Filed Rate Doctrine Precludes Auction Rule Change, Third Circuit Tells FERC

On March 12, 2024, the US Court of Appeals for the Third Circuit vacated, in part, a FERC order that allowed PJM Interconnection, L.L.C. (PJM) to implement new rules in the middle of a capacity auction—and to apply those rules to capacity bids that had already been submitted.¹ The case explains what it means for a regulatory rule to be retroactive and emphasizes the importance of the filed rate doctrine in FERC cases.²

PJM's existing tariff required it to calculate an amount of capacity that must be procured, considering peak demand and a reserve margin. This is the LDA Reliability Requirement, an important input to determine the results of the capacity auction. After capacity suppliers submitted offers, PJM realized that certain assumptions it had used to derive the LDA Reliability Requirement were faulty, leading to a capacity price four times higher than it would have been otherwise. After it received bids, but before it determined auction results, PJM proposed