Section 205 of the Federal Power Act: State Governments Are Not Eligible to File
In the PJM Interconnection governance proceedings, OPSI proposed requiring PJM and its transmission owners to submit Section 205 filings of the Federal Power Act as directed by state governments. Former FERC Chairman Joseph Kelliher believes this proposal violates the law, as the court in Mass. DPU v. FERC established that the Section 205 filing right is exclusive to utilities, and state governments should express their concerns through the Section 206 complaint procedure.
Joseph Kelliher is the principal of Joseph Kelliher Consulting and a former chairman of the Federal Energy Regulatory Commission (FERC) and former executive vice president of federal regulatory affairs at NextEra Energy.
In the record of the PJM Interconnection governance proceeding, one proposal made by the Organization of PJM States, Inc. (OPSI) would require PJM and its transmission ownersto file Federal Power Act section 205 filings at the direction of OPSI. The states' rationale is that "PJM's governance structure and stakeholder process were designed for a different era." Perhaps the times are different, but the Federal Power Act remains the same.
In my view, these proposals are inconsistent with the Federal Power Act. Perhaps the best explanation comes from then-Judge Stephen Breyer inMassachusetts Dept. of Public Utilities v. FERC. The future Justice Breyer explained that the Federal Power Act provides two paths for changing a utility's electric rate: sections 205 and 206.
Section 205 allows utilities—and only utilities—to submit rate changes for FERC review. Section 206 authorizes the Commission to change existing rates, on its own motion or upon complaint. Under section 206, the Commission or the complainant bears the burden of proving that an existing practice is unjust, unreasonable, unduly discriminatory, or preferential.
In Mass. DPU v. FERC, a state commission ordered Western Massachusetts Electric Company, a FERC-jurisdictional utility, to file a section 205 filing to change a pricing practice the Massachusetts DPU opposed. The utility did so, but FERC dismissed the filing because FERC found that section 205 "governs changes proposed by the utility itself, not changes that a state regulatory agency has ordered the utility to propose." Judge Breyer summarized FERC's dismissal: "If Massachusetts objected to the rule, FERC said, it should file a complaint under [section 206]." The court agreed with FERC.
The court noted that "the net effect of accepting Massachusetts' argument would be to permit a State to do what FERC itself could not do, namely, to change an interstate rate practice that FERC had not found to be unjust and unreasonable." That is precisely what OPSI seeks to accomplish in its proposal.
If PJM and the PJM utility transmission owners agreed to share their section 205 filing rights with the states, the result should be the same as in Mass. DPU v. FERC. The Commission should dismiss any such filing and invite the states to file a section 206 complaint. If OPSI asks the Commission to compel PJM and the PJM utility transmission owners to share their section 205 filing rights with the states, that approach would also fail becausecourts have repeatedly held that FERC has no authority tocompel a utility to make a section 205 filing,[6]and FERC cannot grant the states authority it does not itself possess. Indeed, the Commissionhas no authority to delegate any of its Federal Power Act authority to the states.。
OPSI complains more than 20 times in its comments that it lacks "a path to formally submit state-developed proposals to FERC in a form acceptable to the Commission." But that is not true. A path exists: section 206. I understand the states' frustration at being classified as complainants, but that is their only status under the Federal Power Act when it comes to rate changes.
The Mass. DPU v. FERC court was troubled by the prospect of allowing states to circumvent their section 206 burden by ordering a utility to file a section 205 filing over its objection, effectively seizing the utility's section 205 filing right. Allowing states to require utilities to file section 205 rate changes would be an end run around the Act. That was true in 1984, and it remains true in 2026. OPSI appears to harbor the same goal: proposing rate changes while discarding its inconvenient burden under section 206.
OPSI's proposal essentially resurrects the approach rejected forty years ago in Mass. DPU v. FERC. The passage of time has not made the idea any more meritorious. OPSI wants state commissions to be able to "submit their proposals to FERC on a level playing field with PJM and the [transmission owners]." But that is simply not permitted under the Federal Power Act. The Act limits section 205 filings to utilities: PJM is a utility, the jurisdictional transmission owners are utilities, and state commissions are plainly not—they are complainants.
OPSI expresses frustration that retail regulators cannot control the wholesale costs passed through to retail consumers. But its grievance should be directed at the Commerce Clause, the Supremacy Clause, and Supreme Court decisions dating back a century, including judicial doctrines such as the filed rate doctrine, not at the PJM tariff or operating agreement.
Notably, OPSI makes little effort to persuade the Commission that its proposal is consistent with the Federal Power Act. In particular, it offers no argument that its proposal is permitted by section 205. Curiously, OPSI declares that its proposal is consistent with, or at least not in conflict with, Atlantic City Electric, quoting a sentence from the decision: "Of course, a utility may voluntarily contract away some of its section 205 rate filing freedom." That effort is slick at best.
First, the sharing of section 205 rights discussed in Atlantic City Electric was limited to allocation among PJM, a utility, and PJM's utility members. The court had no concern about sharing section 205 rights among utilities, especially when one utility operates other utilities' assets. That does not mean the court endorsed sharing section 205 rights with a particular class of complainants.
Second, the quotation is twisted to suggest that Atlantic City Electric endorsed the idea of sharing section 205 filing rights with state complainants. But the quotation says no such thing. The quotation does not say that a utility "waives" its filing right; it refers only to "some of its section 205 rate filing freedom." What "rate filing freedom" did the court have in mind? Certainly not sharing the section 205 filing right. It referred to a utility's right to unilaterally change rates during the term of a fixed-rate contract.
In my view, OPSI's proposal is entirely inconsistent with Atlantic City Electric. The core holding of Atlantic City Electric is that "the power to initiate rate changes [under section 205] belongs to the utility, and FERC may not usurp it." That is true whether FERC attempts to take a utility's section 205 filing right for itself or make it available to state complainants, as OPSI seeks. The court concluded in harsh terms: "FERC has thus eliminated the very core of what the statute was designed to protect—the utility owner's ability 'to set the rates it will charge prospective customers and to change those rates from time to time,' subject to Commission review."
OPSI's proposal would eliminate the ability of PJM and its utility transmission owner members "to set the rates they will charge" and "to change those rates from time to time," subject to Commission review. Instead, those utilities could be forced, at the behest of state governments, to file section 205 rate changes to which they strongly object and which they believe are unjust and unreasonable.
Some go even further than OPSI, declaring that the states should have section 205 filing rights directly, rather than "sleeving" their proposals through PJM and its utility members. It is unclear whether proponents believe the states already have section 205 rights or are calling on FERC to grant the states such rights. Neither approach would work, for the reasons stated above. Only utilities may file rate changes under section 205, state commissions are not utilities, and FERC cannot grant the states a section 205 filing right it does not itself possess—a point long settled.
OPSI points out that other RTO tariff provisions improperly share section 205 filing rights with regional state committees, suggesting that if it has been done before, sharing section 205 filing rights must be lawful. To my knowledge, none of those tariff provisions has been subject to judicial review, so their approval indicates only that the Commission wished to be comity with the states, nothing more.
I come to this issue as a repentant sinner, seeking redemption, because I voted for the 2004 FERC order that improperly compelled SPP to make certain section 205 filings at the request of a regional state committee. I voted over 7,000 times during my tenure at FERC, but this is one of the votes I most regret. The SPP order led to similar provisions in the tariffs of other regional transmission organizations. Those tariff provisions are now the subject of a section 206 complaint seeking their removal as a violation of section 205. If FERC denies the complaint, the complainants would likely prevail on judicial review.
I urge the Commission to reject OPSI's proposal. Atlantic City Electric was the worst court loss FERC has suffered in years, but if the Commission adopts OPSI's proposal, I believe that loss would be surpassed. Moreover, any such loss would open the door to section 206 complaints to remove RTO tariff provisions that lightly grant section 205 rights to state complainants.