The Federal Energy Regulatory Commission (FERC) recently issued a Proposed Policy Statement on tariff waiver requests that will apply to both electric and natural gas companies. FERC intends to stop granting requests for retroactive waivers of tariff provisions, except if requests (1) can be couched as an exercise of FERC’s remedial authority under the Federal Power Act (FPA) or Natural Gas Act (NGA), or (2) are based on tariff provisions expressly permitting a FERC waiver.

FERC has adopted a short timeframe for comments on the Proposed Policy Statement, with initial comments due on June 4, 2020, and a reply comment deadline of June 11, 2020. This suggests that FERC intends to act quickly on this proposal.

The Proposed Policy Statement has the following key elements:

  • (1) FERC now takes the position that the statutory provisions underlying the filed rate doctrine and the prohibition on retroactive ratemaking also apply to non-rate terms and conditions. FERC had previously approved retroactive waivers of non-rate terms and conditions of tariffs suggesting that those doctrines may not be applicable.
  • (2) Filings for relief from actions or omissions before the date of filing should be filed as petitions for declaratory order or complaints, depending on whether the filing entity is the one that purportedly acted inconsistently with the relevant tariff. The filer must request that the Commission grant relief pursuant to Section 309 of the FPA or Section 16 of the NGA, which give FERC authority to grant remedial relief.
  • (3) FERC will apply its existing FPA four-part waiver analysis to both prospective waiver requests and requests for remedial relief. However, FERC proposes that petitioners seeking relief for their own tariff noncompliance would need to make a “stronger showing” under this analysis, and indicates that it will more closely scrutinize whether the requested relief will result in undesirable consequences.
  • (4) The four-part waiver analysis, which previously only applied to tariff waiver requests under the FPA, will also apply to requests for tariff waivers and remedial relief under the NGA.

The proposed policy appears designed to discourage requests that relate to past actions and activities, even if framed as requests for remedial relief. A higher burden would be imposed on entities seeking such relief, due to both the enhanced procedural requirements and the heightened scrutiny and skepticism that FERC will apparently afford such requests.

In addition, such requests for relief would also have to meet the standards set forth in FERC’s four-part waiver analysis, even though the Proposed Policy Statement distinguishes between such requests and prospective waiver requests. It seems likely that the outcome will be that fewer such requests are filed, particularly for matters involving relatively small dollar amounts where the cost of filing and potential litigation may well exceed the anticipated benefits.

Recognizing that this proposal represents a change from its past approach, FERC also offers suggestions to electric utilities and natural gas pipelines to modify their tariffs to facilitate tariff waivers without running afoul of FERC’s view of the filed rate doctrine and the prohibition on retroactive ratemaking. FERC suggests, as an example, a tariff provision could expressly state that failure to comply with deadlines may be waived by a FERC order.

For tariff waiver requests pending when FERC issues the final Policy Statement, FERC proposes to apply the final Policy Statement’s guidance. Where appropriate, FERC suggests that applicants could refile their waiver requests to conform to the final Policy Statement.