Comment on Shelley Welton, Rethinking Grid Governance for the Climate Change Era

Date01 August 2022
AuthorCasey Roberts
by Casey Roberts
Casey Roberts is a Senior Attorney at the Sierra Club’s Environmental Law Program.
In Rethinking Grid Governance for the Climate Change
Era, Shelley Welton has incisively described the under-
explored institutional role of regional transmission
organizations (RTOs) in facilitating deca rbonization. As
an attorney who advocates within the RTO stakeholder
process, and before the Federal Energy Regulatory Com-
mission (FERC) and the federal courts, I se e rsthand how
the RTO processes for identifying and addressing emerg-
ing issues can succe ed or be derailed, and the limitations in
FERC’s ability to proactively set these processes and their
outcomes straight. I agree with Welton that RTOs can-
not be trusted to self-govern and that many factors mi litate
against treating them with a lighter hand tha n a run-of-
the-mill utility.¹ But I am more sanguine than Prof. Shelley
Welton that FERC has sucient ability to shape RTO pro-
cesses and outcomes in a manner that protects consumers
and advances decarbonization.
Second, while RTO voting structures unquestionably
favor incumbents, the broader political environment in
which RTOs operate can constrain their worst tendencies.
I describe some of these dynamics and sug gest ways that
states, consumer advocates, and public interest organiza-
tions can shape outcomes while deeper reforms are pursued.
For all of their deciencies, RTOs are a signicant
improvement over the prior holders of Federal Power Act
Section 205 rights—individua l utilities. Consumers have
an inadequate say in RTO decisionmaking processes, but
they have even less of a say in the decisions of a utility
outside of an RTO. And while RTOs may drag their heels
or erect roadblocks to innovative new technologies, it is
undisputable that a non-RTO vertically integrated utility
squelches nea rly all competition from such technologies,
unless the utility itself can develop them and add them to
its rate-base. While RTOs are a signicant improvement,
they present considerable untapped potential.
1. Shelley Welton, Rethinking Grid Governance for the Climate Change Era, 109
C. L. R. 209, 257 (2021).
I. FERC’s Ability to Shape RTO Tariffs
Is Substantial
Professor Welton notes that following the U.S. Court of
Appeals for the District of Columbia (D.C.) Circuit’s deci-
sion in NRG Power Marketing, FERC’s ability to modify
an RTO’s Section 205 ling has been signicantly con-
strained, leaving FERC without the ability to impose a
more just and reasonable alternative.² is limitation on
FERC’s authority also, of course, applies where a non-RTO
utility submits changes to its rates under Section 205,³ and
I think the evidence is mi xed as to whether the RTO struc-
ture further diminishes FERC’s authority.
It is true that FERC’s approval of an RTO’s Section
205 ling is sometimes heavily inuenced by the fact that
it was approved by a substantial portion of the RTO’s
membership. In this way, FERC could be understood
to be applying a lighter hand to RTO lings because of
the implicit vetting below. However, at other times, the
existenc e of the stakeholder pr ocess complicates an RTO’s
eort to get its way at FERC. As Professor Welton observes,
some controversial lings actually contravene stakeholder
preferences, which leaves the RTO with the unenviable
task of explaining why it has ignored these preferences.
More broadly, the stakeholder process usually provides an
opportunity for advocates to dissect a nd extract informa-
tion from the RTO about its preferred course of action.
2. Id. at 233-34 (citing NRG Power Mktg. v. FERC, 862 F.3d 108, 114 (D.C.
Cir. 2017)).
3. It is worth considering that FERC may actually have broader authority over
RTO rates than it does over bilateral contracts widely used outside of cen-
tralized RTO markets, given that application of the Mobile-Sierra doctrine
to the latter limits FERC to setting aside rates only if they are clearly con-
trary to the public interest. Tri-State Generation & Transmission Ass’n, 170
FERC ¶ 61,221, at PP 44-46 (2020) (reiterating FERC precedent that the
Mobile-Sierra standard applies only to individualized agreements negotiated
at arms-length, not to generally applicable rates).
4. Welton, supra note 1, at 255.
5. See, e.g., ISO New England, Inc., Order Rejecting Proposed Tari Re-
visions, 173 FERC ¶ 61,106, at P 49 (2020) (nding an ISO-NE rate
proposal unjust and unreasonable because the costs exceeded the benets
based on an impact assessment that ISO-NE had conducted at stakehold-
ers’ request).
Copyright © 2022 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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