Will FERC Bar Retail Customers From Electricity Cases?

Should retail electricity customers be barred from bringing cases before the Federal Energy Regulatory Commission, a decades-long practice? A FERC administrative law judge, Carmen Citron, last month recommended to the commission that it abandon its long-standing practice and deny retail customers standing before the agency.

Cintron’s mid-October recommendation came in a case involving an Arkansas lawyer, school teacher and activist (ER07-1069-006), Martha Peine of Eureka Springs, Ark. She challenged expenses AEP subsidiary Southwester Electric Power Co. charged to consumers in lobbying for a new interstate power line. She argued at FERC that SWEPCO had stuck customers with some $92,000 in expenses that were improper. Her filing was under Section 205 of the Federal Power Act (FPA).

FERC ruled that Peine’s petition should be heard by an ALJ, and assigned the case to Citron, a veteran judge in FERC proceedings. The FERC staff argued that Peine’s petition was valid, noting that the FPA does “not preclude an individual ratepayer from participating in a commission hearing.” AEP disagreed, arguing that such complaints by retail customers “threatens judicial economy, creates rate uncertainty, and increases other customers’ rates.”

Cintron bought AEP’s argument. In a petition to the commission, she argued that FERC ought not to hear complaints from retail customers in the future. “Retail ratepayers,” she said, “by definition do not purchase wholesale electricity – they purchase retail electricity. Thus, retail ratepayers cannot have standing to file a section 205 complaint.” Cintron said continuing to allow retail customers to participate in FERC proceedings would not promote “efficiency. As AEP asserts, complaints by individual retail ratepayers cost time and money.”

Cintron’s argument to FERC drew a swift and pointed response from large industrial and commercial electric power consumers, long participants in FERC cases. The Electricity Consumers Resource Council (Elcon), the Washington, D.C., lobbying group for big electricity consumers – joined by a long list of industrial and commercial lobbying groups – challenged Cintron’s reasoning as flipping “the fundamental purpose of the FPA on its head.”

Elcon asserted, “The purpose of the FPA is not to protect utilities from the burden of responding to consumers; rather, as the Supreme Court and other courts have recognized, it is ‘to protect power consumers against excessive prices.’”

The question of whether FERC should continue to grant standing to retail customers comes in the context of the U.S. Supreme Court’s deliberation on whether FERC’s demand response policy, in Order No. 745, draws a correct distinction between retail and wholesale transactions. A lower court held that the order was invalid as it impinged on state regulatory powers over retail transactions. The government argued that the FERC order big-footed state authority. FERC has wrestled with the distinction between state retail authority and federal wholesale authority for at least 30 years.

Whether retail customers can continue their historic right to access to FERC also has political implications for the commission. In recent months, anti-natural gas activists have staged demonstrations at commission meetings, including interrupting proceedings (resulting in guard-escorted exits from FERC’s D.C. headquarters). The protesters have argued, often at high volume, that FERC cares only for the interests of big energy companies, and not those of people affected by the agency’s actions.

The commission has repeatedly said, as it opens its monthly public meetings, that it will consider arguments and protests to its activities from anybody, through normal FERC proceedings, including filings. Should the commission adopt Cintron’s recommendations, those statements will ring administratively and politically hollow.