Joseph Kelliher is principal of Joseph Kelliher Consulting, former chairman of the Federal Energy Regulatory Commission and former executive vice president of federal regulatory affairs for NextEra Energy.
One of the proposals advanced in the record of the PJM Interconnection governance proceeding at the Federal Energy Regultory Commission is recommendations by the Organization of PJM States, or OPSI, that both PJM and PJM transmission owners be required to make Federal Power Act Section 205 filings at OPSI’s behest. The rationale offered by the states is that “PJM’s governance structure and stakeholder process were developed for a different era.” It may be a different era, but it is still the same Federal Power Act.
In my opinion, these recommendations are not consistent with the Federal Power Act. Perhaps the best explanation why comes from then-Judge Stephen Breyer in Massachusetts Dept. of Public Utilities v. FERC. Future Justice Breyer explains the Federal Power Act provides two tracks to change a public utility tariff: Section 205 and Section 206.
Section 205 allows a public utility — and only a public utility — to file tariff changes that are subject to FERC review. Section 206 authorizes the Commission to change existing tariffs, either on its own motion or after complaint. Under Section 206, the Commission or complainant have the burden to provide existing practices as unjust and unreasonable or unduly discriminatory or preferential.
In Mass. DPU v. FERC, a state commission ordered the Western Massachusetts Electric Co., a FERC public utility, to make a Section 205 filing to change a rate-setting practice objectionable to the Massachusetts DPU. The public utility dutifully made the filing, but FERC rejected it because it held Section 205 “governs changes that the utility itself proposes, not those that a state regulator requires it to propose.” As Judge Breyer summarized the FERC rejection: “If Massachusetts objects to the rule, says FERC, it should file a complaint in accordance with [Section 206].” The court agreed with FERC.
The court noted “the net effect of accepting Massachusetts’ argument is to allow a state to do what FERC itself cannot, namely, to change an interstate rate practice that FERC has not found unreasonable.” That is exactly what OPSI is grasping for in its recommendations.
If PJM and PJM public utility transmission owners were to consent to share their Section 205 filing rights with the states, the result should be the same as in Mass. DPU v. FERC. The Commission should reject any such filings and invite states to file Section 206 complaints. If OPSI is asking that the Commission require PJM and the PJM public utility transmission owners to share their Section 205 filing rights with the states, that approach fails because the courts have repeatedly held FERC has no power to force public utilities to make Section 205 filings,[6] and FERC cannot delegate to the states more power than the Commission itself possesses. In fact, the Commission has no authority to delegate any of its Federal Power Act authority to states.
More than 20 times in its comments, OPSI bemoans that it lacks “a formal means of placing state-developed proposals before FERC in a form the Commission can accept.” But that is not true. The means exist: Section 206. I understand states are offended at being classified as complainants but that is their only status under the Federal Power Act when it comes to tariff changes.
The Mass. DPU v. FERC court was troubled by the prospect of allowing a state to sidestep its burden under Section 206 through the device of commanding a public utility to make a Section 205 over its objections, effectively seizing the Section 205 filing rights for the state. Allowing a state to require a public utility file a Section 205 tariff change is an end run around the Act. That was true in 1984 and remains true in 2026. OPSI seems to have the same objective of proposing tariff changes while discarding their inconvenient burden under Section 206.
The OPSI recommendations essentially exhume the approach rejected in Mass. DPU v. FERC forty years ago. The passage of time has not made this idea any more meritorious. OPSI desires that state commissions be able to “present[] their proposals to FERC on a level playing field with PJM and [Transmission Owners].” But that is simply not permissible under the Federal Power Act. The Act limits Section 205 filings to public utilities: PJM is a public utility, jurisdictional transmission owners are public utilities, state commissions plainly are not — they are complainants.
OPSI expresses frustration that retail regulators are unable to control wholesale costs that flow through to retail consumers. But there its grievance properly lies with the Commerce Clause, the Supremacy Clause and Supreme Court decisions tracing back 100 years, including judicial doctrines such as the filed rate doctrine, not the PJM Tariff or Operating Agreement.
It is telling that OPSI makes little effort to persuade the Commission that their recommendations are consistent with the Federal Power Act. In particular, it offers no argument its proposals are allowed by Section 205. Inexplicably, OPSI declares its recommendations are consistent, or at least not inconsistent, with Atlantic City Electric, pointing to a stray sentence in the decision, namely: “Of course, utilities may choose to voluntarily give up, by contract, some of their rate-filing freedom under section 205.” This attempt is at best slippery.
First, the only sharing of Section 205 rights discussed in Atlantic City Electric was the allocation of Section 205 rights between PJM, a public utility, and PJM public utility members. The court was not troubled at the sharing of Section 205 rights between public utilities, especially where one public utility would be operating the assets of other public utilities. That does not mean the court embraced the idea of sharing Section 205 rights with a preferred class of complainants.
Second, the quote is misrepresented as implying Atlantic City Electric applauds the notion of sharing Section 205 filing rights with state complainants. But that is not what the quote says. The quote does not refer to public utilities “giving up” filing rights, but only “some of their rate-filing freedom under section 205.” What “rate-filing freedom” was the court envisioning? Not the sharing of Section 205 filing rights, to be sure. It was a public utility relinquishing its right to make unilateral changes in rates for a time as part of a fixed rate contract.
In my view, the OPSI recommendations are squarely inconsistent with Atlantic City Electric. The central holding of Atlantic City Electric is that “the power to initiate rate changes [under Section 205] rests with the utility and cannot be appropriated by FERC.” That is true whether FERC seeks to appropriate a public utility’s Section 205 filing rights for itself or for the use of state complainants, as OPSI seeks. In harsh language the court concluded “FERC thereby eliminated the very thing that the statute was designed to protect — the ability of the utility owner to ‘set the rates it will charge prospective customers, and change them at will,’ subject to review by the Commission.”
The OPSI recommendations would eliminate the ability of PJM and its public utility transmission owner members to “set the rates it will charge” and “change them at will,” subject to Commission review. Instead, these public utilities may be forced to file Section 205 tariff changes they actively oppose and believe unjust and unreasonable at the behest of states.
Some go even further than OPSI, declaring that states should have direct Section 205 filing rights, rather than the right to sleeve their proposals through PJM and its public utility members. It is not clear whether proponents believe states currently have Section 205 or are instead calling for FERC to grant states this right. Both approaches fail, for the reasons discussed above. Only public utilities can file tariff changes under Section 205 and state commissions are not public utilities, and FERC cannot license states to make Section 205 filings if the Commission itself lacks that power, which has long been established.
OPSI points to other RTO tariff provisions that improperly shared Section 205 filing rights with regional state committees, implying that it must be lawful to share Section 205 filing rights if it has been done before. To my knowledge, none of these tariff provisions have been subject to judicial review, so their approval speaks only to the Commission’s desire for comity with the states, nothing more.
I come to this question as a repentant sinner seeking redemption, since I voted for the 2004 FERC order that improperly compelled SPP to make certain Section 205 filings at the request of the regional state committee. I voted more than 7,000 times during my FERC service, but this is one of the votes I most regret. The SPP order led to similar provisions in other regional transmission organization tariffs. These tariff provisions are subject to a Section 206 complaint seeking their removal as violative of Section 205. If FERC rejects the complaint, complainants could well prevail on judicial review.
I urge the Commission to reject the OPSI recommendations. Atlantic City Electric was the worst FERC court defeat in many years, but if the Commission were to adopt the OPSI recommendations I believe that defeat would be eclipsed. Moreover, any such defeat would open the door for Section 206 complaints to remove regional transmission organization tariff provisions that improvidently granted Section 205 rights to state complainants.
