09/28/2022 - Electricity Law Initiative

Electricity Law Initiative Files Brief Supporting Clean Energy in the Southeast

by Ari Peskoe

The Electricity Law Initiative filed an amicus brief supporting clean energy advocates’ challenge to a newly formed alliance among Southeastern utilities. Last year, the Federal Energy Regulatory Commission approved the so-called Southeast Energy Exchange Market (SEEM) that will allow utilities to trade energy with each other and their hand-picked trading partners. Last week, a coalition of clean energy advocates challenged the approval in a federal appeals court, arguing that FERC’s order is inconsistent with FERC’s regulations and policies.

The Electricity Law Initiative’s amicus brief provides context for the advocates’ arguments by explaining why FERC’s regulation of interstate transmission service is necessary to counteract utilities’ market power, highlighting the key principles underlying FERC’s transmission rules, and outlining how FERC’s approval of SEEM violates FERC’s transmission rules. The brief explains that 26 years ago FERC ordered utilities to provide “Open Access” transmission service in order to mitigate utilities’ systemic anti-competitive behavior. Its Open Access rules have been guided by two key requirements: comparability and transparency. FERC requires utilities to provide their customers and their own power wholesale market operations with comparable transmission service. To support new entry and fair markets, FERC has attempted to liberate transmission information from utility control by compelling them to share operational and planning data.

FERC’s approval of SEEM discards these key principles. SEEM provides the Southeast region with two tiers of transmission service and allows utilities to arbitrarily deny preferential access, even to block competitors. This two-tiered transmission service violates the comparability requirement because it preferences the utilities’ favored market participants with superior service. SEEM is also not transparent because it allows utilities to deny preferential access without any limits in the published tariff. FERC attempts to justify this illegal scheme by presuming that utilities will not take advantage of SEEM’s easy opportunities to act anti-competitively. This trust betrays FERC’s firmly established presumption that monopolist utilities will act in their own self-interest in absence of regulatory safeguards.