Skip to content
Foreclosure and Bankruptcy Lawyer Free Consultation in Astoria, NY
Menu
  • Property Tax
  • Judicial Foreclosure List
  • Wrongful Foreclosure
  • Judicial Foreclosure
  • Bankruptcy And Foreclosure
Menu

PSEG Energy Resources & Trade LLC v. Federal Energy Regulatory Commission (2011)

Posted on August 10, 2020August 11, 2020 by Robert Mayer

New England’s electricity market is structured as a “forward capacity market,” administered by ISO New England, Inc. and overseen by the Federal Energy Regulatory Commission (FERC). This means that rather than engaging in a traditional cost-based regulatory approach, New England sets utility rates by auction, in which electricity providers “purchase from generators options to buy quantities of energy three years in advance.” ISO New England manages the auction process, in which they set the initial prices that energy suppliers like PSEG Energy Resources & Trade LLC (PSEG) receive.

As Judge Garland described in his opinion for the majority, in the auction, suppliers would bid based on the capacity they would provide at the initial price. The amount of the bidding mutually descended until the ISO New England price and suppliers’ bids were equal at the minimum required level to maintain the reliability of the regional bulk electric system. However, the auction need not have reached this equilibrium: ISO New England imposed a price floor that closed the auction when that floor was met. To restore the price/capacity bid equilibrium, ISO New England used proration on both price and capacity.

In 2007, ISO New England submitted a new provision of their Proration Rule to FERC. Without a specific explanation, FERC approved the provision, which stated: “Any proration shall be subject to reliability review.” Because ISO New England interpreted the provision to mean that it could require a supplier to provide energy without capacity proration to meet minimum local electric needs—while also forcing the supplier to take the price proration—the supplier PSEG filed objections with FERC, challenging their approval of the auction results and their interpretation of the new proration provision. FERC rejected PSEG’s objection twice, but adopted the supplier’s position prospectively. PSEG appealed to the D.C. Circuit for review of FERC’s orders.

Judge Garland first addressed the provision interpretation issue. He applied a “Chevron-like” analysis, first considering de novo “whether the tariff unambiguously addresses the matter at issue.” As with Step One of Chevron, if the tariff’s language were clear, it would control. On the issue of clarity, FERC waffled. In handing down their own decisions to PSEG, they argued the text was clear, but on appeal, FERC conceded the tariff’s proration provision was ambiguous. Judge Garland agreed the provision was ambiguous, because, for example, it did not address how ISO New England reviewed “reliability” or what their next steps would be if there were a problem of meeting reliability. Judged Garland was especially concerned by FERC’s decision that the proration provision compelled the sanctity of the price floor.

Because FERC equivocated on the issue of the provision’s clarity, Judge Garland remanded to the agency, rather than proceeding to Step Two of the Chevron-like analysis. As FERC made their original decision on the assumption that the provision was clear, Judge Garland could not analyze whether FERC had reasonably interpreted an ambiguous provision. Judge Garland suggested FERC might reverse itself on remand, given their prior decision to reinterpret the proration provision prospectively. Judge Garland also remanded the matter on the grounds that FERC had not effectively responded to a number of PSEG’s legitimate objections.

Robert Mayer

Robert Mayer

Robert Mayer got the license to work as a lawyer in New-York in 2010. After graduating he worked in a non-governmental organization to the UN (United Nations), that specializes in studying the issue of population aging.Read more...

Recent Posts

  • 7 Best Online Bookkeeping Services in 2022
  • Possibility of using a Quitclaim Deed in NYC
  • Top 8 Best Bike Tours in New York City [My Experience]
  • How to Cash Out a Pre Foreclosure Home
  • Judicial Foreclosure Definition and Explanation

Foreclosure Help

  • 7 Best Online Bookkeeping Services in 2022
  • Possibility of using a Quitclaim Deed in NYC
  • Top 8 Best Bike Tours in New York City [My Experience]
  • How to Cash Out a Pre Foreclosure Home
  • Judicial Foreclosure Definition and Explanation

Foreclosure in Astoria, NY

  • About Robert Mayer
  • Bankruptcy And Foreclosure in NY | Can Bankruptcy Stop Foreclosure

This Website is for informational purposes only. The hiring of an attorney is an important decision that should not be based solely upon advertisements. Materials on the website do not, and are not intended to, constitute legal advice. Neither transmission nor receipt of such materials will create an attorney-client relationship between the sender and receiver. Users are advised not to take, or refrain from taking, any action based upon materials in this Website without consulting legal counsel.

Merrick Garland Project © 2021 | Privacy Policy | Built using WordPress and Responsive Blogily theme by Superb