UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION MOTION TO INTERVENE AND COMMENTS OF ISO/RTO COUNCIL IN SUPPORT OF PETITION
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1 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION PJM Interconnection, L.L.C. ) Docket No. EL MOTION TO INTERVENE AND COMMENTS OF ISO/RTO COUNCIL IN SUPPORT OF PETITION The ISO/RTO Council ( IRC ) 1 moves to intervene and submits the following comments in support of the Petition for Declaratory Order (the Petition ) filed in this proceeding on March 12, 2012 by PJM Interconnection, L.L.C. ( PJM ). I. BACKGROUND AND SUMMARY OF IRC COMMENTS A. Background The Petition asks the Commission to declare that: (1) PJM does not have responsibility or authority under its tariffs to oversee worker safety in maintenance operations performed by employees of its Transmission Owners ( TOs ), and (2) the bar to ordinary negligence claims set forth in PJM s Open Access Transmission Tariff ( OATT ) applies when PJM executes its Regional Transmission Organization ( RTO ) functions of planning for future grid reliability 1 The IRC is comprised of the Alberta Electric System Operator ( AESO ), the California Independent System Operator Corporation ( California ISO ), Electric Reliability Council of Texas ( ERCOT ), the Independent Electricity System Operator of Ontario, Inc. ( IESO ), ISO New England, Inc. ( ISO-NE ), Midwest Independent Transmission System Operator, Inc. ( MISO ), New York Independent System Operator, Inc. ( NYISO ), PJM Interconnection, L.L.C. ( PJM ), Southwest Power Pool, Inc. ( SPP ), and New Brunswick System Operator ( NBSO ). As PJM filed the original Petition to which these comments support, PJM is not participating as a signatory to these IRC comments. Because they are not subject to the Commission s jurisdiction, AESO and NBSO do not join in these comments. Further, these comments do not constitute agreement or acknowledgement by ERCOT or IESO or that they can be subject to the Commission s jurisdiction. The IRC s mission is to work collaboratively to develop effective processes, tools, and standard methods for improving the competitive electricity markets across North America. In fulfilling this mission, it is the IRC s goal to provide a perspective that balances Reliability Standards with market practices so that each complements the other, thereby resulting in efficient, robust markets that provide competitive and reliable service to customers.
2 and approving the request by one of its member TOs to schedule an outage of the TO s transmission facility. 2 As the Petition explains: The two questions presented in this Petition have arisen in a Pennsylvania state court action seeking money damages for alleged negligence by PJM ( State Court Action ). The action was commenced by Mr. Marlin Yorty, a now retired electrical worker who was formerly employed by PPL Electric Utilities Corp. ( PPL ), and his wife ( Plaintiffs ), for physical injuries suffered by Mr. Yorty while performing maintenance for PPL. Plaintiffs initially named twenty-two defendants, but the state court ruled that the claims against PPL were barred by the worker s compensation regime and Plaintiffs later voluntarily dismissed their claims against all the defendants except PJM (through settlement or otherwise). PJM thus remains the sole defendant in the case despite the fact that it had no authority to supervise the relevant maintenance work and, in any event, its tariff precludes liability to any... third party or other person for any damages whatsoever... arising or resulting from any act or omission in any way associated with service provided under [its] Tariff, except in cases of gross negligence or intentional misconduct. PJM OATT 10.2, Second Revised Sheet No ; Original Sheet No ; see PJM Interconnection, L.L.C., 112 FERC 61,264 (2005). PJM moved for summary judgment in the State Court Action on the basis that Plaintiffs claims are preempted by federal law. That motion was denied on March 5, 2012 in a one-page order. Because the trial date of June 11, 2012, is now approaching, and the questions presented here are purely matters of tariff interpretation that concern this Commission s exclusive jurisdiction, PJM is requesting Commission action on this Petition. 3 B. Summary of IRC Comments The IRC supports a prompt and affirmative response to the Petition because, inter alia, ISOs and RTOs do not have the responsibility or authority under their governing documents to oversee maintenance operations performed by employees of their TOs. 2 3 Petition, at 1. Petition, at 1-2 (footnotes omitted). 2
3 II. MOTION TO INTERVENE The IRC moves to intervene in this proceeding because of its direct interest in the issues presented in the Petition, which was filed by a member of the IRC. III. COMMUNICATIONS Correspondence and communications regarding this filing should be addressed to the undersigned as follows: Nancy Saracino General Counsel Roger Collanton Assistant General Counsel-Litigation and Mandatory Standards Anna McKenna* Senior Counsel California Independent System Operator Corporation 151 Blue Ravine Road Folsom, California amckenna@caiso.com Raymond W. Hepper Vice President, General Counsel, and Secretary Theodore J. Paradise* Assistant General Counsel, Operations and Planning ISO New England Inc. One Sullivan Road Holyoke, Massachusetts tparadise@iso-ne.com Carl F. Patka* Assistant General Counsel New York Independent System Operator, Inc. 10 Krey Blvd Rensselaer, New York cpatka@nyiso.com Matthew Morais* Assistant General Counsel Electric Reliability Council of Texas, Inc West Lake Drive Taylor, Texas mmorais@ercot.com Stephen G. Kozey* Vice President, General Counsel, and Secretary Midwest Independent Transmission System Operator, Inc. P.O. Box 4202 Carmel, Indiana skozey@midwestiso.org Brian Rivard* Manager Regulatory Affairs & Sector Policy Analysis Ontario s Independent Electricity System Operator 655 Bay Street, Suite 410 Toronto, Ontario M5G 2K4 brian.rivard@ieso.ca 3
4 Paul Suskie* Senior Vice President, Regulatory Policy and General Counsel Southwest Power Pool, Inc. 415 North McKinley, Suite 140 Little Rock, Arkansas * = persons designated to receive service IV. COMMENTS A. The IRC Supports a Prompt and Affirmative Response to the Petition, Which Will Be Beneficial to ISO/RTO Customers and Electricity Consumers The Petition requests resolution of issues that are of significant importance not just to PJM, but to other ISOs and RTOs as well. The IRC requests the Commission to resolve these issues promptly by June 1, 2012 and in the manner sought in the Petition. This resolution will have benefits to ISO/RTO customers and electricity consumers. As the Petition points out, 4 there is a need for uniformity as to the meaning and scope of the responsibilities of ISOs/RTOs with respect to operational authority and functional control and the limited liability provisions of their OATTs. In the absence of such uniformity, state court judges or juries could determine these issues (and in varying ways, with respect to a multistate ISO or RTO), and in a manner that intrudes on the Commission s exclusive jurisdiction. A failure by the Commission to address these issues in the manner requested in the Petition would also invite litigation against ISOs/RTOs, interfering with the conduct of their important reliability and market missions. Such litigation would, in addition, create uncertainty for lenders to, and insurers of, ISOs and RTOs. All ISOs and RTOs are operated on a not-for- 4 Petition, at
5 profit basis, and thus have no shareholders to absorb any substantial damage awards. 5 Moreover, as recognized by the Commission, limitation of liability provisions guard against a risk of potentially excessive damage awards that would be reflected in higher insurance premiums (to the extent that adequate liability coverage is even available) and higher cost of capital, which, in turn, would be borne by customers and could result in inequities among customers. 6 To be effective, these provisions must be durable in the face of state, or federal, court litigation. The alternative produces an undesirable outcome, as a matter of public policy, where the ISO or RTO customers and, in turn, retail electric consumers, will bear the ultimate costs of litigation, but are without protection, authority or ability to prevent the very circumstances that may give rise to their liability. B. Under Their Governing Documents, ISOs/RTOs Do Not Have the Responsibility or Authority to Oversee Worker Safety in Maintenance Operations Performed by TO Employees Like PJM, other ISOs and RTOs operate under Commission-accepted tariff and governance documents that make clear that such entities have authority to direct the TOs to operate their transmission facilities in accordance with FERC tariffs and reliability rules, but do not have direct, physical control over those facilities or the workers who maintain them. 7 The In addition, the protection of provisions included in some state laws that impose limitations on public utility liability is not available for ISOs and RTOs that are not public utilities for state law purposes. PJM Interconnection, L.L.C., 112 FERC 61,264 at P 7 (2005). See, e.g., CAISO Transmission Control Agreement with its participating transmission owners, ( Each Participating TO shall have the exclusive right and responsibility to operate and maintain its transmission facilities and associated switch gear and auxiliary equipment (including facilities that it operates under Entitlements). ); ISO-NE Transmission Operating Agreement between ISO-NE and Participating Transmission Owners ( PTOs ), at Preamble ( WHEREAS, the PTOs will, among other things, continue to own, physically operate, and maintain their Transmission Facilities ), 3.01(c) ( Nothing herein or elsewhere contained shall be construed as requiring or effecting a transfer of any PTO s responsibility (or the assumption thereof by the ISO) for the physical control of the Transmission Facilities, including the physical operation, repair, maintenance and replacement of such Transmission Facilities. ); MISO Transmission Owner Agreement, at Appendix 1(B) ( The Owners shall physically operate these facilities, subject to the Midwest ISO s direction, and maintain those facilities, subject to the (continued...) 5
6 direct, physical control is retained solely by the TOs that own/lease the facilities. This absence of ISO/RTO direct, physical control necessarily excludes the possibility that an ISO or RTO could have responsibility for the safety of TO workers performing maintenance on TO transmission facilities. As described in the Petition, the Commission has had occasion to note the limits of ISO/RTO control; for example, in the context of the Midwest ISO, the Commission observed that the ISO s functional control means that ISO employees will not perform the actual physical operations associated with transmission control. 8 In the more specific context of transmission maintenance outages, the Commission s view is that an ISO or RTO simply performs a scheduling function to ensure compliance with reliability standards. 9 Further, many ISO and RTO documents accepted by the Commission state explicitly that the respective regions TOs remain responsible for maintenance of their facilities and safety of their workers. 10 (...continued) Midwest ISO s scheduling approval.); NYISO-Transmission Owner Agreement, 2.02 ( Each Transmission Owner shall operate and maintain its facilities in accordance with the terms of this Agreement and in accordance with all Reliability Rules and all other applicable operating instructions, and ISO Procedures ); SPP Membership Agreement, at 3.2 ( Transmission Owner shall maintain its Tariff Facilities in accordance with Good Utility Practice. Transmission Owner shall coordinate and obtain SPP approval for maintenance on its Tariff Facilities in accordance with Section of this Agreement. ) Midwest Indep. Transmission Sys. Operator, Inc., 84 FERC 61,231, at p. 62,160 (1998). See Regional Transmission Organizations, Order No. 2000, FERC Stats. & Regs., Regulations Preambles ,089, at pp. 31, (1999), order on reh g, Order No A, FERC Stats. & Regs. Regulations Preambles ,092 (2000), petitions for review dismissed sub nom. Pub. Util. Dist. No. 1 v. FERC, 272 F.3d 607 (D.C. Cir. 2001) ( [W]e expect the RTO to: receive requests for authorization of preferred maintenance outage schedules; review and test these schedules against reliability criteria; approve specific requests for scheduled outages; require changes to maintenance schedules when they fail to meet reliability standards; and update and publish maintenance schedules as needed. ). See, e.g., CAISO Transmission Control Agreement, Appendix C, 10.1 ( Each PTO shall take proper care to ensure the safety of personnel and the public in performing Maintenance duties. ); ISO-NE TOA, 3.06(a) ( From and after the Operations Date, each PTO shall, in accordance with Good Utility Practice: (i) maintain its Transmission Facilities. ) and 3.06(b) ( Nothing in this Section 3.06(b) shall limit the right of each PTO pursuant to [the reserved PTO rights section of the TOA] to take any action(s) that it deems necessary to prevent loss of human life, injury to persons and/or damage to property. ); MISO TO Agreement at Article Four, 1(B) ( Each Owner shall maintain its transmission facilities in accordance with Good Utility Practice. ); SPP Membership Agreement, 3.0(h) ( Member reserves the right to exercise operational authority of Member s Tariff Facilities (1) to protect public safety and the safety of its workers. ). 6
7 A declaration by the Commission as requested by PJM in the Petition would, thus, reaffirm important Commission-enunciated principles governing the extent of authority and liability of all ISOs/RTOs. V. CONCLUSION The IRC respectfully requests the Commission to grant the Petition. Respectfully submitted, /s/ Nancy Saracino Nancy Saracino General Counsel Roger Collanton Assistant General Counsel-Litigation and Mandatory Standards Anna McKenna Senior Counsel California Independent System Operator Corporation 151 Blue Ravine Road Folsom, California /s/ Raymond W. Hepper Raymond W. Hepper Vice President, General Counsel, and Secretary Theodore J. Paradise Assistant General Counsel, Operations and Planning ISO New England Inc. One Sullivan Road Holyoke, Massachusetts /s/ Carl F. Patka Carl F. Patka Assistant General Counsel New York Independent System Operator, Inc. 10 Krey Blvd Rensselaer, New York /s/ Matthew Morais Matthew Morais Assistant General Counsel Electric Reliability Council of Texas, Inc West Lake Drive Taylor, Texas /s/ Stephen G. Kozey Stephen G. Kozey Vice President, General Counsel, and Secretary Midwest Independent Transmission System Operator, Inc. P.O. Box 4202 Carmel, Indiana /s/ Brian Rivard Brian Rivard Manager Regulatory Affairs & Sector Policy Analysis Ontario s Independent Electricity System Operator 655 Bay Street, Suite 410 Toronto, Ontario M5G 2K4 7
8 /s/ Paul Suskie Paul Suskie Senior Vice President, Regulatory Policy and General Counsel Southwest Power Pool, Inc. 415 North McKinley, Suite 140 Little Rock, Arkansas April 11,
9 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Washington, D.C. this 11 th day of April, /s/ Pamela S. Higgins Pamela S. Higgins Ballard Spahr LLP th Street, NW, Suite 1000 South Washington, DC
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