How to understand Invenergy’s lawsuits against National Grid and ISO New England
There are two, newly filed cases pertaining to Invenergy now pending at the Federal Energy Regulatory Commission (FERC) in Washington, DC: ER18-349 and EL 18-31. The central issue in both cases relates to who will pay several hundred million dollars to build and maintain the interconnection lines between Invenergy’s proposed power plant and the broader electricity grid run by ISO-New England. Under the ISO Tariff, Invenergy is responsible for these expenses; but in the FERC lawsuits, Invenergy is trying to get these costs shifted to New England ratepayers.
The Energy Facility Siting Board (EFSB) has scheduled a so-called “Show-Cause Hearing” for Tuesday, January 30, 2018, at which time Invenergy will be required to give any reasonable reason why the EFSB docket should not be suspended until those FERC lawsuits have been decided.
What is really going on with these two lawsuits that Invenergy is involved with at FERC?
Invenergy is genuinely, honestly committed to pursuing these lawsuits at FERC. Invenergy has hired a sophisticated international law firm to represent it. Crowell & Moring LLP has over 500 lawyers, offices in Washington, Los Angeles, and London, and represents multinational corporations like DuPont, Honeywell, and United Technologies. The legal papers that Invenergy has filed in the two FERC lawsuits are excellent, superb pieces of legal work. Hiring a big law firm to produce hundreds of pages of highly sophisticated legal pleadings is really expensive. One thing we can be sure of is that Invenergy genuinely, honestly means to pursue these cases at FERC, and is willing to spend big bucks to do so.
What is Invenergy arguing at FERC?
Invenergy is making two main arguments at FERC. First, Invenergy argues that long-standing FERC policy is for ratepayers, not power plant owners, to have to pay these interconnection costs.
The second argument pertains to how other grid operators in other parts of the country (where Invenergy has power plants) allocate these same interconnection costs. Our grid operator here in New England is ISO-New England. Invenergy has power plants regulated by the Midcontinent ISO (MISO) and the PJM Interconnection LLC (PJM). Both MISO and PJM spread those interconnection costs that Invenergy is litigating about to ratepayers.
Both of Invenergy’s legal arguments are correct as far as they go: The way ISO-NE allocates these interconnection costs to developers (not ratepayers) is against FERC policy. And if Invenergy’s proposed Burrillville power plant were regulated by the MISO or PJM tariff, Invenergy would not have to pay the disputed costs.
So are you saying that Invenergy is likely to win at FERC?
No, Invenergy is very likely to lose at FERC. Although both of Invenergy’s arguments are correct as far as they go, Invenergy arguments are still likely to fail at FERC. First of all, tariffs between different ISO/RTOs differ in many respects; FERC allows that. Second, every other generator in New England has had to pay these costs (according to the provisions of the ISO-NE tariff), and it would create a deeply uneven playing field if Invenergy got away with not paying them. Moreover, the New England states and public officials from all over New England have intervened in the FERC lawsuits to oppose Invenergy – because they do not want their ratepayers to have to pay these costs.
In short, while Invenergy’s legal arguments are correct that the MISO and PJM tariffs are different than the ISO-NE tariff, FERC allows different tariffs in different regions. Over the years, I have seen the argument “It’s done differently at PJM” used often at ISO-NE; I have never seen it work.
So what will the EFSB do at the show-cause hearing on January 30?
The EFSB will probably stay the EFSB Final Hearing, pending the outcome of the two cases at FERC. There is a really simple reason for this: the members of the EFSB honestly, genuinely want to know the results of the two FERC cases before proceeding with the Invenergy case….