FERC issued an order on October 30 rejecting ISO New England’s proposed suite of “Energy Security Improvements” or “ESI.” Approval of ESI would have imposed enormous charges on New England consumers in return for dubious — if any — regional reliability/fuel security benefits. ISO New England filed the proposal in response to a FERC directive to adopt a market mechanism to address regional fuel security concerns.

Under ESI, New England ratepayers would have paid the region’s generators up to an additional $257 million dollars a year for three new day-ahead products, based on the hope that those day-ahead payments would encourage generators to procure fuel supplies months in advance. Our clients, Massachusetts Municipal Wholesale Electric Company, New Hampshire Electric Cooperative and Connecticut Municipal Electric Energy Cooperative, argued that ESI allowed insufficient time for the generators to purchase needed supplies. And, worse, the proposal was voluntary—meaning that generators could decide not to participate at times when the system need was most acute.

Spiegel attorneys Scott Strauss, Jeff Schwarz, Latif Nurani and Amber Martin Stone represented the three organizations in the case.

Presidential candidate Biden and Congress are focused on solutions to the climate crisis. Billions of dollars in new investment will be needed. But money will not be enough. In our op-ed, “FERC’s Capacity Markets Limit Clean Energy and Cost Billions; It’s Time for Congress to Act,” published August 27, 2020, in Utility Dive, we argue that the fate of US efforts to transition to a clean energy economy depends on federal and state cooperation. But the federal government, through the actions of the Federal Energy Regulatory Commission, is actively undermining state programs. If not reversed, consumers will bear billions in unnecessary costs, as older, less environmentally-friendly plants remain online, contrary to state and citizen preferences. A recent House report recommends a fix to the problem, which should be pursued.

Bogorad, Pomper, Strauss Highlighted

Spiegel & McDiarmid LLP thanks our clients for their continued support and confidence as reflected in the recognition the firm has recently received from Chambers USA.

For the seventh consecutive year, Chambers & Partners has recognized Spiegel & McDiarmid LLP as one of the nation’s leading law firms in the area of “Energy: Electricity (Regulatory & Litigation) — Nationwide.” Chambers also recognizes Cindy Bogorad, David Pomper, and Scott Strauss individually as among the top lawyers in that category. Chambers ranks “the world’s best lawyers and law firms based on in-depth, objective research” and extensive interviews with clients and colleagues. Their guide is considered the premier survey of attorneys and law firms in the country.  We are gratified by the comments we received from clients and others as reported in Chambers USA.  You may read the full review on Chambers’s website.

Spiegel partner David Pomper’s article, “How FERC’s Peers Estimate Equity Costs: A Deep Dive,” appears in the December 2019 issue of Public Utilities Fortnightly.  It went to press before FERC issued its Opinion No. 569, which accords with the article’s observation that earnings/book ratios do not represent the capital attraction cost of equity and should not be used to set allowed returns.  The article also provides insights on how FERC’s peers estimate the market-wide rate of return on equity.

Tim Lay spoke on panels at the annual conferences of the National Association of Telecommunications Officers and Advisors (NATOA) in Tampa, and the Texas Association of Telecommunications Officers and Advisors (TATOA) in Corpus Christi.

The topic of the NATOA conference panel was “Franchise Fees and ROW Management: What’s Left After the FCC’s New Rules?”  The topic of the TATOA panel was “Federal Update: FCC, Litigation, and Legislation Impacting Local Governments and the Communications Industry.”

It is with great sadness that we announce the death of our former partner, Daniel Davidson, who spent forty-five years of his legal career with Spiegel & McDiarmid. We remember Dan as an invaluable colleague and wonderful friend, who had a unique gift for crafting the right legal argument, locating the most apt case, and recommending the best mystery novels.

Dan was a 1959 graduate of the Columbia School of Law, where he was a member of the Law Review. After graduation, he clerked for two Second Circuit Judges: Harold Medina and Learned Hand.

Prior to his career as an energy lawyer, Dan worked in New York City, and for several years thereafter, at the U. S. State Department, where he was a staff member at the National Security Council and served as a delegate to the Paris Peace Talks to end the Vietnam War. Outside of the office, Dan was a longtime contributor of op-eds and book reviews to the New York Times, Atlantic, Financial Times, Economist and the Washington Post.

Our California clients remember Dan for his role in the case averting an exponential (and for some clients potentially catastrophic) proposed transmission rate increase by PG&E against the Western Area Power Administration and for litigation over access to transmission service from the Pacific Northwest that was the first successful enforcement of the antitrust conditions in a nuclear license.

More generally, Dan was instrumental in a range of complex matters. Perhaps most noteworthy was his and the firm’s success in the carbon fiber industry price fixing and qui tam litigation.

Dan died peacefully at home, with his wife Susan and his daughter Jill beside him. Our hearts are with them at this difficult time.  According to his wishes, no services will be held, but there will be a memorial gathering at a later date.

Throughout his career of law and public service, Dan was guided by a strong commitment to fairness and justice.  We will miss him greatly.

Spiegel partners Jim Horwood and Tim Lay both made presentations at the Alliance for Community Media 2019 Annual Conference in Portland, Oregon on July 10.  Tim spoke at the session on “Federal Policy Developments: What You Should Know and Do.”  Jim spoke at the session on “State Policy Developments: What Are Good and Bad Developments to Monitor.”

Jim also gave a report on the “Legal Report on Court and FCC Decisions and Activities During 2018–2019” at the Alliance for Communications Democracy 2019 Annual Meeting on July 11. A copy of the handout is linked below.

David Pomper responded to a recent article in the Public Utilities Fortnightly which faulted “successive customer complaints against the same ROE.”*  In his letter to the editor in Fortnightly’s June issue, David provides some background on the 1988 Regulatory Fairness Act and its application of symmetry between utility rate increase filings under Federal Power Act section 205 and complaints requesting rate decreases under the companion section 206.  He concludes that the Federal Energy Regulatory Commission “should focus on a merits comparison between the rates that customers pay and study-period costs.”

You can read Mr. Pomper’s letter at the link below.

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* Carmen Gentile, Time to Put the Kibosh on Pancaking Section 206 Complaints: FERC Must Act, Pub. Utils. Fortnightly, Apr. 2019, at 42. Link (password required).

On May 1, 2019, the U.S. District Court for the District of Columbia rejected the President’s motion to dismiss a suit brought by members of Congress alleging that the President has violated the Foreign Emolument Clause of the Constitution.  Spiegel attorneys Katharine Mapes and Jeffrey Bayne represented amici curiae Separation of Powers Scholars.  The amici brief, which can be read at the link below, argued that adjudication of this case is consistent with the separation of powers set forth in the Constitution.  The District Court cited to Separation of Powers Scholars’ amici brief in rejecting the President’s argument that the court should exercise “extreme equitable restraint” and decline to hear this case.  The court agreed with amici curiae Separation of Powers Scholars that this case would not distract the President from his official duties, because compliance with the Foreign Emolument Clause is part of a President’s official duties.

On April 23, 2019, the United States Court of Appeals for the DC Circuit affirmed the Federal Aviation Administration’s decision denying an administrative complaint brought by the Air Transport Association of America d/b/a Airlines for America (A4A) against the Port of Portland.  At issue was whether the Port, which owns and operates the Portland International Airport, is violating federal law when paying certain utility charges imposed by the City of Portland as part of the Airport’s operating costs.

The Airport sits within City limits and receives water and sewer services from the City.  The Airport and City are independent entities.  The dispute arose when the City began imposing separate line item charges as part of its combined sewer/stormwater/water bill to cover the cost of managing stormwater on public property throughout the City, and the cost of participating in the environmental investigation and cleanup of a Superfund site on the banks of the Willamette River.  These costs are allocated by formula to all City water and sewer utility ratepayers, including the Port as the Airport’s owner.

A4A argued that airport revenues could not be used to pay for the disputed utility charges because the charges are being imposed to pay for things that are not directly or substantially related to PDX, or for which PDX receives no value, in violation of the federal airport revenue use restrictions.  Alternatively, the airlines argued that the disputed utility charges are an impermissible tax or fee on air transportation, in violation of the federal Anti-Head Tax Act.

The Court held that FAA correctly determined that the disputed components of the utility fees were imposed to recover general costs of the City utility, and, as calculated and assessed uniformly to all ratepayers based on a common cost allocation method, are operating costs of the Airport.  The Court explicitly rejected the notion that operating costs of an airport must be directly and substantially related to the air transportation of passengers or property.  The Court likewise rejected A4A’s argument that, under federal law, airport operating costs must reflect the value of services and facilities provided to the airport.  Finally, the Court rejected the notion that the disputed charges were impermissible taxes or fees on air transportation.

Spiegel partners Pablo Nüesch and Peter Hopkins represented the Port of Portland before FAA and the Court of Appeals.

FAA’s Final Agency Decision can be found here, and the Court’s decision denying the petition for review here.

In Owensboro Municipal Utilities v. Louisville Gas & Electric Co. and Kentucky Utilities Co., 166 FERC ¶ 61,131 (Feb. 21, 2019), Spiegel & McDiarmid LLP successfully enforced an obligation worth about half a million dollars each month to its client, Owensboro Municipal Utilities (“Owensboro”).

In 2006, Louisville Gas & Electric and Kentucky Utilities (“LG&E/KU”) were allowed to leave what is now the Midcontinent Independent System Operator (“MISO”), on the condition that they shield their on-system transmission customers, such as Owensboro, from having to pay an extra (“pancaked”) transmission charge to move power over the resulting MISO-LG&E/KU border.  LG&E/KU complied with that condition by entering into a contract and rate schedule under which, among other things, it reimburses Owensboro for transmission access charges incurred to bring power from within MISO to that border.  (In ongoing proceedings in a different docket, LG&E/KU are seeking to terminate that reimbursement obligation; Owensboro and other Kentucky Municipals maintain that it remains in the public interest.)  With the impending retirement of its local coal-fired power plant, Owensboro determined it would need to procure replacement power supply from outside LG&E/KU and a firm transmission path to bring that power to the LG&E/KU border.  Through parallel procurement processes, it purchased firm power from MISO member Big Rivers Electric Cooperative, and reserved a 115 MW firm path from within MISO to the MISO-LG&E/KU border.  But when Owensboro submitted invoices to LG&E/KU requesting reimbursement for MISO’s export transmission access charges, LG&E/KU denied reimbursement, claiming that Owensboro didn’t need power from within MISO and had reserved the export path before its contract with Big Rivers was signed.  Through Spiegel & McDiarmid, Owensboro filed a complaint seeking to enforce LG&E/KU’s reimbursement obligation.  FERC granted the complaint, ordered LG&E/KU to reimburse Owensboro’s charges for so long as the reimbursement tariff remains on file with FERC, and ordered refunds with interest for the twelve months of previously withheld reimbursements.  The refunds are expected to exceed $5.5 million.

Spiegel & McDiarmid LLP is pleased to announce that Latif M. Nurani  has become a Partner in the firm.  Latif has been with Spiegel & McDiarmid since 2011.

Latif’s practice focuses on regulatory and policy issues related to electric reliability, market design and transmission rates.

He represents municipal utilities, joint action agencies, and state agencies before the Federal Energy Regulatory Commission and federal courts.  He also advises clients on compliance with the North American Electric Reliability Corporation (“NERC”) electric reliability standards and cybersecurity standards.

A graduate of the Columbia University School of Law, Latif is admitted to the bars of the District of Columbia and the State of New York.  You can read more about his practice and background here.