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Energy Litigation

Kaye Scholer’s energy litigation practice handles a variety of complex proceedings across the full spectrum of the energy landscape. We appear before the Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission (NRC), state utility commissions, state and federal courts, as well as arbitral tribunals.

Our clients include state public utility commissions, utilities, renewable generation developers, investors, and design, engineering, and manufacturing companies.  Clients turn to us because we know the industry – offshore wind, wholesale and retail electric energy, transmission and distribution, demand response, energy efficiency, renewable energy, nuclear power, capital-intensive construction projects, and oil & gas – and because we recommend innovative strategies to solve complex problems.  For example:

  • While growing concerns by many states and utilities mounted as disposal sites for low-level radioactive waste dwindled, we acted on behalf of our client to create the Atlantic Interstate Low-Level Radioactive Waste Management Compact, which ensures that Connecticut nuclear power plants will always be able to dispose of their low-level radioactive waste.
  • When FERC decided New England needed a new capacity market design, we requested and received an unprecedented oral argument before the FERC Commissioners and then spear-headed the negotiations among more than 120 parties that produced the Forward Capacity Market.

  • When damaging emails and public perception threatened a utility’s ability to recover its costs for a first-of-its-kind-at-this-size, uniquely clean integrated gasification generation facility, we developed a dual-track strategy that focused on explaining the core engineering issues to non-engineers while identifying opportunities to develop the record for appeal, which positioned our client to reach a fair settlement that will facilitate 30 years or more of clean, reliable energy for its customers.

  • In response to soaring retail electric prices in Maryland after deregulation, we performed a comprehensive analysis of electric restructuring that considered others states’ experiences with deregulation as well as relevant incentives, costs, and benefits and then identified steps Maryland could take within the confines of a deregulated market to ensure reliability and the reasonableness of customers’ electric energy costs.

Electric Markets and Regulation

Our experience spans ratemaking’s regulatory spectrum, from cost-of-service to competitive markets.  We represent clients in electric market design and standard rate cases, complaint proceedings, rulemakings, investigations, and settlements before FERC and state regulatory commissions, and appellate matters arising out of those administrative actions. 

Electricity regulation always involves navigating a broad and complex matrix of issues.  We bring to our clients the depth and breadth of our electric industry experience, as well as knowledge of the administrative rules and practice, precedent and regulations of FERC and other state regulatory agencies.  Our experience includes:

  • Ground-up competitive market design and wholesale power market rules for energy, capacity and ancillary services markets

  • Cost-of-service rates and “incentive” treatments for transmission investment

  • Cost-of-service rates and performance terms for “reliability-must-run” generation

  • Investigations and enforcement actions, addressing allegations of tariff violations and fraud

  • Contract disputes

  • Complex “prudence” proceedings involving the construction or decommissioning of large power plants

We counsel thoughtful strategies to avoid litigation – and, if litigation cannot be avoided, we assist our clients to develop decisive litigation strategies.  Our knowledge of electric markets and regulation enables us explain complex concepts clearly and persuasively, which is especially important in administrative litigations decided solely on the papers.  For instance, we recently prevailed in FERC proceedings where we argued that a proposed remedy to address alleged monopsony power would actually prevent new entrants in the market from offering a lower, competitive price.  In line with Kaye Scholer’s long tradition of courtroom advocacy, when the stakes are high, we excel in trial-type administrative litigations before FERC and state commissions.   

Representative Matters

  • Represented the Connecticut Public Utilities Regulatory Authority (PURA, formerly the Department of Public Utility Control) in FERC proceedings related to the New England capacity market (i.e., the Forward Capacity Market (FCM)), spanning all matters related to the design of that market including the development and implementation of new and modified market rules.  Since FERC approved the new FCM design in 2006, our representation has continued through numerous proceedings at FERC including petitions, complaints, and “paper” hearing proceedings to establish and reform the market rules.  These proceedings have involved multifaceted issues such as federal-state jurisdictional boundaries, resource adequacy and reliability, fraud, competition, supply-side market power mitigation, reliability-must-run compensation, interconnection queue reforms and performance metrics.  We presently represent the PURA before the US Court of Appeals for the District of Columbia Circuit in proceedings to review FERC’s orders changing significant supply-side market power rules necessary to ensure the capacity market remains competitive.

  • Represented the Maryland Public Service Commission in various matters involving the PJM Interconnection Reliability Pricing Model (RPM) capacity market, most recently opposing a second round of aggressive rule changes presented as buyer-side mitigation rules that are intended to block new generation plants that a state has found to be needed to assure reliability.  We currently represent the Commission in appellate proceedings before the US Court of Appeals for the Third Circuit to review FERC’s orders modifying the first round of buyer-side mitigation rule changes.  We also initiated complaint proceedings at FERC to challenge the reasonableness of excessive capacity charges burdening customers during the transition to the RPM, and have successfully opposed unreasonable proposals to increase key RPM parameters such as the “Cost of New Entry” that have immediate and substantial impacts on capacity rates.

  • Represented the New England Governors (pro bono) in developing a proposal to form a regional state committee for the New England states that would provide a forum for and better representation of states’ interests in wholesale electricity market matters.  After extensive negotiations with stakeholders, FERC approved tariff revisions authorizing the New England States Committee on Electricity (NESCOE) to be funded through the grid operator, ISO New England.

  • Represented Duke Energy Indiana before the Indiana Utility Regulatory Commission in a complex litigation defending allegations of imprudence, gross mismanagement, fraud and concealment in the design, engineering and construction of a $3 billion integrated gasification combined cycle plant.

  • Initiated complaint proceedings at FERC on behalf of the Maryland Public Service Commission to challenge discriminatory, preferential energy market rules exempting certain electric generation plants from offer mitigation.  FERC agreed and eliminated the mitigation exemptions, which the market monitor estimated had been costing the state’s customers more than $80 million annually.

  • Negotiated settlements on behalf of the Connecticut Public Utilities Regulatory Authority in several FERC settlement proceedings to establish cost-of-service rates for must-run electric generators operating to ensure grid reliability.  FERC approved our proposed settlements, reducing costs that electric customers would have otherwise paid by more than $100 million.

  • Represented the Connecticut Public Utilities Regulatory Authority in FERC proceedings to set transmission providers’ electric transmission rates, including consideration of “incentive adders” and preferential rate treatments for new transmission investments.

  • Acted as special counsel to the Delaware State Senate Energy and Transit Committee to examine witnesses at a two-day Committee hearing and prepare a draft report for the Committee on “Affordable, Environmentally Friendly Energy with a Detailed Analysis of the Proposed Bluewater Power Purchase Agreement.”  We reviewed the procedures that the Delaware Public Service Commission used to assess a proposed power purchase agreement for offshore wind generation, an assessment of compliance with state statutes, an analysis of the costs and benefits of the proposed power purchase agreement with Bluewater Wind, and evaluation of alternatives and a path forward.

  • Acted as special Counsel to the former Connecticut Department of Public Utility Control to evaluate wholesale electric utility deregulation options, including the development of merchant power producers, divestiture of investor-owned generating assets, and creation of market administration mechanisms.  This effort resulted in legislative proposals that ultimately led to retail deregulation in the spring of 1998.

  • Examined, for the Maryland Public Service Commission, the outcome of the State’s electric deregulation process, prepared an analysis of other states’ electric industry restructuring experience and steps taken to address problems with restructured markets, and recommended steps Maryland could take to assure reliability while ensuring the reasonableness of customers’ electric energy costs.  The investigation also produced a settlement with a utility that the Governor estimated created $2 billion in customer benefits, including termination of one utility customers’ financial obligations for decommissioning a nuclear generation plant.

  • Investigated Maryland’s retail default standard offer service auctions for the Maryland Public Service Commission to assess whether those auctions had been compromised.  Our investigation included a comprehensive review of bid data, the auction monitor’s reports, and other confidential documents and interviews with commission staff and consultants to determine whether auction participants had violated state or federal antitrust laws, codes of conduct, or other applicable laws and regulations.

  • Represented the California Public Utility Commission’s independent management auditor in the 2001 review of Pacific Gas & Electric as part of the CPUC’s evaluation of possible rate relief for PG&E.  This representation included assisting the state auditor in preparing testimony before the California Senate Energy Committee and before the CPUC.

  • Represented Commonwealth Edison in proceedings before the Illinois Commerce Commission relating to restructuring of the electric industry in Illinois and the impact of those changes on charges for nuclear power plant decommissioning. We also represented Public Service Gas and Electric Company in similar proceedings before the New Jersey Board of Public Utilities.

  • Represented the Mt. Pleasant Solar Cooperative Association (pro bono), an association of District of Columbia solar generation advocates, on a wide variety of legislative and regulatory initiatives and assisted to resolve hurdles encountered with solar interconnections and metering.

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