Environmentalists Challenges Utilities’ Financing Rules for Electrical Upgrades

A Washington, D.C.-based environmental group appeared to make progress last month in its court challenge against Federal Energy Regulatory Commission rules on how utility companies finance their upgrades to the electrical grid.

Current rules allow some utilities to provide cash for the upgrades and to collect interest on their investments.

The American Clean Power Association calls the funding system a conflict of interest, particularly when utilities that transmit electricity also own electrical generators. The nonprofit group’s lawsuit says the financing method is anti-competitive and a potential violation of antitrust laws.

The Federal Energy Regulatory Commission argues that its rules merely allow utilities to make profits on their upgrades, like any private business.

During oral arguments before the D.C. Circuit Court of Appeals, Judge Patricia Millett cast doubt on whether the federal agency properly evaluated its rules for anti-competitive business practices.

She questioned whether companies that generate electricity but do not transmit it to customers are placed at an unfair disadvantage. Millett said the advantage of utilities that generate and transmit electricity could be “discriminatory” against competitors that perform only one function.

At issue is the funding system used by Midcontinent Independent System Operator's portion of the grid, which operates throughout much of the middle United States.

The Federal Energy Regulatory Commission is in the process of reforming its regulations on energy transmission. The American Clean Power Association’s lawsuit appears to be an effort to add its voice to the reforms.

The association has been an advocacy group for electrical consumers. Its website says it seeks to?“transform the U.S. power grid to a low-cost, reliable and renewable power system.”

The case is American Clean Power Assoc v. FERC, case number 20-1453, in the U.S. Court of Appeals for the District of Columbia Circuit.

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