|
|
|
|
|
Complaint Against Cleared PJM Capacity Market Prices Revived As Court Sends Case Back To FERC
The following story is brought free of charge to readers by VertexOne, the exclusive EDI provider of EnergyChoiceMatters.com
The U.S. Court of Appeals for the D.C. Circuit has revived a complaint filed by the Maryland Office of People's Counsel, and aligned parties, against PJM concerning the cleared prices in the 2024/2025 PJM Base Residual Auction for capacity
In brief, the U.S. Court of Appeals for the D.C. Circuit said that FERC erred in dismissing the OPC complaint under FERC's erroneous finding that the matter had been previously resolved by a Third Circuit court decision. The U.S. Court of Appeals for the D.C. Circuit said that the Third Circuit decision had only addressed a section 205 tariff filing, while the OPC complaint was made under section 206 of the FPA. As FERC wrongly dismissed the complaint, the U.S. Court of Appeals for the D.C. Circuit remanded the OPC complaint concerning 2024/2025 capacity prices back to FERC for further proceedings.
With regards to the specifics of the issues addressed by the OPC complaint relating to the 2024/25 BRA, the U.S. Court of Appeals for the D.C. Circuit summarized that: "The DPL South Zone’s LDA Reliability Requirement rested on PJM’s belief that certain suppliers would participate in the auction, but that prediction proved to be wrong. As a result, the LDA Reliability Requirement reflected a need for substantially more capacity than the DPL South Zone in fact needed. If left unaddressed, this mismatch would inflate the clearing price and likely lead to more than $100 million in excess capacity charges."
As previously reported, PJM requested relief under section 205 and section 206 of the Federal Power Act to address the situation. Both filings sought FERC’s approval of a tariff amendment that would authorize PJM to modify the LDA Reliability Requirement before finalizing the auction. In February 2023, FERC approved PJM’s request to amend its Tariff under section 205, and FERC denied PJM's section 206 filing as moot. PJM amended its Tariff, revised the LDA Reliability Requirement, and completed the auction.
As summarized by the Court, "Capacity suppliers that would have benefitted from a higher clearing price challenged FERC’s approval of PJM’s tariff amendment. The Third Circuit granted their petition, reasoning that the tariff amendment operated retroactively in violation of the filed-rate doctrine."
After the Third Circuit's ruling, FERC instructed PJM to re-run the auction as if PJM's tariff had not been amended. Compared to the earlier iteration of the auction, PJM load in the re-run auction spent an additional $182.8 million to procure just 1.9 percent more capacity, the U.S. Court of Appeals for the D.C. Circuit noted
OPC and other consumer interests filed a section 206 complaint against re-running the auction. The OPC complaint had asked FERC to declare the re-run auction results to be unjust and unreasonable, and to replace them with the "efficient market outcome" that prevailed in the original auction.
FERC denied the OPC complaint, reasoning that FERC could not reach an, "outcome that would be inconsistent with the Third Circuit’s ruling."
However, the U.S. Court of Appeals for the D.C. Circuit found that FERC erred in this decision, because the OPC complaint was brought under section 206
FERC in denying the OPC complaint had cited the Third Circuit's finding that the lower rates from the tariff change amounted to impermissible retroactive ratemaking
However, such retroactive ratemaking had occurred under a section 205 filing (generally, an application for a change in rates). The U.S. Court of Appeals for the D.C. Circuit noted that FERC's decision that was reviewed by the Third Circuit, and which led to the Third Circuit's order concerning retroactive ratemaking, was not addressing a section 206 complaint
The U.S. Court of Appeals for the D.C. Circuit said that, "the 'important differences' between section 205 and section 206 make it impossible to predict how the Third Circuit would have resolved a challenge to FERC’s modification of PJM’s auction-set capacity price under section 206."
The U.S. Court of Appeals said, "FERC’s argument wrongly assumes that the filed-rate doctrine categorically bars all backward-looking rate modifications. No doubt, the filed-rate doctrine generally forbids the retroactive modification of rates. Okla. Gas & Elec. Co., 11 F.4th at 829. But that is only a default rule because the doctrine does not operate independently of the 'interconnected statutory' provisions that undergird it. Id.; see E. Tex. Elec. Coop., Inc. v. FERC, 90 F.4th 579, 589 n.7 (D.C. Cir. 2024). If a filed rate is 'changed in [a] manner provided by the [Federal Power] Act,' the earlier rate is no longer 'binding upon the seller and the purchaser.' Nw. Pub. Serv. Co. v. Montana-Dakota Utils. Co., 181 F.2d 19, 22 (8th Cir. 1950), aff’d, 341 U.S. 246 (1951). That is no less true of retroactive rate changes."
The U.S. Court of Appeals cited several precedents under section 206(b) permitting "retroactive" rates
The U.S. Court of Appeals concluded that, "The Third Circuit’s decision rejecting FERC’s efforts to modify PJM’s auction process under section 205 simply did not resolve whether FERC might later use its section 206 authority to set aside the auction result. In reaching a different conclusion, FERC committed legal error."
The U.S. Court of Appeals vacated FERC's orders denying the OPC complaint and remanded the case to FERC
U.S. Court of Appeals for the D.C. Circuit No. 24-1353
ADVERTISEMENT Copyright 2026 EnergyChoiceMatters.com. Unauthorized copying, retransmission, or republication
prohibited. You are not permitted to copy any work or text of EnergyChoiceMatters.com without the separate and express written consent of EnergyChoiceMatters.com
January 13, 2026
Email This Story
Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW -- Account Executive (Commercial Retail Energy)
|
|
|
|
|