnection members' chosen method of sharing the cost of building new extra-high-voltage transmission lines.
Applying a PJM-wide pro rata cost allocation the way FERC did it is just not OK, two of the three judges said in a ruling that appears to have thrown a pall of uncertainty over transmission investment.
The ruling, which one of the panel's three judges objected to strongly, has at first blush thrown a pall of uncertainty on the transmission planning and investment work that is going on like mad nowadays. It "seems to threaten" the whole direction FERC is taking, said Christine Tezak, plugged-in analyst with the Robert W. Baird firm.
Especially but not only for renewable power, new 500-kV-plus lines are large on the agendas of wind power interests and the Congresspeople who love them, as well as the companies like ITC Holdings, American Electric Power, Allegheny Energy and MidAmerican Energy that are in the transmission-development business big time.
The Illinois Commerce Commission was the main challenger, and the 7th Circuit is in Chicago. Whether that fact had any bearing on the decision is hard to know. The Chicago court did display sympathy for the argument that if Commonwealth Edison, in Chicago, were to derive only $1 million in benefits from Project Mountaineer in eastern PJM, it would still have to pay $480 million toward the project. The fact that FERC is not requiring calculation of the benefits vis a vis costs was the commission's blunder, the judges said.
The dissenter, Judge Richard Dickson Cudahy, decried the decision's coming at a time when the nation is trying to build out a transmission system that has been called inadequate for the job it must do. And he said the other two judges misread earlier cases that they cited to support their position.
FERC may appeal to the full 7th Circuit, but it's not yet saying anything about its strategy. Bill Massey, a former FERC commissioner who now is counsel to the Compete Coalition, said the ruling is more a caution that FERC must take care in how it writes its determinations than a rejection of the so-called postage stamp pricing method.
You know the lists we accumulate of things to avoid? It seems FERC must now add insouciance to its own list, and try to figure out when it is exhibiting that altogether too liberating behavior.
(Illinois Commerce Commission v. FERC, No. 08-1306 et al)
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