Can States Regulate Interstate Electricity Markets?

It is long settled law that FERC has jurisdiction over interstate transmission rates.  State Commissions are required to respect that jurisdiction and cannot change transmission rates that flow through to the retail electric customers over which the states have jurisdiction.  A state must pass interstate transmission rates through unscathed.  A rate can only be changed in the jurisdiction in which it is set.  Therefore, any retail customer who pays an interstate transmission rate can only address it at FERC, where the rate was set.

Power Magazine published an interesting piece yesterday headlined, "Will FERC Bar Retail Customers From Electricity Cases?"

Should retail electricity customers be barred from bringing cases before the Federal Energy Regulatory Commission, a decades-long practice? A FERC administrative law judge, Carmen Citron, last month recommended to the commission that it abandon its long-standing practice and deny retail customers standing before the agency.

Cintron’s mid-October recommendation came in a case involving an Arkansas lawyer, school teacher and activist (ER07-1069-006), Martha Peine of Eureka Springs, Ark. She challenged expenses AEP subsidiary Southwestern Electric Power Co. charged to consumers in lobbying for a new interstate power line. She argued at FERC that SWEPCO had stuck customers with some $92,000 in expenses that were improper. Her filing was under Section 205 of the Federal Power Act (FPA).

The op-ed took a look at both Judge Cintron's "Certified Question" to the Commission, and the "swift and pointed response" to the question by numerous trade orgs. representing large industrial and commercial electricity users.  Power says the trade filing from ELCON

challenged Cintron’s reasoning as flipping “the fundamental purpose of the FPA on its head.”

Elcon asserted, “The purpose of the FPA is not to protect utilities from the burden of responding to consumers; rather, as the Supreme Court and other courts have recognized, it is ‘to protect power consumers against excessive prices.’”

ELCON's filing is powerful -- must read!

Power opined:

Whether retail customers can continue their historic right to access to FERC also has political implications for the commission. In recent months, anti-natural gas activists have staged demonstrations at commission meetings, including interrupting proceedings (resulting in guard-escorted exits from FERC’s D.C. headquarters). The protesters have argued, often at high volume, that FERC cares only for the interests of big energy companies, and not those of people affected by the agency’s actions.

The commission has repeatedly said, as it opens its monthly public meetings, that it will consider arguments and protests to its activities from anybody, through normal FERC proceedings, including filings. Should the commission adopt Cintron’s recommendations, those statements will ring administratively and politically hollow.

This sort of begs a question about who FERC serves, doesn't it?

The whole history of this legal quagmire can be found on FERC Docket No. ER07-1069, sub docket 006 (although FERC misdocketed one of the supporting memorandums on the main docket, instead of the sub.)  Interesting reading!

At any rate, the Commission has until Nov. 12 to decide the Certified Question, or else it will revert back to the judge for decision.

What do you think the Commission should do?

A couple of new parties have spoken this morning.  The  National Association of State Utility Consumer Advocates and the City of Coffeyville, Kansas, have filed support of ELCON's position and are asking the Commission to publicly notice this issue and accept public comment before making a decision.