Court scraps last-minute FERC rule change in largest power market

By Niina H. Farah, Zach Bright | 03/14/2024 07:11 AM EDT

Some East Coast residents could end up with higher electricity bills after a federal appeals court said grid operator PJM should not have rerun a capacity auction.

PJM Interconnection's control room is pictured in Pennsylvania.

Grid operators with PJM Interconnection monitor electricity use across more than a dozen states. PJM

The Federal Energy Regulatory Commission improperly allowed the nation’s largest power market to retroactively change the rules of a capacity auction, an appeals court ruled Tuesday.

The rule change aimed to avoid a spike in electricity prices, after power producers initially bid in PJM Interconnection’s auction for the energy needs of the Delmarva Peninsula, which includes Delaware, Maryland and Virginia. FERC approved PJM’s request to rerun the auction under amended rules, resulting in lower prices.

But the 3rd U.S. Circuit Court of Appeals found that FERC acted outside its authority under the Federal Power Act when it approved that “tariff amendment.” The court’s decision vacates the FERC order for the auction, which was held in 2022 for the region’s 2024 and 2025 energy needs.


“The petitioners contend that FERC’s orders violate the filed rate doctrine, which forbids retroactive rates. We agree. We will grant the petitions and vacate the orders in relevant part,” Chief Judge Michael Chagares wrote in the opinion for the court.