Petition for Writ of Certiorari — Affirmed Energy, LLC, Petitioner v. Federal Energy Regulatory Commission, et al.

APPENDIX

APPENDIX

TABLE OF CONTENTS

Page

APPENDIX A: Opinion of the United States

Court of Appeals for the District of

Columbia Circuit and Partial Dissent,

dated February 10, 2026............................................ 1a

APPENDIX B: Judgment of the United

States Court of Appeals for the District of

Columbia Circuit, dated February 10, 2026 ......... 53a

APPENDIX C: Order Accepting Tariff

Revisions, PJM Interconnection, L.L.C.,

Docket No. ER24-2995-000,

189 FERC ¶61,095, dated November 5, 2024 ........ 55a

APPENDIX D: Notice of Denial of Rehearing

by Operation of Law and Providing

for Further Consideration, PJM

Interconnection, L.L.C., Docket

No. ER24-2995-001, 190 FERC ¶62,005,

dated January 6, 2025 ............................................ 113a

APPENDIX E: Order Addressing Arguments

Raised on Rehearing and Denying Stay,

PJM Interconnection, L.L.C, Docket

No. ER24-2995-001, 190 FERC ¶61,081,

dated February 7, 2025.......................................... 115a

APPENDIX F: Order of the United States

Court of Appeals for the District of

Columbia Circuit Denying Petition for

Rehearing En Banc, dated May 7, 2026 .............. 159a

i

APPENDIX G: Relevant Statutory Provisions:

16 U.S.C. § 824 ........................................................... 161a

16 U.S.C. § 824d ......................................................... 162a

16 U.S.C. § 824e ......................................................... 164a

16 U.S.C. § 824q ......................................................... 165a

16 U.S.C. § 825l .......................................................... 166a

APPENDIX H: PJM Open Access Transmission

Tariff (Marked/Redline Format)............................ 169a

APPENDIX I: Declaration of B. Abram,

dated May 1, 2025 ...................................................... 231a

ii

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 25-1091

AFFIRMED ENERGY, LLC,

Petitioner,

v.

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent,

MONITORING ANALYTICS, LLC, AND

PJM INTERCONNECTION, LLC,

Intervenors

Argued October 6, 2025

Decided February 10, 2026

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

*

*

*

Before: HENDERSON and PAN, Circuit Judges, and

GINSBURG, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge

HENDERSON.

Opinion dissenting in part filed by Circuit Judge

PAN.

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KAREN LECRAFT HENDERSON, Circuit Judge: The

issue presented by petitioner Affirmed Energy LLC

(Affirmed) is whether the Federal Energy Regulatory

Commission (FERC) permissibly approved a tariff

amendment prohibiting companies from bidding Energy

Efficient Resources (EERs) in capacity auctions. The

auctions are run by PJM Interconnection LLC (PJM),

the entity responsible for managing the electrical grid in

portions of thirteen States and the District of Columbia.

At the auctions, PJM purchases commitments to supply

electrical capacity to its grid. With FERC’s permission,

PJM allowed providers of EERs, which continuously reduce electrical consumption, to bid EER projects at its

auctions. In other words, EERs could treat their resources as commitments to supply electricity, rather

than to reduce electrical consumption, and could bid

those commitments at the auctions. If PJM accepted an

EER provider’s bid, PJM permitted that provider to bid

the same project at up to three more auctions. PJM permitted this action in part to offset a four-year lag between when EER projects became operational and when

PJM’s statistical model, known as a load forecast, could

capture those projects’ effects on energy consumption.

Although PJM had since 2009 allowed providers to bid

EERs at its auctions, it proposed to sunset that permission in 2024, explaining that its updated load forecast

fixed the four-year lag. FERC accepted the proposed

tariff amendment. It found that the amendment would

reduce costs for end-use customers without compromising grid reliability. One EER provider, Affirmed, now

petitions for review of FERC’s orders.

Affirmed contends that FERC violated the filedrate doctrine by retroactively divesting it of the right to

participate in at least two more capacity auctions. It also

argues that FERC’s orders were arbitrary and

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capricious because FERC uncritically accepted PJM’s

updated load forecast, overlooked reliance interests

based on the existing tariff and ignored that tariff’s substantial benefits.

We disagree with both claims.

FERC’s orders were not impermissibly retroactive under our caselaw because the amendment applied solely

to future capacity auctions. FERC critically reviewed

PJM’s updated forecast and explained why the forecast

was fit for its intended purpose. And it acknowledged

that its decision might upset reliance interests and reduce incentives to invest in EERs but it explained that

those costs were outweighed by other considerations.

I.

Background

A. PJM’s Electrical Grid

In the 1935 Federal Power Act (FPA), the Congress

charged FERC (then, the Federal Power Commission)

with superintending the interstate sale of electricity.

Federal Power Act of 1935, ch. 687, pt. II, 48 Stat. 838,

847 (codified as amended at 16 U.S.C. § 824 et seq.). Under that authority, FERC oversees entities, known as

Regional Transmission Organizations (RTOs), which

manage the electrical grid in their respective regions.

Pub. Citizen, Inc. v. FERC, 7 F.4th 1177, 1186 (D.C. Cir.

2021). RTOs carry out several key responsibilities,

which include “operating the grid in particular geographic areas, ... balancing supply and demand, and ensuring a reliable transmission system.” Id. PJM is an

RTO. Off. of Pub. Participation, Fed. Energy Regul.

Comm’n, An Introductory Guide for Participation in

PJM Processes 2 (2025). To discharge its responsibilities, PJM hosts capacity auctions at least once each year.

See Morgan Stanley Cap. Grp. v. Pub. Util. Dist. No. 1 of

Snohomish Cnty., 554 U.S. 527, 537 (2008). At the auctions, PJM purchases commitments to supply its grid

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with electrical capacity for a future delivery year, usually more than three years ahead. See PJM, 2025/2026

Base Residual Auction Report 1, 4 (2024).

The capacity auctions work in this way: Providers

bid the price they will accept in exchange for their promise to supply electricity. See Hughes v. Talen Energy

Mktg., LLC, 578 U.S. 150, 155 (2016). PJM uses those

bids, in conjunction with its estimate of demand, to set a

“clearing price” for the auction. PJM Power Providers

Grp. v. FERC, 96 F.4th 390, 395 (3d Cir. 2024). Any provider who submits a bid below (i.e., “clears”) the clearing

price will receive that price in exchange for its commitment to provide electricity. Talen Energy Mktg., 578

U.S. at 155-56. PJM continues to purchase capacity commitments until it satisfies projected demand (known as

the reliability requirement). Id.

EERs—including efficient light bulbs and appliances—have posed a unique problem for capacity auctions. The reason is simple: EERs reduce the amount of

capacity that PJM must procure at each auction. For example, if a consumer installs a more efficient refrigerator, he will, all else being equal, consume less electricity.

Use of Energy Explained, U.S. Energy Info. Admin.

(Jan. 12, 2024), https://www.eia.gov/ energyexplained/use-of-energy/efficiency-and-conservation.php

[https://perma.cc/5G9P-SL4N]. And the difference between his old and new consumption constitutes electricity that PJM no longer needs to procure at auction. For

many years, however, PJM could not capture the effects

of EERs in the statistical model it uses to predict demand—its “load forecast.” J.A. 120, Gledhill Aff. ¶¶ 1617. To account for EERs at all, then, PJM needed to do

so at its capacity auctions, by permitting EER providers

to bid their projects as commitments to provide electricity.

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Since 2009, PJM has allowed EER providers to participate in its auctions. See PJM Interconnection,

L.L.C., Order Accepting Tariff Provisions in Part, 126

FERC ¶ 61,275, PP 120, 131 (2009) (2009 Order). Central to Affirmed’s petition are two tariff provisions that

FERC approved in 2009. First, Section L.1 of PJM’s tariff defines eligible EERs. Its definition encompasses

only projects that continuously reduce electrical consumption and that are not already reflected in the load

forecast:

An Energy Efficiency Resource is a project ...

designed to achieve a continuous ... reduction in

electric energy consumption at the end-use customer’s retail site that is not reflected in the

peak load forecast prepared for the Delivery

Year for which the Energy Efficiency Resource

is proposed… .

J.A. 60. Second, Section L.4 establishes the time frame

in which an EER provider can bid a particular project:

An Energy Efficiency Resource that clears an

auction for a Delivery Year may be offered in

auctions for up to three additional consecutive

Delivery Years, but shall not be assured of

clearing in any such auction… .

J.A. 61. In other words, Section L.4 permits EER providers to bid an EER project in up to four consecutive

auctions—the initial auction at which the project clears

and three more. PJM chose this four-auction time frame

in part to match the four-year lag in its load forecast.

2009 Order, 126 FERC ¶ 61,275, P 132. With FERC’s

permission, PJM added these provisions to its tariff on

file with FERC, as well as to its contracts with providers

in its region.

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The four-year lag did not remain for long. In 2016,

PJM deployed a model that, in theory, fixed the lag. To

achieve this goal, PJM incorporated “end-use intensity

values,” which it obtained from the Energy Information

Administration (EIA), a statistical entity within the

U.S. Department of Energy. J.A. 118, 120-21, Gledhill

Aff. ¶¶ 6-7, 18. End-use intensity measures a technology’s “relative use over time” and it has two critical features. J.A. 121, Gledhill Aff. ¶ 20. The first is “saturation,” or the proportion of all homes and commercial

floorspaces with the technology. J.A. 121, Gledhill Aff.

¶ 20. The second is “efficiency,” or the reduction in electrical usage the technology produces. J.A. 121, Gledhill

Aff. ¶ 20. With these forward-looking data available,

PJM concluded, it could capture the effects of EERs

without the lag.

This development posed an issue for grid reliability.

Because PJM accounted for EERs both in its load forecast and at its auctions, PJM wound up double counting

their effects on electrical consumption. To illustrate:

Assume that EER projects reduce the number of megawatts (MW) that end-use customers consume by 20 in a

given delivery year. If PJM forecasted a demand of 100

MW for that year, its projection would account for those

20 MW of energy efficiency. In other words, but-for its

updated modeling, PJM would have forecasted demand

for 120 MW. Assume further that PJM purchased commitments from EER providers to provide 20 MW of capacity for the same delivery year. In this hypothetical,

PJM would purchase only 80 MW of actual capacity compared to its reliability requirement of 100 MW. Thus, by

double counting the effects of EERs, PJM risked obtaining less capacity than it needed.

To counteract that risk, PJM introduced an “addback” mechanism. For each MW attributable to EERs

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that “cleared” at auction, PJM added one MW to its reliability requirement. In other words, if PJM predicted

that it needed to obtain 100 MW for a given delivery year

and it obtained 20 of those MW from EERs at auction,

PJM would shift its reliability requirement from 100

MW to 120 MW. In this way, PJM ensured that EER

providers’ participation did not prevent it from purchasing enough capacity.

Although the addback promoted grid reliability, the

reliability came at a price: The addback required the

utilities and, ultimately, end-use customers within

PJM’s region to shoulder the costs of capacity payments

for EERs without benefiting from a corresponding reduction in the reliability requirement. As PJM put it,

the addback was “at odds with the notion that resources

being paid capacity rates should actually provide capacity.” J.A. 34-35. Accordingly, in September 2024, PJM

proposed to “prospectively sunset” EERs’ auction eligibility, beginning with July 2025’s auction for the 2026/27

delivery year. J.A. 1. PJM submitted a filing under section 205 of the FPA, seeking permission to amend Section L of the tariff to reflect that change. The proposed

amendment stated that no EERs would “qualify” for the

auctions “beginning with the 2026/2027 Delivery Year.”

J.A. 59.

Given its updated load forecast, PJM explained in an

accompanying letter, it had determined that EER participation raised costs for consumers without incrementally reducing the reliability requirement. It observed

that capacity payments for EERs had proven increasingly onerous, cresting at $144 million for the 2025/26 delivery year alone. And it noted that its decision was

backed by a supermajority of its stakeholders and was

the product of nearly one year’s deliberation.

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To support its filing, PJM submitted an affidavit

from one of its managers. The manager provided a detailed overview of PJM’s load forecast, as well as its plan

to exclude EERs from the auctions. For example, he

identified the source of PJM’s data underlying its load

forecast. PJM acquires publicly available data from the

EIA, he noted, comprising both historical energy usage

(from the EIA’s Form EIA-861M) and prospective energy usage (from its Annual Energy Outlook). PJM then

supplements those data with information obtained from

outside vendors. In recent years, he observed, PJM has

acquired supplemental data on “behind-the-meter solar

and electric vehicle charging trends.” J.A. 118, Gledhill

Aff. ¶ 7. He also discussed how the load forecast functioned. PJM ran regression models for different sectors,

he explained—residential, commercial and industrial. It

finetuned those models on the basis of variables affecting electrical consumption, like historical weather patterns, peak shaving, behind-the-meter storage and datacenter activity. In its load forecast for 2024, for example,

PJM produced “377 forecast scenarios for every hour” of

the year based on variability in weather alone. J.A. 120,

Gledhill Aff. ¶ 15.

The manager also explained that PJM met with

stakeholders and outside consultants to refine its load

forecast. One meeting with a third-party consultant,

Itron, Inc., led to a publicly available report on PJM’s

forecast. The manager also pointed out that various

PJM stakeholder groups, including its Load Analysis

Subcommittee and Planning Committee, meet periodically to evaluate and provide input on the forecast.

Finally, the manager supplied two pieces of evidence

that the load forecast did, in fact, capture EERs. First,

for delivery year 2023/24, PJM’s predicted peak load was

lower than its actual peak load. Second, and relatedly, a

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recent short-term forecast had exceeded an older, longterm forecast for the 2024/25 delivery year. If the load

forecast had in fact failed to capture EERs, the manager

opined, both results should have flipped. The long-term

forecast would be higher than the short-term forecast

and actual peak load because the latter two metrics are

more accurate and, hence, more likely to capture EERs.

These patterns confirmed, in the manager’s view, that

the forecast captured EERs accurately. He acknowledged that the forecast was “not so granular as to track”

any individual EER project but he concluded that it

could “reasonably capture[]” the EERs’ aggregate effects on electrical consumption. J.A. 125, Gledhill Aff.

¶ 35.

On the basis of its letter and its manager’s affidavit,

PJM requested that FERC approve its amendment.

B. Affirmed’s Claim

Affirmed does not sell or manufacture EERs itself.

Instead, Affirmed “contracts with manufacturers, retailers, and distributors” of EERs “in exchange for the contractual rights to the capacity reductions from those energy efficient products.” Pet’r’s Br. add. 10, Abram

Decl. ¶ 6. Affirmed then “aggregates the expected future energy capacity reductions from those products”

and participates in capacity auctions, offering “commitments to reduce energy consumption” in exchange for

capacity payments in PJM’s region. Pet’r’s Br. add. 910, Abram Decl. ¶¶ 4-7. It then passes along a portion of

those payments to EER manufacturers and retailers.

Stated simply, Affirmed’s business model runs on capacity payments. If EERs are excluded from the auctions,

Affirmed will be left without a material source of revenue. Affirmed bid projects at the 2023/24 and 2024/25

delivery-year auctions. Its bids cleared at each auction.

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Under Section L.4 of the tariff, then, Affirmed planned

to bid those projects in at least the 2026/27 and 2027/28

delivery-year auctions.

In response to PJM’s filing seeking the above-described tariff amendment, Affirmed submitted a protest.1 In it, Affirmed highlighted several “deficiencies”

in PJM’s proposal that, it asserted, warranted FERC’s

rejection. J.A. 162. Among other things, Affirmed criticized PJM’s updated load forecast, challenging PJM’s

evidence that the model accurately captured EERs.

And it contended that PJM’s proposal would, if approved, retroactively divest it of the right to participate

in the 2026/27 and 2027/28 delivery-year auctions.

FERC approved PJM’s amendment. PJM Interconnection, L.L.C., Order Accepting Tariff Revisions, 189

FERC ¶ 61,095, P 1 (2024) (Order). FERC determined

that the amendment reduced costs for consumers without compromising PJM’s grid reliability and was therefore just and reasonable under FPA section 205. Id.

P 63; 16 U.S.C. § 824d(a). And it noted that Section L.4’s

raison d’être—the four-year lag in the load forecast—no

longer existed. Order, 189 FERC ¶ 61,095, P 62. Thus,

FERC allowed PJM to exclude EERs from its auctions,

starting with the July 2025 auction.

FERC also addressed the protestors’ arguments.

Order, 189 FERC ¶ 61,095, P 64. In response to the argument that FERC’s order operated retroactively,

FERC concluded that its order applied wholly prospectively, beginning with the July 2025 auction for the

1

A protest is distinct from a petition for rehearing. Anyone

can protest a tariff filing. 18 C.F.R. § 385.211(a)(1). A petition for

rehearing, among other things, preserves arguments for judicial review. 16 U.S.C. § 825l(b).

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2026/27 delivery year. Id. P 71. And although its decision could upset providers’ expectations, as some protestors had contended, FERC believed that the benefits of

its decision outweighed those costs. Id. P 72. PJM would

continue to honor existing capacity commitments,

FERC pointed out, and the record lacked evidence about

the extent to which PJM’s proposal would undercut sunk

investments. Id.

In response to other arguments, FERC conceded

that PJM’s forecast might not perfectly capture the

EERs’ effects on demand. Order, 189 FERC ¶ 61,095,

P 69. But it determined that the forecast would “reasonably” capture those effects. Id. It found the forecast reliable because PJM incorporated publicly available data

widely relied on in the industry and refined its forecast

through meetings with outside consultants and stakeholders. Id.

Finally, FERC rejected the argument that the benefits of EER participation were necessary to achieve

just and reasonable rates. Order, 189 FERC ¶ 61,095,

P 70. FERC recognized that capacity payments might

“increase incentives to invest” in EERs. Id. But it did

not view those incentives as “necessary to ensure just

and reasonable rates,” particularly because PJM would

continue to account for EERs in its load forecast and,

hence, its reliability requirement. Id.

One month after FERC accepted the amendment,

Affirmed moved for a stay and petitioned for rehearing.

See 5 U.S.C. § 705; 16 U.S.C. § 825l. In its motion, Affirmed argued that FERC’s order posed an existential

threat to its operations, leaving it saddled with $50 million in sunk investments and forcing it to cease operations once it met its obligations for the 2025/26 delivery

year.

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In January 2025, FERC denied Affirmed’s rehearing petition by failing to decide it within 30 days. PJM

Interconnection, L.L.C., Notice of Denial of Rehearing

by Operation of Law and Providing for Further Consideration, 190 FERC ¶ 62,005 (2025). It stated that it

would address the substance of Affirmed’s rehearing petition and stay motion in a future order. Id.

The following month, FERC issued an order explaining its rationale. PJM Interconnection, L.L.C., Order Addressing Arguments Raised on Rehearing and

Denying Stay, 190 FERC ¶ 61,081, P 1 (2025) (Rehearing Order). FERC elaborated on its rationale for concluding, among other things, that PJM’s load forecast

captured the effects of EERs, id. PP 31-34, and that the

benefits of its decision outweighed the harm to existing

reliance interests, id. PP 36-38. It noted that Section L.1

of the tariff put providers on notice that improvements

to the forecast might render their projects ineligible for

the auctions, which, in turn, diminished the providers’

reasonable reliance interests. Id. P 38.

Affirmed filed petitions for review of all three orders. PJM moved to intervene, as did the Independent

Market Monitor on PJM’s behalf, and we granted both

motions.

II. Analysis

We have jurisdiction of Affirmed’s petition, 16

U.S.C. § 825l(b), and we review de novo the claim that

FERC violated the filed-rate doctrine, SFPP, L.P.

v. FERC, 967 F.3d 788, 802 (D.C. Cir. 2020) (per curiam).

We review Affirmed’s remaining claims under the Administrative Procedure Act’s arbitrary-and-capricious

standard. 5 U.S.C. § 706(2)(a). Under that standard, we

will uphold an agency’s decision if it is “reasonable and

reasonably explained.” FCC v. Prometheus Radio

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Project, 592 U.S. 414, 423 (2021). An agency’s decision is

arbitrary and capricious if the agency entirely fails to

consider an important aspect of the problem before it or

ignores the reasonable reliance interests of regulated

parties. Dep’t of Homeland Sec. v. Regents of the Univ.

of Cal., 591 U.S. 1, 30-32 (2020). An agency’s decision is

also arbitrary and capricious if it merely rubberstamps

a regulated party’s analysis. Susquehanna Int’l Grp.,

LLP v. Sec. & Exch. Comm’n, 866 F.3d 442, 447 (D.C.

Cir. 2017).

In its petition, Affirmed contends that FERC’s orders violated the filed-rate doctrine by retroactively divesting Affirmed of the right to participate in at least

two more capacity auctions. Affirmed also asserts that

FERC’s orders were arbitrary and capricious for three

reasons: First, FERC impermissibly rubberstamped

PJM’s load forecast instead of critically reviewing PJM’s

analysis or conducting its own; second, FERC unreasonably discounted the benefits of EER participation; and

third, FERC failed to consider the EERs’ reliance interests. We consider each argument in turn.

A.

Affirmed contends that FERC’s orders violate the

filed-rate doctrine. It asserts that it obtained the right

under Section L.4 to bid at the 2026/27 and 2027/28 delivery-year auctions when its bids cleared at the 2023/24

and 2024/25 delivery-year auctions. And FERC’s orders, it maintains, retroactively divested it of that tariffbased right. It bases its argument on the Supreme

Court’s decision in Landgraf v. USI Film Products,

which deemed retroactive laws that “attach[] new legal

consequences to events completed before their enactment,” or which “take[] away or impair[] vested rights

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acquired under existing laws.” 511 U.S. 244, 269-70

(1994) (citation modified).

We interpret tariff provisions according to their

“plain meaning.” Okla. Gas & Elec. Co. v. FERC, 11

F.4th 821, 827 (D.C. Cir. 2021). We do not doubt that

under Section L.4’s plain meaning, Affirmed obtained

permission to bid at up to four consecutive auctions. Our

only concern is whether FERC properly approved

PJM’s revocation of that permission.

The answer to that question lies in the filed-rate doctrine or its corollary, the rule against retroactive ratemaking. The filed-rate doctrine prohibits a utility from

charging “any rate other than the one on file with the

Commission.” Verso Corp. v. FERC, 898 F.3d 1, 10 (D.C.

Cir. 2018) (quoting W. Deptford Energy, LLC v. FERC,

766 F.3d 10, 12 (D.C. Cir. 2014)). And the rule against

retroactive ratemaking prohibits a utility from

“set[ting] rates to recoup past losses” and FERC from

“prescrib[ing] rates on that principle.” City of Piqua v.

FERC, 610 F.2d 950, 954 (D.C. Cir. 1979) (quoting Nader

v. FCC, 520 F.2d 182, 202 (D.C. Cir. 1975)); accord Pub.

Serv. Co. of N.H. v. FERC, 600 F.2d 944, 958 (D.C. Cir.

1979) (“A rate designed to recoup past losses is retroactive and illegal.”). The bar on retroactive ratemaking is

a “corollary” of the filed-rate doctrine, precluding FERC

“from doing indirectly what it cannot do directly”—that

is, allowing a utility to collect a rate other than the filed

rate. SFPP, L.P., 967 F.3d at 801-02 (quotations omitted). These rules are “not limited to rates per se but also

extend[] to matters directly affecting rates.” Okla. Gas

& Elec. Co., 11 F.4th at 829 (citation modified).

In the domain of interstate electricity, we have

based these rules on the FPA’s text. Section 205 of the

FPA requires utilities to file tariffs with FERC

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“reflecting the rates they charge and the related rules.”

Cent. Hudson Gas & Elec. Corp. v. FERC, 138 F.4th 531,

533 (D.C. Cir. 2025) (citing Hecate Energy Greene Cnty.

3 LLC v. FERC, 72 F.4th 1307, 1309-10 (D.C. Cir. 2023));

16 U.S.C. § 824d(c). And section 206 empowers FERC,

with exceptions not relevant to this petition, to “fix rates

and charges, but only prospectively.” Towns of Concord,

Norwood & Wellesley v. FERC, 955 F.2d 67, 72

(D.C. Cir. 1992); 16 U.S.C. § 824e(a).

Affirmed characterizes its filed-rate claim as a challenge to retroactive ratemaking. Because neither PJM

nor FERC has attempted to impose something other

than the rate on file, we agree that Affirmed’s claim is

best conceptualized as one of retroactivity, to the extent

that these rules diverge in practice. See Associated Gas

Distribs. v. FERC, 898 F.2d 809, 810 (D.C. Cir. 1990)

(mem.) (per curiam) (Williams, J., concurring in the denial of rehearing and rehearing en banc).

Our precedent makes clear that FERC’s orders

were not impermissibly retroactive. We have upheld an

agency’s authority to impose a new auction rule, even if

that rule divested regulated parties of a permission they

had obtained under an earlier regime. DIRECTV, Inc.

v. FCC, 110 F.3d 816 (D.C. Cir. 1997). In DIRECTV, we

considered whether the Federal Communications Commission (FCC) retroactively divested petitioners of the

right to acquire satellite channels surrendered by another party. Id. at 825-26. The FCC had granted permits to several applicants to construct satellites. Those

permits came subject to certain requirements, including

an obligation to begin operating within six years of receiving the permit. Id. at 822 (quoting 47 C.F.R.

§ 100.19(a)). By order, the FCC afforded the permittees

a “reservation[],” granting them the “first right” to

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a pro-rata share of any channel of a surrendered or cancelled permit. Id. (quotation omitted). When the FCC

canceled one permit, however, it decided to auction off

the permittee’s fifty-one channels instead. Id. at 823.

Several permittees filed petitions, contending that

the FCC’s new auction rule was impermissibly retroactive. Like Affirmed, they argued that the FCC’s new

auction rule “divest[ed] them each of [a] right” “that

they had been given in the [earlier] order.” DIRECTV,

110 F.3d at 825. We analyzed the permittees’ claim

there, as Affirmed asks us to do here, under the Supreme

Court’s decision in Landgraf, which deems retroactive

those laws that “impair rights a party possessed when

he acted.” 511 U.S. at 280. Still, we rejected the permittees’ arguments. We recognized that the permittees

“may reasonably have expected that, under the” first order, “they would receive a pro rata portion of any channels the [FCC] reclaimed.” DIRECTV, 110 F.3d at 826.

But that order did not, we concluded, foreclose it from

taking a different approach moving forward. Indeed, the

FCC’s order “was itself entirely prospective: it set forth

what the FCC intended to do if a certain condition were

to arise, which it later did.” Id. In view of these circumstances, we concluded that the new auction rule was not

retroactive.2

2

The partial dissent distinguishes DIRECTV principally on

the ground that the FCC had “never implemented” its binding order. Partial Dissenting Op. 14. In our view, that distinction does

not matter. An agency’s progress towards implementing a guarantee says very little about whether that guarantee existed in the first

place—or, more relevant here, whether a subsequent decision retroactively erased that guarantee. Rather, an agency’s progress

speaks to, if anything, the existence and strength of any reliance

interests—an issue we have consistently analyzed under other doctrines, including secondary retroactivity, e.g., Bd. of Cnty. Comm’rs

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DIRECTV is no outlier. We have iterated its basic

holding in similar contexts. In National Cable & Telecommunications Ass’n v. FCC, for example, the FCC

banned exclusivity contracts between cable operators

and multiple-dwelling units. 567 F.3d 659, 661-62 (D.C.

Cir. 2009) (NCTA). It also prohibited cable companies

from enforcing existing exclusivity contracts. Id. at 662.

Petitioners argued that the FCC’s decision to outlaw existing exclusivity contracts operated retroactively. Id.

at 670. We rejected that assertion, however, concluding

that the decision was not retroactive because it did “not

render[] past actions illegal or otherwise sanctionable,”

even if it “impaired the future value of past bargains.”

Id.

Similarly, in Mobile Relay Associates v. FCC, we

upheld the FCC’s rebanding decision, in which it reconfigured a portion of the radio band. 457 F.3d 1, 3

(D.C. Cir. 2006). One petitioner argued that the FCC

retroactively impaired the right it had obtained at auction to operate a licensed radio system in the future. Id.

at 10. The petitioner equated the FCC’s decision with

selling a “10-year timber” lease, “collecting the ten years

of rent in advance, and then, one year into the ten-year

term,” prohibiting timber extraction. Pet’r’s Br. at 3132, Mobile Relay Assocs., 457 F.3d 1 (No. 04-1413). We

declined to set aside the decision as retroactive, holding

that its effects were “purely prospective” even if they

unsettled the petitioner’s reliance interests. Mobile Relay Assocs., 457 F.3d at 11. We also observed that an

order “is not retroactive” if it “alters the future effect”

of Weld Cnty. v. Env’t Prot. Agency, 72 F.4th 284, 295-96 (D.C. Cir.

2023), and the Administrative Procedure Act’s arbitrary-and-capricious standard, e.g., MediNatura, Inc. v. Food & Drug Admin.,

998 F.3d 931, 940-41 (D.C. Cir. 2021).

18a

but “not the past legal consequences of an action.”

Id. (citation modified).3

Consistent with this understanding of retroactivity,

we see nothing impermissibly retroactive about FERC’s

decision. Affirmed reasonably expected that it would be

allowed to bid in at least two more auctions. But that

expectation did not transform FERC’s forward-looking

orders into retroactive ratemaking. An order that

merely “upsets expectations based on prior law is not

retroactive.” NCTA, 567 F.3d at 670 (quoting Mobile

Relay Assocs., 457 F.3d at 11). Nor is an order that

simply “alters the future effect” of a party’s conduct.

Mobile Relay Assocs., 457 F.3d at 11. FERC’s orders

undoubtedly altered Affirmed’s eligibility for future auctions—a “future effect,” as Mobile Relay put it. Id. But

that is all they did. They did not strip Affirmed of its

“past eligibility.” Ass’n of Accredited Cosmetology Schs.

v. Alexander, 979 F.2d 859, 864 (D.C. Cir. 1992). They

did not force Affirmed to return the “payments [it] had

received” from earlier auctions.4 Id. And they did not

3

There is nothing unique about the broadcast or communications fields that would preclude us from applying these cases to define retroactivity. Many of our foundational cases in this context

drew guidance from FCC precedent in defining retroactivity. E.g.,

City of Piqua, 610 F.2d at 954 (quoting Nader, 520 F.2d at 202); Pub.

Serv. Co., 600 F.2d at 957 (same). And we have observed that, as a

general matter, courts apply the filed-rate doctrine “across the

spectrum of regulated utilities.” NSTAR Elec. & Gas Corp.

v. FERC, 481 F.3d 794, 800 (D.C. Cir. 2007) (quotation omitted).

4

This is one of the reasons that we find unpersuasive the partial dissent’s reliance on Arkema Inc. v. Environmental Protection

Agency, 618 F.3d 1 (D.C. Cir. 2010). The Arkema Court made clear

that the agency’s 2010 rule was retroactive because it allowed the

agency to undo transactions that were completed in 2008 and 2009.

618 F.3d at 7, 10. Laws that nullify past transactions are quintessentially retroactive. See Landgraf, 511 U.S. at 268-69, 280. Here,

19a

render Affirmed’s “past actions illegal or otherwise

sanctionable.” NCTA, 567 F.3d at 670. They were therefore not retroactive.

Fortifying this conclusion, Section L.4 is “itself entirely prospective.” DIRECTV, 110 F.3d at 826. The

provision “set forth what [PJM] intended to do” once a

provider’s bid cleared at an auction. Id. But the occurrence of that condition did not create regulatory gridlock—not even, as Affirmed claims, for two more capacity auctions. Id. “To conclude otherwise would hamstring” FERC in exercising its statutory prerogative to

accept just and reasonable tariffs. Mobile Relay Assocs.,

457 F.3d at 11. Because FERC’s orders are not retroactive under our caselaw, they do not violate the rule

against retroactive ratemaking.

The partial dissent challenges our reliance on FCC

caselaw in defining retroactivity, contending that it is

crucial to pay careful attention to the underlying statute—here, the FPA. Partial Dissenting Op. 13, 17. We

agree: The critical question is whether FERC violated

the FPA’s rule permitting only prospective changes to

the filed rate.5 But to answer that question, it is first

necessary to define “retroactivity,” which is why we

draw guidance from caselaw on that matter.

Moreover, we cannot help but point out that the partial dissent’s precedent of choice, Arkema Inc. v. Environmental Protection Agency, 618 F.3d 1 (D.C. Cir.

by contrast, Affirmed will keep all of the payments it received from

the 2023/24 and 2024/25 delivery-year auctions. See Order, 189

FERC ¶ 61,095, P 72.

5

No one—not Affirmed, not us and not the partial dissent—

has identified a more specific, text-based rule that FERC could

have violated here.

20a

2010), has nothing to do with either the FPA or the filedrate doctrine. See Partial Dissenting Op. 17-18. Arkema

instead involved an Environmental Protection Agency

(EPA) rulemaking; the effective bar on retroactivity

there arose from the Clean Air Act, 42 U.S.C. § 7671f,

together with the Supreme Court’s “clear statement”

rule from Bowen v. Georgetown University Hospital, 488

U.S. 204, 208 (1988). Arkema, 618 F.3d at 7. Why those

sources should be more analogous to the FPA than the

FCC sources eludes us.

At bottom, we agree with the partial dissent that it

can be difficult to parse “the difference between a ‘past

entitlement’ and a mere ‘expectation.’ ” Partial Dissenting Op. 12. Despite our dissenting colleague’s undeniable thoroughness and eloquence, however, we remain

convinced that this petition calls for nothing more than a

straightforward application of precedent.

B.

Next, Affirmed argues that FERC’s orders are arbitrary and capricious because FERC failed to critically

evaluate PJM’s load forecast. Because that forecast provided the basis of PJM’s filing, Affirmed asserts, FERC

had to—but did not—either critically review PJM’s analysis or conduct its own.

If an agency relies on a regulated party’s analysis to

justify its decision, it must either critically review that

analysis or perform its own. Susquehanna Int’l Grp.,

866 F.3d at 447.

“[U]nquestioning reliance” on the submission does

not suffice. Bloomberg L.P. v. Sec. & Exch. Comm’n, 45

F.4th 462, 473 (D.C. Cir. 2022) (quoting Susquehanna

Int’l Grp., 866 F.3d at 447). Nor may an agency “simply

summarize[]” the party’s argument “in broad strokes”

21a

and then “announce” that it is persuaded. In re NTE

Conn., LLC, 26 F.4th 980, 988 (D.C. Cir. 2022). Instead,

if the agency decides not to perform its own analysis, it

must “adopt” the party’s submission and “explain[] why”

it finds the submission “persuasive.” Cboe Futures

Exch., LLC v. Sec. & Exch. Comm’n, 77 F.4th 971, 979

(D.C. Cir. 2023) (citation modified).

Here, FERC critically reviewed PJM’s load forecast

and explained why it found the submission persuasive.

FERC acknowledged that there would “inevitably” be

some daylight between PJM’s load forecast and the actual effects of EERs on electrical consumption. Order,

189 FERC ¶ 61,095, P 69. But it determined that the

forecast could reasonably capture those effects, for several reasons.6

First, the forecast uses reliable data. Order,

189 FERC ¶ 61,095, P 69; Rehearing Order, 190 FERC

¶ 61,081, P 32. As FERC explained, the forecast incorporates data from multiple sources, including “publicly

available data” from the EIA, a unit within the U.S. Department of Energy, whose data are widely used in the

industry. Order, 189 FERC ¶ 61,095, P 69; accord Rehearing Order, 190 FERC ¶ 61,081, PP 32-33. PJM then

supplements the EIA data with data acquired from

other sources. Order, 189 FERC ¶ 61,095, P 69; Rehearing Order, 190 FERC ¶ 61,081, PP 32-33. These additional data encompass variables like historical weather

patterns, behind-the-meter battery use, electric-vehicle

charging, solar-energy use and data-center activity. See

6

For some of its discussion, FERC incorporated by reference

portions of the manager’s affidavit, as it was entitled to do. Christian Broad. Network, Inc. v. Copyright Royalty Tribunal, 720 F.2d

1295, 1306 (D.C. Cir. 1983); see Colo. Interstate Gas Co. v. Fed.

Power Comm’n, 324 U.S. 581, 595 (1945).

22a

Rehearing Order, 190 FERC ¶ 61,081, P 32 nn.83-84 (citing, inter alia, Gledhill Aff. ¶¶ 10, 13-15). The reliability

of these data, FERC determined, weighed in favor of

finding the forecast reliable. Order, 189 FERC ¶ 61,095,

P 69; Rehearing Order, 190 FERC ¶ 61,081, P 32.

Second, the forecast employs a plausible mechanism

to capture EERs without the four-year lag. PJM incorporates end-use intensity values, FERC explained,

which track a technology’s use over time and its efficiency. Rehearing Order, 190 FERC ¶ 61,081, P 32

& n.85 (citing Gledhill Aff. ¶¶ 16-23). In other words,

the values project “growing efficiency,” meaning the

greater the impact of an EER project, the “lower the

end-use intensity.” J.A. 121, Gledhill Aff. ¶¶ 20-21.

FERC recognized that these values helped close the gap

between the date EER projects become operational and

when the projects are reflected in the forecast. Order,

189 FERC ¶ 61,095, PP 62, 65; Rehearing Order, 190

FERC ¶ 61,081, P 32.

Third, PJM refines its model on the basis of feedback

from shareholders and outside consultants. Order, 189

FERC ¶ 61,095, P 69 & n.163 (citing Gledhill Aff. ¶¶ 611). Various groups within PJM periodically review the

load forecast, including its Load Analysis Subcommittee

and Planning Committee. J.A. 119, Gledhill Aff. ¶ 10.

PJM also commissioned a publicly available report from

outside consultant Itron, Inc. J.A. 119, Gledhill Aff. ¶ 11.

And after Itron published its report, it met with the

Load Analysis Subcommittee to evaluate the forecast.

J.A. 119, Gledhill Aff. ¶ 11. In FERC’s view, these expert consultations also weighed in favor of crediting the

forecast. Order, 189 FERC ¶ 61,095, P 69; Rehearing

Order, 190 FERC ¶ 61,081, P 32.

23a

Fourth, other metrics confirmed that the forecast

did not significantly underestimate the effects of EERs.

Rehearing Order, 190 FERC ¶ 61,081, P 33 & n.91 (citing

Gledhill Aff. ¶¶ 33-34). The relationship between recent

load forecasts on the one hand and the observed load and

short-term forecast on the other corroborated the load

forecast’s reliability, FERC concluded. Id. P 33 n.91

(citing Gledhill Aff. ¶¶ 33-34). As PJM’s manager had

explained, those relationships would have flipped if the

model had seriously underestimated the effects of

EERs. J.A. 124-25, Gledhill Aff. ¶¶ 33-34. Weighing all

of this evidence, FERC determined that “PJM’s improved load forecast reasonably accounts for energy efficiency measures.” Rehearing Order, 190 FERC

¶ 61,081, P 31.

We believe FERC met its duty to critically review

PJM’s submission. It carefully described the submission

and explained why the submission was suitable for its

intended purpose. Far from “rubberstamp[ing]” PJM’s

analysis, FERC fully explained why it “found [that] evidence persuasive.” In re NTE Conn., 26 F.4th at 988.

Measured against our deferential standard of review,

FERC’s analysis was, we believe, more than satisfactory.

Affirmed, however, emphasizes that FERC did not

have access to the statistical methodology underlying

PJM’s load forecast and so it questions FERC’s ability

to evaluate accurately the forecast. Affirmed mistakes

the level of granularity that our caselaw imposes.

“There is no support” for the assertion that an “untested” and “uncorroborated” affidavit “cannot constitute substantial evidence.” EchoStar Commc’ns Corp.

v. FCC, 292 F.3d 749, 753 (D.C. Cir. 2002); see also Ass’n

of Data Processing Serv. Orgs., Inc. v. Bd. of Governors

of Fed. Rsrv. Sys., 745 F.2d 677, 683-84 (D.C. Cir. 1984)

24a

(“When the arbitrary or capricious standard is performing that function of assuring factual support, there is no

substantive difference between what it requires and

what would be required by the substantial evidence

test… .”). Tellingly, it cites no precedent in which we

have required a regulated party to disclose an underlying statistical model before the agency can adopt the

party’s analysis. And Affirmed’s objection is especially

inapt where, as here, PJM has commissioned a publicly

available report on its methodology and has provided a

detailed affidavit discussing how that methodology

works. See Am. Whitewater v. FERC, 125 F.4th 1139,

1153 (D.C. Cir. 2025) (“Absent evidence to the contrary,

FERC was entitled to rely on representations by parties

who were uniquely in a position to know the relevant information.” (citation modified)).

Affirmed also contends that FERC failed to grapple

with several aspects of the EIA’s data that rendered the

data unsuitable for the load forecast. For example, Affirmed alleges that the EIA fails to account for certain

kinds of EERs, overestimates energy consumption and

has warned against using its analyses as a forecast.

Even if Affirmed is right on the facts, the EIA data

were, as FERC noted, just “one input” for a model that,

on the whole, it found reliable. Rehearing Order, 190

FERC ¶ 61,081, P 33. And it acknowledged that the load

forecast might not perfectly capture EERs’ expected effects. Order, 189 FERC ¶ 61,095, P 69. But because load

forecasting is “inherently uncertain” and PJM’s proposal

cut costs without sacrificing reliability, FERC concluded

that PJM had adequately supported its proposal. Rehearing Order, 190 FERC ¶ 61,081, PP 33-34. We find

nothing unreasoned in that explanation.

Finally, Affirmed highlights that FERC framed

many of its observations in the third person—”PJM

25a

described,” or “PJM explained.” Pet’r’s Br. 45 (citation

modified). In Affirmed’s view, this language calls into

question whether FERC in fact adopted PJM’s submission as its own or simply summarized PJM’s arguments.

We disagree. FERC most probably employed the third

person as acknowledging that PJM carried the burden of

showing its proposal was just and reasonable. See

16 U.S.C. § 824d(e); City of Winnfield v. FERC, 744

F.2d 871, 877 (D.C. Cir. 1984). Its analysis confirms that

understanding. In describing the evidence supporting

the forecast, FERC stated, “We also ... find that PJM has

met its burden to show that its proposal will result in

just and reasonable rates” and that the “forecast reasonably accounts for” EERs. Rehearing Order, 190 FERC

¶ 61,081, P 31; accord id. P 33.

C.

Affirmed also asserts that FERC failed to consider

an important aspect of the problem before it—namely,

the benefits of EER participation. Affirmed maintains

that EER providers use the revenue they receive from

capacity auctions to further incentivize the production

and sale of EERs. The loss of that revenue, Affirmed

says, will diminish EER growth as a matter of “economics 101.” Pet’r’s Br. 48. Yet, it contends, FERC entirely

ignored this consequence of its decision.

It is well settled that an agency’s action is arbitrary

and capricious if it “entirely fail[s] to consider an important aspect of the problem” before it. Motor Vehicle

Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins.

Co., 463 U.S. 29, 43 (1983); accord Ohio v. EPA, 603 U.S.

279, 293 (2024) (“An agency cannot simply ignore an important aspect of the problem.” (citation modified)). The

agency may, however, recognize a problem but conclude

that the problem is mitigated, or its costs outweighed,

26a

by other considerations. Pub. Citizen v. Fed. Motor Carrier Safety Admin., 374 F.3d 1209, 1217 (D.C. Cir. 2004).

We conclude that FERC has met this standard.

FERC acknowledged that its decision could reduce the

incentives to invest in EER projects. It also noted that

“providing capacity payments” for EERs “may increase

incentives to invest” in EERs but that those incentives

were not “necessary to ensure just and reasonable rates

in PJM.” Order, 189 FERC ¶ 61,095, P 70. PJM would

continue to capture EERs “on the demand side,” FERC

emphasized, thereby reducing both the resource requirement and the corresponding capacity payments.

Id. FERC was thus aware of and considered any blunting of incentives. Baystate Franklin Med. Ctr. v. Azar,

950 F.3d 84, 91 (D.C. Cir. 2020). But FERC properly

“face[d] the trade-off” inherent in its decision and determined that “the trade-off was worth it.” Competitive

Enter. Inst. v. Nat’l Highway Traffic Safety Admin., 956

F.2d 321, 323-24 (D.C. Cir. 1992) (emphasis omitted). In

so doing, it balanced conflicting factors as it is sometimes

required to do in enforcing the FPA. See Belmont Mun.

Light Dep’t v. FERC, 38 F.4th 173, 184 (D.C. Cir. 2022).

In a variation on the same theme, Affirmed maintains that FERC’s response was internally inconsistent.

See World Shipping Council v. Fed. Mar. Comm’n, 152

F.4th 215, 221 (D.C. Cir. 2025) (An agency’s decision is

unreasoned if it is “internally inconsistent.” (quotation

omitted)). Affirmed highlights three statements that, in

its view, are inconsistent. First, FERC disclaimed reliance on PJM’s theory that there was no relationship between capacity payments and EER investment. Second,

FERC recognized that capacity payments might incentivize investment in EERs. Third, FERC determined

that the amendment would not undercut grid reliability.

27a

These statements are not inconsistent. In the first,

FERC meant to qualm any fears that it had adopted

PJM’s position that there was no relationship between

the proliferation of EERs and capacity payments. Order, 189 FERC ¶ 61,095, P 27. PJM had, after all, argued

that “the proliferation of energy efficiency projects in

the PJM Region is entirely unrelated to capacity payments.” J.A. 38 (emphasis added). Picking up on that

theme, protestors argued that PJM’s proposal unfairly

imposed a “strict causation standard” on them alone. Order, 189 FERC ¶ 61,095, P 27. For example, one protestor contended that PJM required it to “somehow demonstrate” that it “caused” a customer to purchase an EER

product and that its receipt of capacity payments was

“the reason” for the purchase.7 Protest of Advanced Energy Management Alliance, FERC Dkt. ER 24-2995, at

18 (Sep. 27, 2024). FERC rejected that implication. Instead, it clarified that its decision did “not depend on

[PJM’s] assertions [about] the link between capacity

market payments and [EER] investments.” Order, 189

FERC ¶ 61,095, P 66 n.149. In other words, FERC declined to accept PJM’s hardline stance that there was no

relationship at all between capacity payments and EER

investment. That position, however, is perfectly consistent with FERC’s comment that capacity payments

might incentivize EER investment.

The third statement is also consistent with FERC’s

other positions. FERC recognized the potential incentive effect of capacity payments for EERs. But it does

not follow that removing that incentive would

7

Because only Affirmed petitioned for rehearing, we of course

do not review the substance of the other protestors’ arguments.

16 U.S.C. § 825l(a). We consider those arguments only to contextualize the statements that Affirmed alleges are inconsistent.

28a

necessarily outweigh the benefits of the tariff amendment or render the grid unreliable. As Affirmed itself

points out, FERC believed the amendment would not

undermine grid reliability. There is no statement in the

orders to the contrary. FERC iterated time and again

that the amendment would lower costs without compromising grid reliability. See, e.g., Order, 189 FERC

¶ 61,095, PP 63, 72; Rehearing Order, 190 FERC

¶ 61,081, P 34. Affirmed might disagree with FERC’s

prediction but its disagreement does not render FERC’s

orders internally inconsistent.

Affirmed also contends that FERC failed to recognize and explain its change of position from 2009. At the

time, FERC opined that EERs were a “critical part” of

the energy market. 2009 Order, 126 FERC ¶ 61,275,

P 130. Now, by sanctioning PJM’s attempt to exclude

EER providers, FERC has, Affirmed argues, done a

volte face. We reject this contention as well. Without

opining on the merits of the claim, we note that Affirmed

did not include the claim in its request for rehearing and

so it is forfeit. See 16 U.S.C. § 825l; Ameren Servs. Co.

v. FERC, 893 F.3d 786, 793 (D.C. Cir. 2018) (discussing

the FPA’s “unusually strict exhaustion requirement”

(citation modified)).

D.

Finally, Affirmed argues that FERC overlooked its

reliance interests. Providers like Affirmed structured

their business models around capacity payments, it asserts. And Affirmed had invested $50 million in EERs

that it planned to bid at the 2026/27 and 2027/28 deliveryyear auctions. In Affirmed’s view, FERC failed to contend with the fact that its decision erased Affirmed’s existing investments and its business model.

29a

The governing legal principles are not in dispute.

An agency is not precluded from changing its position.

FCC v. Fox Television Stations, Inc., 556 U.S. 502, 51415 (2009). But when it does, it must “assess whether

there [are] reliance interests, determine whether they

[are] significant, and weigh any such interests against

competing policy concerns.” Regents, 591 U.S. at 33. Put

another way, an agency must be “cognizant” of the reliance interests its decision might upset and “explain[] its

good reasons” for moving forward anyway. MediNatura, Inc. v. Food & Drug Admin., 998 F.3d 931, 943

(D.C. Cir. 2021) (citation modified). It falls to the agency

to decide whether any reliance interests are outweighed

by other factors. Regents, 591 U.S. at 32.

Viewed through this lens, FERC’s decision was reasonable and, hence, permissible. FERC recognized the

reliance interests at stake, weighed their significance

and reasonably concluded that any harm to those interests was outweighed by other considerations. See Cap.

Power Corp. v. FERC, 156 F.4th 644, 650 (D.C. Cir.

2025).

First, FERC acknowledged that its decision might

undermine existing reliance interests. It noted that providers might have expected that their EERs would be

eligible for four years when deciding to invest. Order,

189 FERC ¶ 61,095, P 72. But in its view, several factors

diminished the gravity of those reliance interests. The

tariff did not grant providers an entitlement that PJM

could not change moving forward. Id. The tariff also did

not guarantee that any EER would clear at the auction

and thus generate revenue for the provider. Id. And

Section L.1 tempered the reliance interests, FERC explained, because it expressly tied eligibility to PJM’s

load forecast and thereby put EER providers on notice

that EERs’ eligibility might end. Rehearing Order, 190

30a

FERC ¶ 61,081, P 38. In addition, PJM intended to

honor existing capacity obligations, it noted, ensuring

that providers received some return on their investments. Order, 189 FERC ¶ 61,095, P 72. Finally, FERC

concluded that the record did not disclose the extent to

which providers had already recouped their investments. Id. FERC emphasized, for example, that Affirmed did not disclose how much, if not all, of its $50 million outlay it had already recovered. Rehearing Order,

190 FERC ¶ 61,081, P 51.

Having appraised the reliance interests at stake,

FERC explained why its decision was nonetheless reasonable. FERC determined that PJM’s proposal would

produce “a more efficient capacity market” by reducing

the reliability requirement and, hence, the capacity payments ultimately borne by consumers. Order, 189

FERC ¶ 61,095, P 72. And it would do this without compromising grid reliability. Id. FERC concluded that

these benefits “outweigh[ed] the possible harm” its decision might cause. Id. It highlighted several considerations that diminished the weight of the reliance interests. See MediNatura, 998 F.3d at 942-43 (analyzing factors that diminished or overcame reliance interests).

And it underscored that PJM would continue to honor

existing capacity commitments, which meant that providers’ investments would not be rendered worthless.

Where, as here, the agency has recognized and reasonably balanced the reliance interests at stake, we do not

replace its judgment with our own. Regents, 591 U.S. at

32; see NCTA, 567 F.3d at 671.

Affirmed contends that FERC missed the mark

when it weighed the amendment’s prospectiveness, as

well as the lack of any clearing guarantee, in appraising

its reliance interests. In Affirmed’s view, these points

did not answer its argument that it had reasonably relied

31a

on Section L.4 for the right to participate in at least two

more capacity auctions. Affirmed misconceives FERC’s

analysis. FERC expressly acknowledged that providers

like Affirmed may have expected that their EERs would

be eligible for four consecutive capacity auctions. Order,

189 FERC ¶ 61,095, P 72. It considered the amendment’s prospective nature and the lack of any clearing

guarantee for a different reason—”to properly define

the scope of the reliance interests at stake.” Rehearing

Order, 190 FERC ¶ 61,081, P 37. In FERC’s view, these

factors diminished the interests’ significance, permitting

it to conclude that they were outweighed by other considerations.

Affirmed also maintains that FERC unreasonably

discounted its $50 million investment in EER projects

that it intended to bid at the 2026/27 and 2027/28 delivery-year auctions. It repeatedly highlighted those sunk

investments before the agency, Affirmed asserts, but

FERC nonetheless faulted it for failing to show the extent to which FERC’s decision would thwart its expectations, or how much of the $50 million it had already recouped. FERC permissibly counted that lack of evidence against Affirmed. Once it had determined that

PJM showed the amendment was just and reasonable—

a determination that Affirmed has not challenged—

FERC reasonably faulted Affirmed for failing to respond with persuasive rebuttal evidence. Evergy Kan.

Cent., Inc. v. FERC, 77 F.4th 1050, 1056 (D.C. Cir. 2023).

It noted that the record did not reflect the degree to

which the amendment would thwart existing investments. Order, 189 FERC ¶ 61,095, P 72. It did not dispute that Affirmed had invested in EERs but it observed that Affirmed had not stated whether it had already recouped its investment. Rehearing Order, 190

FERC ¶ 61,081, P 51. Recoupment was no remote

32a

possibility: EER providers received more than $140 million in capacity payments for the 2025/26 delivery year

alone. Id. P 50 n.163. And the projects that Affirmed

planned to bid at the 2026/27 and 2027/28 delivery-year

auctions had already cleared at least one auction, generating some revenue for Affirmed. FERC permissibly

weighed this lack of evidence when considering the reliance interests at stake.

***

For the foregoing reasons, the petition for review is

denied.

So ordered.

33a

PAN, Circuit Judge, dissenting in part:

PJM Interconnection, LLC (“PJM”) is a regional

transmission organization that manages the wholesale

market for electricity in the Mid-Atlantic and Midwestern regions of the United States. PJM conducts auctions

to ensure adequate electricity capacity to meet demand.

Its auction procedures are governed by a tariff that the

Federal Energy Regulatory Commission (“FERC” or

the “Commission”) must approve.

In 2009, PJM amended its tariff to authorize suppliers of Energy Efficiency Resources (“EERs”) to participate in its capacity auctions. To incentivize EER bidding, the tariff guaranteed that if an EER “cleared” an

auction (i.e., if the bid were accepted), it could also be

offered in the next three auctions. Although previously

cleared EERs were not assured of clearance in the subsequent auctions, the opportunity for the EER providers to participate was valuable: So long as the subsequent bids were low enough, the EERs would “clear”

those auctions too and thus would generate additional

payments to the providers. EER providers factored

that possibility into their pricing of energy-efficiency

projects and into their bidding strategies in auctions.

Under the multi-year eligibility rule, the clearing of

an EER in a PJM capacity auction was a legally significant event: The initial clearance conferred on the EER’s

purveyor an entitlement to participate in the next three

auctions. That entitlement was protected by the filedrate doctrine, which constrains PJM’s ability to change

its tariff, and the retroactivity doctrine, which prohibits

FERC from altering the legal consequences arising out

of a past action.

Affirmed Energy, LLC (“Affirmed”) is a provider of

EERs in PJM’s region. Affirmed’s EERs cleared PJM’s

34a

auctions for the 2023/24 and 2024/25 delivery years. It

therefore was entitled to bid those EERs in the 2026/27

and 2027/28 delivery-year auctions. But before that

could happen, PJM amended its tariff in 2024 to bar

EERs from all auctions, effectively changing the filed

rate on which Affirmed relied, and retroactively stripping Affirmed of an entitlement that the tariff had conferred. Because I disagree with my colleagues’ conclusion that the 2024 tariff amendment did not retroactively

alter Affirmed’s eligibility to bid its EERs in specific future auctions, I respectfully dissent from Section II.A of

the court’s opinion. I join the court’s holding that the

2024 amendment was not otherwise arbitrary and capricious.

I.

Background

The Federal Power Act (“FPA” or the “Act”) grants

FERC the authority to regulate “the transmission of

electric energy in interstate commerce” and “the sale of

electric energy at wholesale in interstate commerce.” 16

U.S.C. § 824(b)(1). The Act charges the Commission

with ensuring that electricity rates—including all “rules

and regulations affecting or pertaining to such rates”—

are “just and reasonable” and not “undu[ly] prejudic[ial].” Id. § 824d(a)-(b). Regulated entities that manage the transmission and sale of electricity must file with

FERC “schedules showing all rates and charges for any

transmission or sale ... and the classifications, practices,

and regulations affecting such rates and charges.” Id.

§ 824d(c). FERC must publish those proposed rates and

regulations. Id. Once filed, a rate cannot be changed

without following notice-and-comment procedures.

Id. § 824d(d) (“[N]o change shall be made ... in any such

rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto, except after sixty

days’ notice to the Commission and to the public.”);

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id. § 824d(e) (allowing third parties to submit protests

challenging proposed rates and rules). FERC may

change unjust and unreasonable rates and rules, but it

may do so only prospectively. Id. § 824e(a); see also

Okla. Gas & Elec. Co. v. FERC, 11 F.4th 821, 829 (D.C.

Cir. 2021) (“FERC has no authority under the Act to allow retroactive change in the filed rates.” (cleaned up)).

To carry out its statutory duties, FERC has tasked

regional transmission organizations (“RTOs”) with coordinating the transmission of electricity and managing

the wholesale markets within their respective regions.

FERC v. Elec. Power Supply Ass’n, 577 U.S. 260, 267

(2016). PJM is one such RTO. At least once a year, PJM

administers competitive auctions to procure capacity

from electricity-generating suppliers. “Capacity is not

actual electricity,” but rather “a commitment to produce

electricity or forgo the consumption of electricity” in a

future delivery year. Advanced Energy Mgmt. All. v.

FERC, 860 F.3d 656, 659 (D.C. Cir. 2017). Because capacity “auctions determine the wholesale rates of energy

in interstate commerce, they are subject to Commission

oversight.” XO Energy MA, LP v. FERC, 77 F.4th 710,

714 (D.C. Cir. 2023). PJM therefore must file with

FERC a tariff that sets forth the governing rules for its

capacity auctions. Id.; 16 U.S.C. § 824d(c).

In PJM’s capacity auctions, suppliers bid the price

they are willing to accept in exchange for committing to

provide electricity in a future delivery year. PJM accepts or “clears” bids starting with the lowest rate that

is offered until it has procured enough capacity to meet

its projected demand—commonly referred to as its projected “load.” All accepted bids receive the highest accepted rate, known as the “clearing price.” Hughes

v. Talen Energy Mktg., LLC, 578 U.S. 150, 156 (2016).

PJM typically administers its auctions three years

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before the target delivery year. In doing so, it relies on

a “load forecast” model to predict “the amount of capacity that needs to be procured” for that delivery year.

J.A. 118 (Gledhill Aff. ¶ 5).

In 2009, FERC approved a PJM tariff that authorized EER providers to bid the projected energy savings

from their resources as capacity in PJM’s auctions. PJM

Interconnection, LLC, 126 FERC ¶ 61,275 at P

130 (2009) (the “2009 Order”). Under that 2009 tariff,

EERs played a unique role in PJM’s capacity market.

Unlike power-generating suppliers that commit to producing electricity, EER suppliers—like Affirmed—commit to reducing energy consumption in PJM’s region.

Affirmed contracts with manufacturers, retailers,

and distributors of energy-efficient products to provide

per-unit compensation for each energy-efficient product

that is sold. In exchange, the program partners give Affirmed “the contractual rights to the capacity reductions

from those energy[-]efficient products.” Affirmed Add.

10 (Abram Decl. ¶ 6). Those capacity reductions comprise the EERs that Affirmed bids at a capacity auction.

The payments that Affirmed makes to its program partners for the sale of energy-efficient products incentivize

the partners to increase their sales of such products. If

Affirmed’s EERs clear at the capacity auction, Affirmed

receives the clearance price from PJM. The dollar

amounts at issue are significant: In PJM’s auction for

the 2024/25 delivery year, EER suppliers like Affirmed

received more than $100 million in revenue for cleared

EER bids.

The instant petition for review concerns, in relevant

part, Section L.4 of PJM’s 2009 tariff. Section L.4 provides that an EER that clears a capacity auction may be

offered in the next three consecutive auctions:

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[An] Energy Efficiency Resource that clears an

auction for a Delivery Year may be offered in

auctions for up to three additional consecutive

Delivery Years, but shall not be assured of

clearing in any such auction… .

J.A. 61.1

In its 2009 Order approving PJM’s tariff, FERC confirmed that “PJM’s proposal would allow an [energy-efficient] resource to bid into the auction, and if it is accepted, to bid for an additional three consecutive years.”

126 FERC ¶ 61,275 at P 131. FERC’s approval of that

provision rested on two policy considerations. First, as

the majority explains, PJM adopted the multiple-auction

rule to address the four-year lag between when consumers installed energy-efficient products and when PJM’s

load forecast model accounted for the corresponding reduction in energy demand. Id. at P 132. Second, FERC

also approved the tariff provision to make it more likely

that EER suppliers would receive additional payments

for their positive contributions. Unlike power generators that produce electricity each year, energy-efficient

products continuously reduce energy demand and capacity needs in PJM’s region over time.

1

Another provision of the 2009 tariff, Section L.1, defines an

EER as follows:

An Energy Efficiency Resource is a project ... designed to

achieve a continuous ... reduction in electric energy consumption at the end-use customer’s retail site that is not

reflected in the peak load forecast prepared for the Delivery Year for which the Energy Efficiency Resource is

proposed, and that is fully implemented at all times during

such Delivery Year, without any requirement of notice,

dispatch, or operator intervention.

J.A. 60.

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Consider, for example, a consumer who has installed an

energy-efficient refrigerator in her home. That refrigerator will continuously reduce the homeowner’s energy

consumption over multiple years and, as a result, will

lower the expected energy demand that PJM’s capacity

auction must meet. When FERC approved the participation of EERs in PJM’s auctions, it expressly acknowledged that “energy efficiency is a permanent reduction

in load … .” Id. at P 136. Section L.4 was intended to

“allow energy efficiency resources that clear in [an] auction to receive ... capacity payments for up to four consecutive Delivery Years.” Id. at P 121. That benefit to

EER suppliers reflected FERC’s view that EER projects served “a critical part of efficient energy markets,

and should be treated comparably to other types of resources, by being allowed to participate in base residual

auctions and be paid the auction clearing price when

they are accepted in the auction.” Id. at P 130.

Since 2014, Affirmed has bid its EERs in nearly

thirty auctions. In preparation for the auctions, Affirmed “calculate[d] and aggregate[d] the expected future energy capacity reductions” from its energy-efficiency projects and, in turn, bid those capacity reductions in PJM’s auctions. Affirmed Add. 10 (Abram Decl.

¶ 7). PJM reviewed and approved Affirmed’s calculation

“methodologies” to verify that its energy-efficiency projects had, in fact, reduced the expected capacity load.

Id.; see also 2009 Order, 126 FERC ¶ 61,275 at P 121.

From 2022 to 2024, Affirmed invested $50 million to

incentivize the purchase and installation of energy-efficient products, and to acquire the contractual rights to

the attendant capacity reductions. Affirmed then bid

the energy savings from those products in PJM’s auctions for the 2023/24 and 2024/25 delivery years. Affirmed’s EERs cleared both auctions. As a result, the

39a

operative tariff guaranteed Affirmed the opportunity to

bid the continued energy savings from those EERs in

PJM’s 2025/26, 2026/27, and 2027/28 delivery-year auctions.

But before Affirmed could bid its EERs in the

2026/27 and 2027/28 delivery-year auctions, PJM

changed course. In 2024, PJM proposed a tariff amendment that barred EERs from its capacity auctions altogether. Specifically, its 2024 amendment declared that

“no Energy Efficiency Resources shall qualify to be offered into the [capacity] Auctions beginning with the

2026/2027 Delivery Year.” J.A. 94. The proposed

amendment rendered Affirmed ineligible to bid its

EERs in the 2026/27 and 2027/28 delivery-year auctions,

even though its EERs had cleared the 2023/24 and

2024/25 delivery-year auctions.2

Affirmed submitted a protest opposing PJM’s 2024

tariff amendment. In relevant part, Affirmed argued

that because its EERs cleared the 2023/24 and 2024/25

delivery-year auctions, Affirmed had secured the right

to bid its EERs in up to three additional consecutive capacity auctions, under the operative tariff. Affirmed objected that PJM’s proposed tariff amendment would divest Affirmed of its entitlement to bid its EERs in the

2026/27 and 2027/28 delivery-year auctions. FERC nevertheless approved the 2024 tariff amendment as applied

2

PJM justified the change by explaining that its improved load

forecast model could now incorporate the expected energy savings

from energy-efficient products. As the majority explains, PJM was

entitled to change its policy regarding EERs, and its tariff amendment was not arbitrary and capricious. I focus here on the retroactive effects of the change on Affirmed’s right to participate in future

auctions after its EERs cleared the 2023/24 and 2024/25 deliveryyear auctions.

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to Affirmed’s previously cleared EERs, concluding that

the original multi-year eligibility provision did not preclude PJM from implementing “forward-looking revisions to Energy Efficiency Resources’ eligibility more

broadly.” PJM Interconnection, LLC, 189 FERC

¶ 61,095 at P 71 (2024).

II. The Filed-Rate and Retroactivity Doctrines

The Commission may adjust electricity rates and related regulations only prospectively. This constraint on

FERC’s authority rests on two related principles: the

filed-rate doctrine and the rule against retroactive ratemaking. The filed-rate doctrine is grounded in provisions of the Federal Power Act that require regulated

entities (like PJM) “to charge only the rates filed with

FERC and to change their rates only prospectively.”

Okla. Gas, 11 F.4th at 829. That statutory prohibition on

retroactive changes to the filed rate “is not limited to

‘rates’ per se”; it also “extends to matters directly affect[ing] ... rates”—such as the EER auction-participation rule at issue here. Id. (cleaned up) (quoting

Nantahala Power & Light Co. v. Thornburg, 476 U.S.

953, 966-67 (1986)). The scope of the doctrine is consistent with the Act’s broad language requiring regulated entities to publicly file proposed changes in any

“rate, charge, classification, or service, or in any rule,

regulation, or contract relating thereto.” 16 U.S.C.

§ 824d(d).

The rule against retroactive ratemaking is a “corollary” and “logical outgrowth” of the filed-rate doctrine.

SFPP, L.P. v. FERC, 967 F.3d 788, 801, 802 (D.C. Cir.

2020). It generally “prohibits the Commission from adjusting current rates to make up for a utility’s over- or

under-collection in prior periods.” Old Dominion Elec.

Coop. v. FERC, 892 F.3d 1223, 1227 (D.C. Cir. 2018).

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Together, the “filed rate doctrine and the rule

against retroactive ratemaking leave the Commission no

discretion to waive the operation of a filed rate or to retroactively change or adjust a rate for good cause or for

any other equitable considerations.” Old Dominion

Elec., 892 F.3d at 1230; see also Okla. Gas, 11 F.4th at

829-30 (noting that the doctrines are “nearly impenetrable shield[s]” that do “not yield, no matter how compelling the equities”). Strict application of those principles

gives effect to Congress’s command for FERC to ensure

predictable and stable electricity rates. NSTAR Elec.

& Gas Corp. v. FERC, 481 F.3d 794, 800 (D.C. Cir. 2007);

see also PJM Power Providers Grp. v. FERC, 96 F.4th

390, 402 (3d Cir. 2024) (“FERC has no authority to disregard Congress’s will” in achieving predictable auction

rules.); cf. Pub. Utilities Comm’n of Cal. v. FERC, 894

F.2d 1372, 1383 (D.C. Cir. 1990) (The Natural Gas Act’s

ban on retroactive ratemaking “reflects a congressional

determination that parties in the industry need to be

able to rely on the finality of approved rates, and that

this interest outweighs the value of being able to correct

for decisions that in hindsight may appear unsound.”).

In evaluating the retroactivity of a tariff provision

approved by FERC, courts look to the Supreme Court’s

decision in Landgraf v. USI Film Products, 511 U.S. 244

(1994), for guidance. See, e.g., PJM Power Providers,

96 F.4th at 398 (noting that the Federal Power Act does

not define “retroactivity” and drawing on Landgraf).

Landgraf explains that a law or regulation is retroactive

if it “takes away or impairs vested rights acquired under

existing laws, or creates a new obligation, imposes a new

duty, or attaches a new disability, in respect to transactions or considerations already past.” 511 U.S. at 269

(cleaned up). A regulation does not have retroactive effect “merely because it is applied in a case arising from

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conduct antedating the [regulation’s] enactment, ... or

upsets expectations based in prior law.” Id. Rather, the

critical question is whether the new provision “attaches

new legal consequences to events completed before its

enactment.” Id. at 270; see also Bd. of Cnty. Comm’rs

v. EPA, 72 F.4th 284, 292-93 (D.C. Cir. 2023) (“[R]etroactive rules alter the past legal consequences of past actions.”).

Landgraf instructs that the “conclusion that a particular rule operates retroactively comes at the end of a

process of judgment concerning the nature and extent of

the change in the law and the degree of connection between the operation of the new rule and a relevant past

event.” 511 U.S. at 270 (cleaned up). The analysis is

therefore “fact-intensive,” Shambie Singer, Sutherland

Statutory Construction § 41:4 (8th ed. 2018), and informed by “familiar considerations of fair notice, reasonable reliance, and settled expectations,” Landgraf, 511

U.S. at 270.

III. Analysis

In my view, PJM’s 2024 tariff amendment is impermissibly retroactive and violates the filed-rate doctrine

to the extent that it strips Affirmed of its entitlement to

bid its EERs in the 2026/27 and 2027/28 delivery-year

auctions—an entitlement that attached when Affirmed’s

EERs cleared the 2023/24 and 2024/25 delivery-year

auctions. Under Landgraf, the 2024 tariff amendment

“takes away or impairs” Affirmed’s “vested right” to bid

in subsequent auctions, which was “acquired under [the]

existing [tariff].” 511 U.S. at 269 (cleaned up). The

amendment also “attaches a new disability ... in respect

to transactions or considerations already past.” Id. The

“past” events were the 2023/24 and 2024/25 delivery-

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year auctions, in which Affirmed earned the right to participate in subsequent auctions by clearing its EERs.

Under Landgraf, the retroactivity analysis turns on

whether PJM’s pre-existing tariff attached a past legal

consequence to a past action. That inquiry begins with

interpreting the tariff’s “plain meaning,” understood

through both “its text and context.” Okla. Gas, 11 F.4th

at 827. The relevant tariff provision here, Section L.4,

plainly states that an EER that “clears an auction for

a Delivery Year may be offered in auctions for up to

three additional consecutive Delivery Years, but shall

not be assured of clearing in any such auction.” J.A. 61.

The guarantee of three subsequent years of auction participation is so clear that my colleagues in the majority

“do not doubt that under Section L.4’s plain meaning, Affirmed obtained permission to bid at up to four consecutive auctions.” Maj. Op. at 14.

Landgraf notes that the fact-intensive retroactivity

analysis is informed by “familiar considerations of fair

notice, reasonable reliance, and settled expectations.”

511 U.S. at 270. Here, the multi-year participation provision in Section L.4 was intended to provide an incentive for EER suppliers to participate in PJM’s capacity

auctions and to more accurately account for the contributions of EERs to the electricity market. Because

EERs provide ongoing reductions in demand for future

delivery years, FERC determined that EER “providers

should have the ability to obtain the full economic benefits of their investments” by participating in up to four

auctions. 2009 Order, 126 FERC ¶ 61,275 at P 137.

FERC’s 2009 Order and the tariff itself thus set the expectation that EER suppliers would be granted multiyear participation in capacity auctions if their EERs

cleared an initial auction. In other words, that expectation was embodied in the filed rate.

44a

The tariff’s multi-year auction provision, approved

by the 2009 Order, drove Affirmed to substantially invest in EERs and to bid them in the 2023/24 and 2024/25

delivery-year auctions. In executing its business plan

and formulating its bids, Affirmed relied on Section L.4’s

guarantee that if its EERs cleared an auction, Affirmed

would secure multi-year eligibility to offer the continued

energy savings from those EERs in three consecutive

auctions. Critically, Affirmed submitted EER bids that

cleared the auctions for the 2023/24 and 2024/25 delivery

years. Affirmed’s settled expectation at the time of

clearance was that it would be permitted to participate

in the next three capacity auctions.

Despite the plain meaning of Section L.4 and Affirmed’s reliance on it, my colleagues in the majority conclude that the 2024 amendment that bars EERs from

PJM’s capacity auctions operates only prospectively in

this case. Maj. Op. at 16-19. They reason that the 2024

amendment does not disturb Affirmed’s past entitlement but instead merely frustrates Affirmed’s expectations of participating in future auctions. Id. Although

the difference between a “past entitlement” and a mere

“expectation” is not easy to parse, my colleagues do not

attempt to explain why they view the change to PJM’s

tariff as “prospective” as applied to Affirmed, when Affirmed’s right to participate in future auctions ripened in

the past—i.e., during the auctions for the 2023/24 and

2024/25 delivery years.

As I see it, the key facts before us are that (1) Affirmed’s right to bid its EERs in the 2026/27 and 2027/28

delivery-year auctions vested when its EERs cleared

the 2023/24 and 2024/25 delivery-year auctions; (2) the

filed-rate doctrine safeguards Affirmed’s reliance on

Section L.4 of the operative tariff, which PJM filed and

FERC approved; and (3) the prohibition against

45a

retroactive rate-making and general principles of retroactivity further constrain the ability of PJM and FERC

to alter the tariff to the extent that it affects a “past legal

consequence”—here, the vesting of Affirmed’s rights

when its EERs cleared past auctions.

The cases cited by my colleagues in their analysis of

the retroactivity issue are factually and legally distinguishable. None of them addresses a situation where a

change in regulatory policy altered a past legal consequence—i.e., where a legal right was conferred on the

petitioning party in the past but was stripped away by

the new rule. Instead, the majority’s cited cases largely

address circumstances where companies made business

decisions based on their understanding of certain rules

that later changed, thereby upsetting the companies’ expectations. The critical distinction here is that Affirmed’s EERs already cleared auctions for the 2023/24

and 2024/25 delivery years, and the operative tariff guaranteed that Affirmed therefore would be entitled to bid

those EERs in the 2026/27 and 2027/28 delivery-year

auctions. The cases cited by the majority would be more

on point if Affirmed had not cleared any auctions in the

past but argued that it should be allowed to participate

in the next auction because it had invested time and

money to prepare a bid in reliance on the terms of the

pre-existing tariff. But instead, Affirmed’s past clearing

bids resulted in a past legal consequence—the right to

bid again—that sets this case apart. It is also notable

that my colleagues rely on cases involving the Federal

Communications Commission (“FCC”) that do not involve filed rates or the application of the filed-rate doctrine, even though the filed-rate doctrine constrains

FERC’s ability to change the terms of the tariff at issue

in this case.

46a

My colleagues principally rely on DIRECTV, Inc.

v. FCC, 110 F.3d 816 (D.C. Cir. 1997). There, we addressed whether the FCC had retroactively divested

permittees of a right to receive satellite channels. Id. at

821. Initially, the FCC issued an order that reserved for

permittees “the first right” to a pro rata share of any additional channels that might later be surrendered or canceled. Id. at 822. Years later, the FCC canceled and reclaimed a forfeited channel. The agency, however, abandoned “its existing, but never implemented, policy of reassigning channels on a pro rata basis among existing

permittees… .” Respondents’ Brief at 6, DIRECTV, 110

F.3d 816 (No. 96-1001). Instead, when it reclaimed the

forfeited channel, the FCC announced its decision to

adopt a new rule reallocating the forfeited channel

through a competitive auction. Id. We rejected the permittees’ retroactivity claim because the FCC’s former

pro rata policy did not grant them “the right to any specific channel.” DIRECTV, 110 F.3d at 826. Rather, the

former policy had prospectively established “the Commission’s plan for the distribution of reclaimed channels,

should there ever be any.” Id.

DIRECTV is inapposite because it involved a prospective policy that the agency announced but never implemented. Here, by contrast, the relevant provision of

the 2009 tariff was in effect for fifteen years until PJM

decided to change it. Moreover, the permittees in DIRECTV took no action that triggered an obligation by

the FCC; but in the instant case, Affirmed succeeded in

clearing two capacity auctions with its EERs, and that

obligated PJM to allow it to participate in up to three

more auctions. Although the permittees in DIRECTV

made unilateral business decisions to spend “millions of

dollars building satellites ... for more channels,” that action had no legal consequence under the agency’s policy.

47a

110 F.3d at 826. Thus, the permittees’ business decision

rested solely on an “expectation[]” that the FCC would

implement the pro rata policy. Id. But here, PJM’s tariff

amendment operated retroactively because it was “substantively inconsistent with a prior agency practice and

attache[d] new legal consequences to events completed

before its enactment”—i.e., the amendment deprived

Affirmed of a right that it had already secured when its

EERs cleared in past auctions. Arkema Inc. v. EPA, 618

F.3d 1, 7 (D.C. Cir. 2010) (cleaned up).

Similarly, National Cable & Telecommunications

Ass’n v. FCC (“NCTA”) is not analogous because it also

involved a straightforward case of upsetting business

expectations. 567 F.3d 659 (D.C. Cir. 2009). In NCTA,

the FCC banned exclusivity agreements between cable

companies and owners of apartment buildings due to the

agreements’ anticompetitive effects. Id. at 662. The petitioners challenged the rule by arguing, in relevant

part, that the ban’s application to existing contracts was

retroactive. Id. at 670. We rejected that argument, noting that “[i]t is often the case that a business will undertake a certain course of conduct based on the current

law, and will then find its expectations frustrated when

the law changes.” Id. (quoting Chem. Waste Mgmt.

v. EPA, 869 F.2d 1526, 1536 (D.C. Cir. 1989)). Such a

change in the law that merely upsets expectations is not

retroactive. But we reaffirmed in NCTA that altering

“past legal consequences of past actions” would be. Id.

As discussed, the key fact in the case before us is that

Affirmed’s entitlement to participate in the auctions for

the 2026/27 and 2027/28 delivery years was a “past legal

consequence” of its “past action” of submitting clearing

bids in the 2023/24 and 2024/25 delivery-year auctions.

Likewise, my colleagues’ reliance on Mobile Relay

Associates v. FCC, 457 F.3d 1 (D.C. Cir. 2006), is

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misplaced. In Mobile Relay, we rejected a retroactivity

challenge to the FCC’s decision to reconfigure portions

of a radio spectrum, which incidentally impaired the petitioners’ ability to use their spectrum licenses. Id. at 10.

The petitioners argued that, when they purchased their

licenses at an auction, the FCC had advertised certain

features that allowed “future flexible use,” which was

“one of the economically advantageous assets of the license.” Petitioners’ Brief at 11, Mobile Relay, 457 F.3d

1 (No. 04-1413). We held that the FCC’s reconfiguration

decision that made the licenses less advantageous posed

no retroactivity concern because the petitioners’ purchase of the licenses created only a contingent expectation—not a fixed legal entitlement—that the FCC’s licensing regime would continue to permit flexible operations indefinitely. Mobile Relay, 457 F.3d at 10-11. The

FCC’s reconfiguration decision prospectively affected

future operations and did not alter the legal effect of any

past event because the petitioners’ licenses did not make

any guarantees or promises about the configuration of

the spectrum. That, of course, is very different from the

situation now before us, where Section L.4 of the preexisting tariff guaranteed Affirmed’s entitlement to participate in future auctions once its EERs cleared an initial auction.

Notably, we observed in Mobile Relay that the

FCC’s licensing scheme did not, by itself, create vested

rights or otherwise trigger fixed legal consequences

based on the terms of the licenses because “the [FCC]

has the unilateral authority, provided it gives notice to

the licensee, to modify a license ‘either for a limited time

or for the duration of the term thereof, if in the judgment

of the Commission such action will promote the public

interest, convenience, and necessity.’ ” 457 F.3d at

12 (quoting 47 U.S.C. § 316(a)(1)); see also Celtronix

49a

Telemetry, Inc. v. FCC, 272 F.3d 585, 589 (D.C. Cir.

2001) (The FCC “always retain[s] the power to alter the

term of existing licenses by rulemaking.” (emphasis

added)). That statutory backdrop stands in stark contrast to the regulatory scheme that we consider here.

The Communications Act authorizes the FCC “to modify

a license” midstream, “if in the judgment of the Commission such action will promote the public interest, convenience, and necessity,” Mobile Relay, 457 F.3d at 12 (quoting 47 U.S.C. § 316(a)(1)); but the tariff amendment in

the instant case was subject to the filed-rate doctrine,

which “leave[s] the Commission no discretion to waive

the operation of a filed rate or to retroactively change or

adjust a rate for good cause or for any other equitable

considerations,” Old Dominion Elec., 892 F.3d at 1230.

Although my colleagues mention that courts have applied the filed-rate doctrine “across the spectrum of regulated utilities,” Maj. Op. at 18 n.2, they fail to

acknowledge that the filed-rate doctrine “does not have

a life of its own. Its application depends on the underlying statute,” Towns of Concord, Norwood, & Wellesley

v. FERC, 955 F.2d 67, 73 (D.C. Cir. 1992). In this instance, the specific features of the governing statutes

are critical, and they make Mobile Relay inapt because

the FCC in that case was not subject to the same constraints that bind FERC in this case.3

3

To be sure, Title II of the Communications Act, 47 U.S.C.

§ 203, requires common carriers to publicly file their rates and tariffs with the FCC, subject to the filed-rate doctrine. Am. Tel. & Tel.

Co. v. Cent. Off. Tel., Inc., 524 U.S. 214, 221-22 (1998). But the cases

cited by my colleagues do not involve the rates filed by regulated

parties and instead primarily consider the FCC’s broader regulatory authority to manage licenses under Title III of the Communications Act, 47 U.S.C. §§ 301, 316.

50a

In sum, the FCC cases cited by my colleagues shed

little light on the question of retroactivity in the present

context. To my mind, the most analogous case is

Arkema, which more precisely addresses the meaning of

“past legal consequence.” 618 F.3d at 7. There, the

EPA’s former rule allowed companies to permanently

transfer their baseline allowances of hydrochlorofluorocarbons production. Id. at 4. Under that rule, the petitioner completed a permanent transfer of its baseline allocation, which the EPA approved. Id. at 7. The EPA

later amended its rule and refused to honor the previously approved transfer. Id. at 3. We held that the new

rule operated retroactively because it sought to “undo

these completed transactions.” Id. at 9. As we explained, “[t]he Agency’s approval and acknowledgment

of Petitioners’ actions distinguish[] this case from situations where a company’s unilateral business expectations are thwarted by a change in the regulatory framework.” Id. at 8. Similarly here, FERC approved—and

PJM implemented—a tariff that authorized EERs’ participation in auctions and conferred multi-year eligibility

once a resource cleared the first auction. This “successive iteration in a long-running regulatory regime” remained in effect for fifteen years. Id. at 9. Refusing to

honor Affirmed’s vested entitlement to bid the continued energy savings from its cleared EERs will “undo

what [FERC] had, in practice, approved under the” 2009

tariff. Id. Heeding Landgraf’s directive to assess the

nature and extent of the tariff amendment’s change, this

case is most similar to Arkema: PJM’s 2009 tariff operated to approve and acknowledge Affirmed’s right to

participate in the auctions for the 2026/27 and 2027/28

delivery years; Affirmed’s right to bid in subsequent

auctions was a legal consequence of its successful EER

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bids in earlier auctions; and the 2024 amendment sought

to “undo [those] completed transactions.” Id.

*

*

*

For the foregoing reasons, I would grant Affirmed’s

petition in part and vacate FERC’s approval of PJM’s

2024 tariff amendment to the extent that it deprives Affirmed of its vested right to participate in the capacity

auctions for the 2026/27 and 2027/28 delivery years. My

fact-bound conclusion does not suggest, as PJM and

FERC claim, that utilities may never amend their tariffs. What distinguishes this case is the vesting of Affirmed’s right to bid its EERs in specific future auctions,

under the terms of the tariff provision at issue. I agree

with my colleagues’ conclusion that FERC may otherwise approve PJM’s proposed tariff amendment and that

it may operate prospectively. I disagree only with the

retroactive divestment of Affirmed’s entitlement to participate in the 2026/27 and 2027/28 auctions. I thus respectfully dissent from Section II.A of the majority opinion.

53a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 25-1091

AFFIRMED ENERGY, LLC,

Petitioner,

v.

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent,

MONITORING ANALYTICS, LLC, AND

PJM INTERCONNECTION, LLC,

Intervenors

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

Before: HENDERSON and PAN, Circuit Judges,

and GINSBURG, Senior Circuit Judge

Filed February 10, 2026

JUDGMENT

This cause came to be heard on the petition for review of orders of the Federal Energy Regulatory Commission and was argued by counsel. On consideration

thereof, it is

ORDERED and ADJUDGED that the petition for

review be denied, in accordance with the opinion of the

court filed herein this date.

54a

Per Curiam

FOR THE COURT:

Clifton B. Cislak, Clerk

BY:

/s/

Daniel J. Reidy

Deputy Clerk

Date: February 10, 2026

Opinion for the court filed by Circuit Judge Henderson.

Opinion dissenting in part filed by Circuit Judge Pan.

55a

APPENDIX C

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

189 FERC ¶ 61,095

Docket No. ER24-2995-000

PJM Interconnection, L.L.C.

(Issued November 5, 2024)

Before Commissioners:

Willie L. Phillips, Chairman; Mark C. Christie,

David Rosner, Lindsay S. See and Judy W. Chang

ORDER ACCEPTING TARIFF REVISIONS

1. On September 6, 2024, pursuant to section 205 of the

Federal Power Act (FPA)1 and part 35 of the Commission’s regulations,2 PJM Interconnection, L.L.C. (PJM)

filed revisions to the PJM Open Access Transmission

Tariff (Tariff) and Reliability Assurance Agreement

(RAA) to prospectively sunset Energy Efficiency Resource participation in PJM’s wholesale capacity market,

the Reliability Pricing Model (RPM).3 In this order, we

1

16 U.S.C. § 824d.

2

18 C.F.R. pt. 35 (2024).

3

Transmittal at 1; PJM Interconnection, L.L.C./Intra-PJM

Tariffs, ATTACHMENT DD-1, OATT ATTACHMENT DD-1

(24.0.0) (Proposed Tariff, Attachment DD-1), § L; PJM Interconnection, L.L.C./Intra-PJM Tariffs, RAA SCHEDULE 6 (23.0.0) (Proposed RAA Schedule 6), § L. PJM adds that its proposal seeks to

appropriately recognize energy efficiency on the demand side of the

56a

accept PJM’s proposed revisions, effective November 6,

2024, as requested.

I.

Background

2. In March 2009, the Commission accepted in relevant

part proposed tariff revisions from PJM to incorporate

energy efficiency participation in the RPM.4 PJM’s filing

followed Commission approval of a comprehensive settlement in which PJM agreed to establish an additional

process within the PJM region for pursuing and supporting demand response and incorporating energy efficiency applications into its capacity market.5 In the

March 2009 Order, the Commission agreed with PJM

that, based on the configuration of the PJM capacity

market at that time, PJM’s proposal corrected “a mismatch between [energy efficiency]-related load reductions and capacity requirement levels” due to the fouryear lag between when an Energy Efficiency Resource

is initially installed and when its load-reducing effects

are reflected in PJM’s load forecast and the associated

installed reserve requirement for the Delivery Year.6

The Commission noted that, “[a]s a result of not including the [energy efficiency] in the load forecast, the [Variable Resource Requirement] curve fails to move to the

capacity market, where it is already reflected in the load forecast in

the aggregate. Transmittal at 4.

4

PJM Interconnection, L.L.C., 126 FERC ¶ 61,275, at PP 131132 (March 2009 Order), order on clarification, 127 FERC ¶ 61,104,

order on clarification & reh’g, 128 FERC ¶ 61,157 (2009).

5

PJM Interconnection, L.L.C., 117 FERC ¶ 61,331, at P 133

(2006) (December 2006 Order), order on reh’g & clarification, 119

FERC ¶ 61,318 (June 2007 Order), denying reh’g, 121 FERC

¶ 61,173 (2007).

6

March 2009 Order, 126 FERC ¶ 61,275 at P 134.

57a

left, increasing the price paid and capacity acquired compared with a load forecast that correctly included [energy efficiency].”7

3. The PJM Tariff and RAA define an Energy Efficiency Resource as:

a project, including installation of more efficient

devices or equipment or implementation of more

efficient processes or systems, exceeding thencurrent building codes, appliance standards, or

other relevant standards, designed to achieve a

continuous (during peak summer and winter periods as described herein) reduction in electric

energy consumption at the end-use customer’s

retail site that is not reflected in the peak load

forecast prepared for the Delivery Year for

which the Energy Efficiency Resource is proposed, and that is fully implemented at all times

during such Delivery Year, without any requirement of notice, dispatch, or operator intervention.8

4. RAA Schedule 6, section L.3 and Tariff, Attachment

DD-1, section L.3 provide, in part, that an Energy Efficiency Resource may be offered with a price offer or as

self-supply and, if an Energy Efficiency Resource clears

the auction, it shall receive the applicable capacity resource clearing price. RAA Schedule 6, section L.4 and

Tariff, Attachment DD-1, section L.4 provide that an

Energy Efficiency Resource that clears an auction for a

7

8

Id.

PJM Interconnection, L.L.C./Intra-PJM Tariffs, ATTACHMENT DD-1, OATT ATTACHMENT DD-1 (23.0.0) (Tariff, Attachment DD-1), § L.1; PJM Interconnection, L.L.C./Intra-PJM Tariffs,

RAA SCHEDULE 6 (22.0.0) (RAA Schedule 6), § L.1.

58a

delivery year “may be offered in auctions for up to three

additional consecutive Delivery Years, but shall not be

assured of clearing in any such auction.”9

II. PJM Filing

A. 2016 Load Forecast Methodology Revision

5. PJM states that it improved its peak load forecast in

2016 by developing an end-use intensity modeling methodology that directly captures the impact of energy efficiency projects and thereby eliminates the four-year lag

between when energy efficiency projects are installed

and when they are reflected in the load forecast.10 PJM

explains that its peak load forecast has been primarily

based on publicly available data from the Energy Information Administration (EIA) and relies on Form EIA861M for historic energy use data and the EIA’s Annual

Energy Outlook for forward-looking energy use data to

forecast energy efficiency impacts on load. As a result

of this change, PJM states that it now includes energy

efficiency on the demand side on a forward basis (i.e.,

within the load forecast) for each RPM auction and that

it is no longer reasonable to claim that energy efficiency

is not already reflected in the load forecast.

6. PJM explains that, after its load forecasting methodology improvements, it adopted an “addback” to continue accommodating Energy Efficiency Resource capacity market participation while avoiding doublecounting the impact of Energy Efficiency Resources on

both the supply and demand sides of the RPM.11 PJM

9

Tariff, Attachment DD-1, § L.1; RAA Schedule 6, § L.1.

10

11

Transmittal at 14-15, 23-24.

Id. at 5, 24-30 & attach. C, Aff. of Andrew Gledhill on Behalf

of PJM Interconnection, L.L.C. (Gledhill Aff.) ¶¶ 38-42. PJM

59a

asserts that improper double-counting could cause PJM

to fail to procure sufficient capacity to maintain reliability. PJM states that it implements the addback by adding a MW to the reliability requirement for each MW of

Energy Efficiency Resources that clears in an RPM auction. Thus, PJM explains, Energy Efficiency Resources

no longer contribute to meeting the reliability requirement and may not serve as a substitute for any other capacity resource committed in the RPM auction. PJM asserts that load therefore pays capacity prices to Energy

Efficiency Resources without receiving a corresponding

benefit.

B. Proposed Tariff Revisions

7. PJM proposes to add a provision to its rules governing participation of Energy Efficiency Resources stating

that those rules are “effective only through the

2025/2026 Delivery Year” and that “no Energy

asserts that, without the addback, double-counting would occur because Energy Efficiency Resources would reduce the reliability requirement—therefore counting on the demand side—and contribute to meeting the region’s reliability needs—thus, counting on the

supply side. To illustrate the double-counting risk, PJM describes

a hypothetical scenario in which (1) PJM has an initial 1,000 megawatt (MW) reliability requirement and (2) energy efficiency projects contribute 50 MW in load reduction. Because the load forecast

reflects the 50 MW reduction caused by energy efficiency projects,

PJM’s reliability requirement, or the amount of demand, decreases

from 1,000 MW to 950 MW. On the supply side, the auction clears

900 MW of generation and demand response resources and 50 MW

of energy efficiency capability, for a total of 950 MW of cleared capacity. But while the market ostensibly clears 950 MW, because the

same 50 MW of energy efficiency capability that reduced the reliability requirement is also used to meet the reliability requirement,

PJM only procures 900 MW of generation and demand response resources to meet a 950 MW reliability requirement. Transmittal at

28-29.

60a

Efficiency Resources shall qualify to be offered into the

RPM Auctions beginning with the 2026/2027 Delivery

Year.”12 PJM states that its proposal is prospective and

would not unsettle RPM auction results, including for

the 2025/2026 Delivery Year Base Residual Auction

(BRA), or undo any existing Energy Efficiency Resource commitments.13

8. PJM asserts that its proposed revisions are just and

reasonable. PJM contends that its proposal is the most

effective way to account for energy efficiency in the

RPM while avoiding double-counting a MW of energy efficiency capability on both the supply side and demand

side, which would create reliability concerns.14 Otherwise, PJM states that it must either carve out energy efficiency impacts from the load forecast or maintain the

status quo addback, each of which creates problems.

PJM states that carving out energy efficiency measures

from the peak load forecast would be methodologically

difficult and would overstate the amount of capacity that

PJM needs to procure to maintain reliability unless all

energy efficiency capability offers into and clears capacity auctions for each given delivery year. PJM argues

that the addback, for its part, requires load to pay capacity rates for load reductions that would naturally occur

12

Transmittal at 10, 31 (quoting Proposed Tariff, Attachment

DD-1, § L.1; Proposed RAA Schedule 6, § L.1).

13

PJM states that, as a result, Energy Efficiency Resources

that cleared the RPM auctions for the 2025/2026 Delivery Year will

need to follow through on their commitments and submit compliant

post-installation measurement and verification reports in advance

of that delivery year to substantiate their cleared quantities. Id. at

10.

14

Id. at 31-35.

61a

and from which load already receives benefits through

the reduced load forecast.

9. PJM contends that energy efficiency measures are

proliferating, and will continue to do so, because of: (1)

customers responding to market prices reflected in their

retail energy bills; (2) end-use customers purchasing

more electrically efficient items; (3) local and state adoption of updated and stricter energy efficiency standards,

such as building codes; and (4) residential programs and

utility programs carried out in accordance with applicable state agency directives.15 PJM argues that none of

these actions depend on capacity payments, that end-use

customers may not even be aware of such payments, and

that capacity payments to Energy Efficiency Resources

therefore do not drive investment in energy efficiency

projects. PJM adds that its current capacity market

rules do not require a showing of a causal link between

capacity payments made to Energy Efficiency Resources and energy efficiency investment, but nevertheless asserts that there is no evidence that any such

causal link exists.

10. PJM maintains that intrinsically accounting for energy efficiency capability in its load forecast lowers the

total amount of capacity procured through the RPM,

and, all else equal, reduces the resulting wholesale

15

Id. at 2, 7-8, 38-39. PJM states that several utility members

that currently offer Energy Efficiency Resources into PJM’s capacity market have indicated they will continue to incentivize energy

efficiency projects through state-sponsored retail programs. Id. at

9, 39 & n.106 (citing Alex Stern, Exelon EE Package Proposal, Exelon Corp. (Aug. 7, 2024), https://www.pjm.com/-/media/committees-groups/committees/mic/2024/20240807/20240807-item-02a-1--ee-resource-evaluation-exelon-proposal---presentation.ashx).

62a

capacity market prices and overall costs.16 Thus, PJM

argues, load-serving entities (LSEs) and their customers already receive the benefits of lower capacity bills

resulting from lower energy consumption—which, in

turn, incents load to continue adopting energy efficiency

measures.17 PJM argues that continuing capacity payments to Energy Efficiency Resources through the addback mechanism would thwart these savings by charging customers for efficiency measures that are already,

and will continue to be, adopted independent of receiving

wholesale capacity market revenues.

11. PJM states that it regularly seeks stakeholder feedback on its load forecasting methodology and that it has

continued to enhance its methodology through an iterative process to make the forecast as accurate as possible.18 PJM also states that it has engaged outside

16

Id. at 39-41.

17

In addition, PJM claims that energy efficiency projects provide the following other cascading benefits: (1) the capacity market

sets a lower reliability requirement by accounting for the permanent reduction in energy consumption in the load forecast than it

would absent energy efficiency projects; (2) the lower reliability requirement results in the market procuring less capacity to maintain

reliability, which also means that the PJM region will need fewer

resources to accommodate the energy transition while maintaining

reliability; (3) load pays lower capacity rates because the market

procures less capacity; (4) fewer resources interconnect to the grid,

which reduces queue congestion, complexity, and interconnection

and transmission buildout costs; (5) consumers implementing energy efficiency projects pay lower capacity costs due to a reduced

load forecast for their zone; (6) end-use customers realize lower

peak load contributions from their respective LSEs, which, in turn,

reduces those customers’ specific capacity costs; and (7) individual

end-use customers who install energy efficiency measures pay reduced energy costs. Id. at 40.

18

Id. at 15-16, 19-20 & Gledhill Aff. ¶¶ 33-34.

63a

consultants to validate its approach, promote transparency, and identify potential enhancements to the load

forecast process. PJM further supports its claim that the

peak load forecast accurately accounts for energy efficiency projects by noting that the weather normal peak

load19 for the 2023/2024 and 2024/2025 Delivery Years

exceeded PJM’s forecasted peak loads for those delivery

years, which, holding all else equal, PJM claims would

not have occurred if the PJM load forecast had failed to

account for significant energy efficiency reduction to

load.

12. PJM contends that energy efficiency need not participate as a supply-side resource for a capacity market

to be just and reasonable.20 PJM states that the Commission accepted PJM’s RPM market design without requiring energy efficiency to participate and rejected a

request for rehearing on this issue.21 PJM also notes

that the Commission rejected requests that it require

the New York Independent System Operator, Inc.

(NYISO) to allow energy efficiency to participate as

19

Weather normalization is a process that adjusts actual energy or peak outcomes, which can vary from year to year, to what

would have happened under normal (i.e., typical) weather conditions. See Eric Fox et al., 2022 PJM Model Review 47-49 (Sept. 6,

2022), https://www.pjm.com/-/media/planning/res-adeq/load-forecast/pjm-model-reviewfinal-report-from-itron.ashx.

20

21

Transmittal at 36.

Id. at 36 (citing June 2007 Order, 119 FERC ¶ 61,318 at PP

198-204).

64a

supply-side resources in its capacity market as part of

distributed energy resource aggregations.22

13. Rather, PJM argues that compensating Energy Efficiency Resources at the capacity market clearing price

violates the beneficiary pays cost causation principle,

which requires that customers only pay for facilities or

services from which they benefit, because Energy Efficiency Resources do not provide capacity nor do capacity

payments result in additional energy efficiency adoption.23

14. Further, PJM argues that energy efficiency is no

longer a nascent industry warranting capacity revenues.24 Rather, PJM notes that energy efficiency standards have become more stringent at the federal, state,

and local levels since 2010, including all states in the PJM

region and the District of Columbia. PJM argues that

these standards naturally result in the adoption of energy efficiency actions without the need for capacity revenues. PJM also notes that these constantly evolving

standards make it increasingly difficult to conclude that

Energy Efficiency Resources being offered into RPM

auctions reflect energy efficiency projects that “exceed[]

then-current building codes, appliance standards, or

other relevant standards,” as required by the Energy

Efficiency Resource RAA definition.25

22

Id. (citing N.Y. Indep. Sys. Operator, Inc., 179 FERC

¶ 61,198, at P 112 (NYISO), order on reh’g, 181 FERC ¶ 61,054

(2022)).

23

Id. at 37-38.

24

Id. at 3, 17-18.

25

Id. at 18 (citing RAA Schedule 6, § L.1).

65a

15. PJM also argues that acceptance of its proposal

would promote regulatory efficiency, allowing the Commission to dispose of pending complaints filed by the Independent Market Monitor for PJM (IMM) and various

consumer advocates in Docket Nos. EL24-126-000 and

EL24-118-000, respectively, that also concern elimination of the addback.26

16. PJM states that its proposal resulted from a stakeholder-initiated holistic review of Energy Efficiency Resource participation in PJM’s RPM auctions that began

in November 2023. PJM states that a sector-weighted

majority of PJM stakeholders at the Markets and Reliability Committee and Members Committee endorsed the

instant proposal on August 21, 2024, and the PJM board

subsequently approved the proposal on August 26,

2024.27 PJM requests a November 6, 2024 effective date

for its proposed Tariff and RAA revisions.

III. Notice and Responsive Pleadings

17. Notice of PJM’s filing was published in the Federal

Register, 89 Fed. Reg. 74,937 (Sept. 13, 2024), with interventions and protests due on or before September 27,

2024.

18. Timely motions to intervene were filed by: Advanced Energy Management Alliance (AEMA); Advanced Energy United; Affirmed Energy LLC; American Electric Power Service Corporation; Buckeye

Power, Inc.; Calpine Corporation; Constellation Energy

Generation, LLC; Delaware Division of the Public Advocate; Dominion Energy Services, Inc.; Electric Power

Supply Association; Enerwise Global Technologies,

26

Id. at 10.

27

Id. at 41-42.

66a

LLC; Environmental Law & Policy Center; Exelon Corporation; Illinois Attorney General’s Office; Illinois Citizens Utility Board; Illinois Municipal Electric Agency;

Maryland Office of People’s Counsel; Monitoring Analytics, LLC, acting in its capacity as the IMM; Natural Resources Defense Council and Sustainable FERC Project;

New Jersey Division of Rate Counsel; NRG Curtailment

Solutions, Inc.; Ohio Federal Energy Advocate; Old Dominion Electric Cooperative; PJM Power Providers

Group (P3); PPL Electric Utilities Corporation; PSEG

Companies; Public Citizen, Inc.; Recurve Analytics, Inc.

(Recurve Analytics); Rockland Electric Company;

Southern Maryland Electric Cooperative, Inc.; and Vistra Corp. New Jersey Board of Public Utilities filed a notice of intervention.

19. IMM and P3 filed comments supporting PJM’s proposal. Protests were filed by AEMA; Advanced Energy

United; Affirmed Energy; Environmental Law & Policy

Center, Natural Resources Defense Council and Sustainable FERC Project (together, Public Interest Organizations); New Jersey Division of Rate Counsel, Maryland Office of People’s Counsel, Illinois Citizens Utility

Board, Illinois Attorney General’s Office, Delaware Division of The Public Advocate, and the District of Columbia Office of People’s Counsel (together, Consumer Advocates); PJM Cities and Communities Coalition;28 and

Recurve Analytics.

28

PJM Cities and Communities Coalition are: Alexandria, VA;

Arlington County, VA; Charlottesville, VA; Chicago, IL; Cincinnati, OH; Columbus, OH; Dayton, OH; Delaware County, PA; Montgomery County, MD; Newark, NJ; Philadelphia, PA; Pittsburgh,

PA; Richmond, VA; Sustainable Ohio Public Energy Council; and

Washington, DC

67a

20. Maryland Public Service Commission filed a motion

to intervene out-of-time on October 7, 2024.

21. PJM filed a motion for leave to answer and answer

to the protests on October 11, 2024. IMM filed a motion

for leave to answer and answer to the protests on October 15, 2024. Public Interest Organizations and AEMA

each filed a motion for leave to answer and answer to

PJM’s answer on October 22, 2024. Affirmed Energy

filed a motion for leave to answer and answer to PJM’s

answer on October 28, 2024. PJM filed a motion for leave

to answer and answer to Affirmed Energy’s Answer on

October 29, 2024.

A. Protests

22. Several protesters argue that PJM has not satisfied

its burden under FPA section 205 to demonstrate that

its proposal is just and reasonable and not unduly discriminatory or preferential.29 Protesters argue that the

Commission should reject PJM’s proposal30 for the reasons discussed below.

1. PJM’s Proposal Conflicts with Commission Precedent

23. Several protesters argue that PJM’s proposal conflicts with the March 2009 Order accepting PJM’s energy

29

Advanced Energy United Protest at 3; AEMA Protest at 3;

Affirmed Energy Protest at 2; Consumer Advocates Protest at 1;

Public Interest Organizations Protest at 11.

30

Advanced Energy United Protest at 16; Affirmed Energy

Protest at 1, 11-12, 14-15; Consumer Advocates Protest at 2; Public

Interest Organizations Protest at 21; Recurve Analytics Protest at

2.

68a

efficiency proposal.31 These protesters contest PJM’s

assertion that PJM’s initial proposal was needed only to

address the four-year lag before energy efficiency was

reflected in the demand curve.32 Rather, they note that

the Commission also stated that energy efficiency is a

critical part of efficient energy markets in PJM and

should be treated on equal footing with other resources33

and that the owners of Energy Efficiency Resources

should have the ability to obtain the full economic benefits of their investments.34

24. Advanced Energy United argues that Commission

precedent does not support excluding energy efficiency

from the capacity market.35 Advanced Energy United

disputes PJM’s characterization of the June 2007 Order

rejecting a rehearing request regarding the Commission’s acceptance of PJM’s RPM market design without

energy efficiency participation. Instead, Advanced Energy United argues that the Commission agreed with

the underlying logic of the New Jersey Board of Public

Utilities’ rehearing request, but rejected it because it

found that the New Jersey Board of Public Utilities had

not proposed a workable plan for including energy

31

Advanced Energy United Protest at 1; AEMA Protest at 9;

Consumer Advocates Protest at 2.

32

Advanced Energy United Protest at 4 (citing Transmittal at

4); AEMA Protest at 9.

33

Advanced Energy United Protest at 4-5 (citing March 2009

Order, 126 FERC ¶ 61,275 at PP 130, 134); Consumer Advocates

Protest at 2.

34

Advanced Energy United Protest at 4-5 (citing March 2009

Order, 126 FERC ¶ 61,275 at PP 130, 134); AEMA Protest at 7-10

(citing March 2009 Order, 126 FERC ¶ 61,275 at PP 133, 137).

35

Advanced Energy United Protest at 10-11.

69a

efficiency in the RPM.36 Advanced Energy United also

argues that the Commission’s rejection of a request to

require NYISO to allow energy efficiency resources to

participate in its capacity market is irrelevant because

NYISO’s capacity market never included those resources, whereas PJM must justify its proposal to remove energy efficiency resources from its capacity market. According to Advanced Energy United, the fact

that energy efficiency need not participate as a supplyside resource for a capacity market to be just and reasonable does not mean that PJM’s filing is just and reasonable.

25. Recurve Analytics and AEMA further argue that

PJM’s proposal erects a barrier to energy efficiency participation and therefore violates Order No. 2222’s37 requirement to allow technology-neutral distributed energy resource aggregations.38 These parties argue that

because Order No. 2222 stated that distributed energy

resources “may include,” but are not limited to, energy

efficiency resources, prohibiting one category of distributed energy resources from participating directly in

PJM’s Capacity Market contravenes Order No. 2222.39

AEMA argues that PJM’s citation to the Commission’s

finding in NYISO ignores fundamental differences

36

Id. at 11 (citing June 2007 Order, 119 FERC ¶ 61,318 at

P 202).

37

Participation of Distributed Energy Res. Aggregations in

Mkts. Operated by Reg’l Transmission Orgs. & Indep. Sys. Operators, Order No. 2222, 172 FERC ¶ 61,247 (2020), order on reh’g, Order No. 2222-A, 174 FERC ¶ 61,197, order on reh’g, Order No. 2222B, 175 FERC ¶ 61,227 (2021)).

38

AEMA Protest at 21; Recurve Analytics Protest at 6.

39

AEMA Protest at 20-21; Recurve Analytics Protest at 6.

70a

between the two Regional Transmission Organizations

(RTOs) and that NYISO specifically sought an exemption from Order No. 2222’s requirements.40

2. Energy Efficiency Resources Provide

Capacity Value

26. Several protesters also contest PJM’s filing for

treating Energy Efficiency Resources differently than

other capacity resources. Public Interest Organizations

appeal to the Commission’s statements in Order

Nos. 841 and 2222 to suggest that the Commission has

established a general rule that market operators should

enable resources that are “technically capable of providing services” to participate in wholesale markets for

those services.41 Several protesters argue that Energy

Efficiency Resources are similar to generation resources

because they provide capacity value toward reliability,

avoiding the need for expensive generation alternatives.42 Public Interest Organizations add that energy

efficiency resources deployed in PJM over the past 15

40

AEMA Protest at n.71 (referencing NYISO, 179 FERC

¶ 61,198).

41

Public Interest Organizations Protest at 8-10 (citing Elec.

Storage Participation in Mkts. Operated by Reg’l Transmission Organs. & Indep. Sys. Operators, Order No. 841, 162 FERC ¶ 61,127

(2018); Order No. 2222, 172 FERC ¶ 61,247).

42

Advanced Energy United Protest at 2; PJM Cities and Communities Coalition Protest at 1-2; Public Interest Organizations

Protest at 5; Recurve Analytics Protest at 6; see also Consumer Advocates Protest at 2 (arguing that PJM’s proposal lacks evidence

demonstrating that Energy Efficiency Resources are technically incapable of providing capacity); Recurve Analytics Protest at 7 (asserting that energy efficiency is technically capable of providing additional wholesale services to reduce all customers’ costs when

measured hourly at the meter with comparison groups “to parse out

incrementality and net out exogenous effects”).

71a

years have provided significant load reductions, reducing the amount of generation that LSEs must procure

through the RPM, lowering capacity costs for customers

and producing rates that are just and reasonable.43

27. Public Interest Organizations and Recurve Analytics assert that PJM’s proposal is unduly discriminatory.

Recurve Analytics argues PJM’s proposal is unjust, unreasonable, and unduly discriminatory because it makes

a technology-specific bar to wholesale capacity market

eligibility.44 Recurve Analytics contends that there is no

basis for eliminating energy efficiency measured with

meter data and properly attributed to the hour(s) relevant to capacity needs from the capacity market. Public

Interest Organizations and AEMA, for their part, argue

that PJM’s proposal unduly discriminates against Energy Efficiency Resources by selectively applying a

novel strict causation standard to them only.45 Public Interest Organizations also suggest that capacity market

eligibility typically focuses on whether a resource can effectively provide reliability service rather than on

whether market payments will affect deployment of that

resource.46 Further, Public Interest Organizations and

Consumer Advocates note that the Commission has recognized in the buyer-side mitigation rules context that

ignoring resources despite lack of causation would distort the market and risk over-procuring capacity.47

43

Public Interest Organizations Protest at 7-8.

44

Recurve Analytics Protest at 5-6.

45

AEMA Protest at 19-20; Public Interest Organizations Protest at 15, 19.

46

47

Public Interest Organizations Protest at 16-17.

Consumer Advocates Protest at 6 (citing N.Y. Indep. Sys.

Operator, Inc., 179 FERC ¶ 61,102, at P 39 (2022)); Public Interest

72a

Public Interest Organizations assert that non-discriminatory application of a causation requirement would perversely penalize the most cost-effective resources that

can provide a service for no cost by relying on other revenue sources and eliminate capacity payments to over

half of PJM’s generation fleet.48

3. Excluding Energy Efficiency Resources

Will Result in Unjust and Unreasonable

Rates

28. In addition, several protesters argue that supplyside participation for Energy Efficiency Resources is

needed in PJM’s capacity market to produce just and

reasonable rates.

29. Several protesters contest PJM’s suggestion that

supply-side energy efficiency participation is no longer

necessary because PJM’s load forecast methodology now

reflects the impact of energy efficiency measures—

thereby producing just and reasonable capacity market

auction results. These protesters argue that several alleged features of PJM’s load forecast cause it to underestimate the impact of energy efficiency measures,

therefore resulting in rates that are not just and reasonable,49 including by: (1) excluding significant categories

Organizations Protest at 7 (citing PJM, Filing, Docket No. ER212582-000, at 8 (filed July 30, 2021) (“[I]f the resource is installed (or

remains in service) and effectively provides a reliability service notwithstanding denial of capacity revenues, the auction presents an

incorrect view of both the price and quantity of providing reliability

service in PJM.”)).

48

49

Public Interest Organizations Protest at 16-18.

AEMA at 15; Affirmed Energy Protest at 7-9; Public Interest Organizations Protest at 4, 12-13. Advanced Energy United,

Affirmed Energy, and Consumer Advocates also assert that PJM

has not demonstrated that its load forecast accurately reflects the

73a

of energy efficiency measures, including higher efficiency equipment sold with midstream/upstream rebates, commercial outdoor lighting and chillers, and

those supported by certain rebate programs in the PJM

footprint;50 (2) using EIA data that EIA has acknowledged overestimates energy intensity, thereby underestimating energy efficiency;51 and (3) using forward-looking data that by nature is based on projections and is

stale before the delivery year, because the load forecast

takes place several years in advance, and therefore cannot account for intervening policy developments like the

Inflation Reduction Act.52 Advanced Energy United

also asserts that PJM’s load forecast will not incorporate

new energy efficiency technology innovations.53 In addition, several protesters contest PJM’s claim that forecasted peak load exceeding the weather normal peak

loads for the 2023/2024 and 2024/2025 Delivery Years

shows that PJM’s load forecast accounted for significant

energy efficiency reduction to load54 because (1) that

claim assumes all else will be taken equal, which is unreasonable given the extraordinary complexity of the

load forecast methodology,55 and (2) PJM cherry-picks

impacts of energy efficiency measures. Advanced Energy United

Protest at 8; Affirmed Energy Protest at 6-7, 9-10, 11; Consumer

Advocates Protest at 4.

50

Public Interest Organizations Protest at 12 & Ex. A at 4-5.

51

Affirmed Energy Protest at 7.

52

Id. at 8-9, 11; Advanced Energy United Protest at 9; Public

Interest Organizations at 15.

53

Advanced Energy United Protest at 10.

54

See Transmittal at 19-20 & Gledhill Aff. ¶¶ 33-34.

55

Advanced Energy United Protest at 9; Affirmed Energy

Protest at 9-10.

74a

data, while a more systematic review of the comparison

between the load forecast and actual load establishes

multiple facts consistent with under-forecasting energy

efficiency.56

30. Public Interest Organizations also state that PJM

has admitted that its load forecast may not reflect all energy efficiency investments in the PJM region, and argued that expecting perfect accuracy is not reasonable.57

Nevertheless, Public Interest Organization and Consumer Advocates claim that PJM has not attempted to

quantify the extent of energy efficiency absences from

the load forecast.58 In light of this undercounting risk,

Public Interest Organizations claim that supply-side energy efficiency participation serves to mobilize merchant energy efficiency providers to document savings

that PJM does not model in its load forecast and commit

56

Public Interest Organizations Protest at 13. Public Interest

Organizations note that: (1) PJM’s load was only in the 60th percentile of forecasts for the summer of 2024, despite being in the 98th

percentile for heat; (2) PJM’s load model very consistently forecasts

load 1-3% higher than actual when tested with actual weather; and

(3) load on every peak day in the summer of 2024 was lower than the

model forecast when tested with actual weather conditions. Id. (citing Molly Mooney, Review of Preliminary Summer 2024 Loads 2, 8,

9 (Sept. 19, 2024), https://www.pjm.com/-/media/committeesgroups/subcommittees/las/2024/20240919/20240919-item-03—review-preliminary-summer-2024-loads.ashx). See also AEMA Protest at 15 (noting that PJM’s most recent review of preliminary

summer 2024 Loads demonstrates that peak loads were as much as

2% lower (about 3,000 MW) than expected, given actual weather

conditions).

57

Public Interest Organizations Protest at 13-14 (citing PJM,

July 29, 2024 Answer, Docket No. EL24-118-000, at 2-3 (filed July

29, 2024)).

58

Consumer Advocates Protest at 4; Public Interest Organizations Protest at 4, 14.

75a

to delivering those savings.59 According to AEMA, despite the addback provisions in PJM’s manual, PJM has

never identified any amount of Energy Efficiency Resources that are both in the load forecast and offered in

the capacity auction for a delivery year (i.e., doublecounted).60 AEMA contends that PJM’s top-down load

forecast methodology cannot capture any specific double-counting of Energy Efficiency Resources because

PJM does not actually reduce forecasted demand based

upon Energy Efficiency Resources offering into the capacity market.

31. In addition, protesters suggest that allowing energy

efficiency measures to participate in the capacity market

as supply importantly aligns market signals.61 Advanced Energy United contends that PJM’s proposal is

unjust and unreasonable because energy efficiency providers will not “obtain[] the full economic benefit of their

investment.”62 That is because, according to Advanced

Energy United, under PJM’s proposal, the customer will

bear the cost of installing Energy Efficiency Resources

while the entire zone benefits from the customer’s

59

Public Interest Organizations Protest at 4 (citing Kathleen

Spees et al., The Benefits of Energy Efficiency Participation in Capacity

Markets

1

(Apr.

1,

2021),

https://www.aee.net/hubfs/The%20Benefits%20of%20Energy%20Efficiency%20Participation%20in%20Capacity%20Markets1.pdf).

60

AEMA Protest at 15-16.

61

Advanced Energy United Protest at 7-8; Public Interest Organizations Protest at 21.

62

Advanced Energy United Protest at 7 (citing March 2009

Order, 126 FERC ¶ 61,275 at P 137).

76a

investment.63 Advanced Energy United argues that this

will lead to lower deployment of energy efficiency, to the

detriment of all customers in that zone. Advanced Energy United contends that the proper way to compensate energy efficiency providers who provide benefits

for the entire zone is through capacity market revenues.

Advanced Energy United also adds that energy efficiency aggregators undertake risk and expend substantial effort and capital to enable the efficient and cost-effective deployment of energy efficiency measures, but,

unlike customers, do not save money from their investment in energy efficiency and instead must be compensated for the value that energy efficiency provides

through energy and/or capacity cost savings. Therefore,

Advanced Energy United claims that energy efficiency

is undervalued when participating on the demand-side

only, and allowing energy efficiency aggregators to earn

capacity market revenues by participating as supplyside resources in the capacity market bridges the gap between the low marginal price that consumers pay for capacity and the higher marginal value of that capacity on

the system, leading to a more efficient market outcome.

Public Interest Organizations similarly argue that retail

rates typically do not provide any economic benefit to

customers who reduce their peak load contributions and

that capacity market payments provide market signals

to a broader cross-section of energy efficiency providers.64 Otherwise, according to Public Interest Organizations, only LSEs that can pass capacity costs on to endusers and therefore have little incentive to attempt to

reduce peak load will receive a direct market signal in

the form of their reduced capacity obligation. Public

63

Id. at 2-3, 7-8.

64

Public Interest Organizations Protest at 15, 20-21.

77a

Interest Organizations argue that failure to recognize

the capacity value that energy efficiency measure load

reductions represent increases capacity prices unnecessarily, resulting in unjust and unreasonable rates.

32. AEMA argues that PJM fails to explain why, given

that other RTOs like the California Independent System

Operator and ISO New England successfully incorporate energy efficiency measures into their capacity market rules, PJM must remove Energy Efficiency Resource participation from its Tariff and RAA.65

4. Capacity Market Payments Cause Adoption of Energy Efficiency Measures

33. Several protesters also contest PJM’s claim that energy efficiency adoption is naturally occurring and will

continue absent capacity market revenues as conclusory

and not supported.66 To the contrary, Public Interest

Organizations and Advanced Energy United maintain

that Energy Efficiency Resources are responsive to financial incentives, and that providers react to price signals just like any other market participant to maximize

return on investments.67 Advanced Energy United

states that capacity market payments provide an additional revenue stream to offset the costs of energy efficiency investments, thereby incenting further investment. Affirmed Energy adds that capacity market payments provide an incentive for retailers to boost adoption of energy efficient products—including through

65

AEMA Protest at 17.

66

Advanced Energy United Protest at 6; AEMA Protest at 6;

Affirmed Energy Protest at 2-4, 6, 11; Public Interest Organizations

Protest at 15-16.

67

Advanced Energy United Protest at 6; Public Interest Organizations Protest at 16.

78a

lower prices, product placement, signage, or other sales

efforts.68 Further, Advanced Energy United disputes

PJM’s claim that RPM payments provide no incremental

value in light of state energy efficiency programs, arguing that RPM payments incent investment: (1) above

that would occur through state programs; (2) in states

that no longer have state energy efficiency standards;

and (3) spurred by merchant providers.69

34. AEMA also notes, agreeing with PJM, that PJM’s

existing Tariff does not require Energy Efficiency Resource providers to demonstrate that RPM payments

nor the Energy Efficiency Resource provider “caused”

an end-use customer to purchase the Energy Efficiency

Resource product.70

5. Filed Rate Doctrine & Request for Transition Period

35. Advanced Energy United further argues that PJM’s

proposal to sunset Energy Efficiency Resource participation starting with the BRA for the 2026/2027 Delivery

Year violates the filed rate doctrine because it would

retroactively eliminate the right of resources that

cleared in recent BRAs to participate and earn revenue

in subsequent auctions.71 Advanced Energy United and

Affirmed Energy add that Energy Efficiency Resources

participate in the RPM under the expectation that they

will be able to participate in four consecutive BRAs.72

68

Affirmed Energy Protest at 3.

69

Advanced Energy United Protest at 6.

70

AEMA Protest at 18.

71

Advanced Energy United Protest at 14-15.

72

Id. at 15; Affirmed Energy Protest at 12-14. Affirmed Energy states that its assets, purchased during the 2024/2025 Delivery

79a

Affirmed Energy therefore argues that PJM’s failure to

provide a mechanism for an orderly transition out of the

market while PJM continues to benefit from the energy

savings that Affirmed Energy’s assets provide is unfair,

unjust, and unreasonable.73

6. Sunsetting Energy Efficiency Will Harm

Consumers

36. Protesters also argue that PJM’s proposal will not

benefit consumers. Advanced Energy United asserts

that supply-side participation benefits consumers by: (1)

yielding binding capacity market commitments from Energy Efficiency Resources; (2) supporting improved load

forecasts; (3) reducing barriers for energy efficiency, especially for merchants; (4) yielding more cost-effective

capacity markets by enabling less expensive Energy Efficiency Resources to participate and avoiding inflated

load forecasts; and (5) providing additional incentives for

investment in energy efficiency and ensuring that individual customers reap the full benefit of energy efficiency savings that are otherwise spread across the load

zone.74 Consumer Advocates argue that maintaining

supply-side Energy Efficiency Resource participation

will help to manage capacity prices and ensure affordability for ratepayers.75 PJM Cities and Communities Coalition agrees, adding that energy efficiency programs

assist local governments, reduce demand, and increase

grid resilience, which will be important given PJM’s

Year, are currently eligible for the 2027/2028 and 2028/2029 Delivery Year BRAs under existing rules. Affirmed Energy Protest at

13.

73

Affirmed Energy Protest at 12-14.

74

Advanced Energy United Protest at 12-13.

75

Consumer Advocates Protest at 4.

80a

forecasted 2.3% annual load growth over the next 10

years.76 Affirmed Energy and Public Interest Organizations similarly assert that eliminating Energy Efficiency

Resource participation in the capacity market at a time

of rising demand will not lead to lower prices and could

cause dramatic price increases given the potential for

small variations to cause large price swings in times of

tight regional capacity.77 Conversely, Advanced Energy

United argues that the cost of Energy Efficiency Resource participation is marginal, amounting to roughly

1% of total cost of capacity cleared in the 2025/2026 Delivery Year—and that, if the same quantity of energy efficiency that cleared the 2025/2026 BRA had received

2024/2025 Delivery Year prices, consumers would have

paid only $15.4 million.78

7. Other Concerns

37. In addition, Advanced Energy United and Affirmed

Energy contest PJM’s suggestion that capacity market

eligibility should depend in part on the nascency of a resource.79

76

PJM Cities and Communities Coalition Protest at 2 (citing

PJM Resource Adequacy Planning Department, 2024 PJM Load

Forecast Report at 2 (Jan. 2004), https://www.pjm.com/-/media/library/reports-notices/load-forecast/2024-loadreport.ashx).

77

Affirmed Energy Protest at 4 (citing Kathleen Spees et al.,

Enabling Cost-Effective Energy Efficiency in PJM’s Capacity

Market: The Advantages of a Supply-Side, Gross Accounting

Framework 5 (July 2021); Johannes Pfeifenberger et al., Review of

PJM’s Reliability Pricing Model (RPM) 116 (June 30, 2008)); Public Interest Organizations Protest at 15.

78

Advanced Energy United Protest at 14; Affirmed Energy

Protest at 6.

79

Affirmed Energy Protest at 6.

81a

38. AEMA and Consumer Advocates also make several

arguments about PJM’s addback. Consumer Advocates

argue that the addback inflates the auction clearing

price and capacity procurement to the detriment of ratepayers.80 AEMA argues that the addback provisions in

PJM’s manuals are unenforceable, and that PJM is not

entitled to rely upon such manual provisions to justify its

treatment of Energy Efficiency Resources.81 AEMA

posits that PJM decided in 2015 not to make an FPA section 205 filing with the addback provisions because PJM

only intended to address a load forecasting issue, not to

substantively impact the number of years that an Energy Efficiency Resource could participate in a capacity

auction. AEMA states that if the addback language had

actually resulted in the elimination of Energy Efficiency

Resources as a supply-side capacity resource, such a

modification would have required a filing to amend Attachment DD-1 to the PJM Tariff, Procedures for Demand Resources and Energy Efficiency, pursuant to the

filed-rate doctrine.

39. Lastly, Advanced Energy United argues that PJM’s

stakeholder process was insufficiently rigorous and

rushed, meaning that various stakeholders were unable

to provide valuable perspective on the proposal.82

80

Consumer Advocates Protest at 4.

81

AEMA Protest at 12-14 (citing Advanced Energy Econ., 167

FERC ¶ 61,032 (2019)).

82

Advanced Energy United Protest at 15-16.

82a

8. Requested Disposition

40. Protesters therefore ask the Commission to reject

PJM’s proposal.83 If the Commission does not reject

PJM’s filing, Affirmed Energy argues that the Commission should set it for hearing to resolve material issues

of fact, including: (1) whether the PJM load forecast fully

captures all energy efficiency savings in the market such

that energy efficiency participation in the capacity market should end; (2) whether the load forecast uses outdated data; (3) whether anecdotal statements about energy efficiency’s impacts are enough to remove energy

efficiency from the capacity market; and (4) whether

there is evidence to support PJM’s claim that eliminating all payments to energy efficiency will have no impact

on market efficiency or the load forecast.84 Several protesters also argue that the Commission should hold a

technical conference85 to: (1) develop a model that allows

energy efficiency in the RPM while addressing reliability and double-counting issues;86 (2) explore opportunities to effectively value energy efficiency in the capacity

market;87 (3) understand the impacts of removing energy efficiency from the capacity market;88 (4) address

83

Id. at 16; Affirmed Energy Protest at 1, 11-12, 14-15; Consumer Advocates Protest at 2; Public Interest Organizations Protest at 21; Recurve Analytics Protest at 2.

84

Affirmed Energy Protest at 11.

85

Advanced Energy United Protest at 16; Consumer Advocates Protest at 2; PJM Cities and Communities Coalition Comments at 1-2; Public Interest Organizations Protest at 4-5, 22; Recurve Analytics Protest at 7.

86

Consumer Advocates Protest at 7.

87

PJM Cities and Communities Coalition Protest at 1-2.

88

Id.

83a

proper measurement methodologies for participation in

wholesale electricity markets;89 (5) identify which types

of energy efficiency measures the PJM load forecast captures so that resources not reflected can continue to participate in the capacity market; (6) consider whether it is

more efficient to compensate energy efficiency as supply-side resources or to include them in the load forecast;

and (7) evaluate comparative models from MISO and

ISO-NE.90

41. Several protesters also argue that PJM should develop a more targeted proposal to address the problems

it identifies. Consumer Advocates suggest rejecting

PJM’s proposal and requiring PJM to develop a mechanism that ensures that Energy Efficiency Resources are

incremental to the load forecast.91 Recurve Analytics

also argues that, given PJM’s concerns about causation,

PJM should have proposed to require a causation showing rather than prohibiting all energy efficiency.92 Recurve Analytics argues that it is unduly discriminatory

to eliminate from the capacity market energy efficiency

measured with meter data and properly attributed to

the hour(s) relevant to capacity needs. Recurve Analytics states that hourly consumption data from the meter

can be used to accurately measure energy efficiency

with respect to both energy savings and the hour in

which energy savings occur. According to Recurve Analytics, PJM’s proposal is unduly discriminatory because

it prohibits such a causal showing from ever being made

89

Id. ; Recurve Analytics Protest at 6-7.

90

PJM Cities and Communities Coalition Protest at 1-2; Public

Interest Organizations Protest at 22.

91

Consumer Advocates Protest at 4.

92

Recurve Analytics Protest at 5.

84a

by prohibiting all energy efficiency regardless of how it

is measured, even those that can demonstrate a causal

link with rigorous measurement. PJM Cities and Communities Coalition suggests that the Commission and

PJM should work with stakeholders to bring more value

from energy efficiency to the capacity market while acknowledging that it may be possible for energy efficiency to be utilized and valued more effectively than

provided for in the current Tariff rules.93

B. Comments in Support

42. Several commenters support PJM’s proposal. P3 argues that: energy efficiency’s value is most appropriately reflected as a demand-side reduction.94 P3 and

IMM argue that PJM’s ability to accurately reflect energy efficiency in the load forecast has improved since

the Commission last reviewed participation of energy efficiency in PJM’s capacity market fifteen years ago, negating the original rationale for inclusion.95 P3 notes

that IMM has long recommended that PJM remove Energy Efficiency Resources from the capacity market and

contends that acceptance of PJM’s proposed revisions

would moot two pending complaints before the Commission regarding energy efficiency participation in the capacity market.96 IMM argues that PJM’s proposal clarifies market rules and protects efficient market

93

PJM Cities and Communities Coalition Protest at 1-2.

94

P3 Comments at 2.

95

Id. at 2-4; IMM Comments at 1-2.

96

P3 Comments at 3 (referencing IMM, Complaint, Docket

No. EL24-126-000 (filed July 11, 2024); Joint Consumer Advocates,

Complaint, Docket No. EL24-118-000 (filed June 20, 2024)).

85a

operations by correcting a longstanding market design

flaw.97 P3 notes that PJM’s revisions were endorsed by

a sector-weighted majority of PJM stakeholders at the

August 21, 2024, Markets and Reliability Committee and

the Members Committee after nearly a year of consideration and deliberation.98 P3 and IMM assert that PJM’s

proposal is necessary because PJM’s current rules have

skewed prices by providing Energy Efficiency Resources capacity market payments that amount to a subsidy paid by consumers without contributing to reliability.99

43. However, IMM disagrees with PJM’s characterization of Energy Efficiency Resources’ participation under

the current Tariff rules. IMM states that under PJM’s

Tariff, Energy Efficiency Resources are not capacity resources and have been treated accordingly since 2017.100

IMM asserts that PJM’s market rules only allow Energy

Efficiency Resources that are not already reflected in

the peak load forecast to participate in the capacity market and argues that once PJM began incorporating energy efficiency into its forecasts in 2016, energy efficiency no longer qualified as a capacity resource. IMM

states that, despite this, PJM has continued to apply the

addback rules from PJM Manual 18, requiring customers

to pay the capacity market clearing price to Energy Efficiency Resources that do not meet the definition of a

capacity resource. IMM recommends that PJM make a

97

IMM Comments at 2.

98

P3 Comments at 4.

99

Id. at 2-4; IMM Comments at 1-2.

100

IMM Comments at 2-3.

86a

future filing to remove all references to energy efficiency as a capacity resource for greater clarity.

C. Answers

44. In its October 11, 2024 answer, PJM argues that

nothing in the Commission’s approval of PJM’s original

energy efficiency tariff provisions restrains PJM or the

Commission from modifying Energy Efficiency Resource participation in the capacity market.101 Rather,

PJM and IMM assert that the driving force behind the

Commission’s determination to permit the conditional

participation of energy efficiency projects in RPM auctions was the lag in recognizing the load reduction value

of energy efficiency projects in PJM’s load forecast.102

PJM and IMM state that that rationale was no longer

relevant after PJM changed its load forecast methodology to capture projected energy efficiency projects.103

Further, PJM notes that, before it proposed the energy

efficiency rules accepted in the March 2009 Order, the

Commission directed PJM to convene a stakeholder process to consider incorporating the value of energy efficiency initiatives either through updated and proactive

adjustments to its load forecast or by allowing direct

participation as a capacity resource in RPM auctions.104

PJM asserts that including energy efficiency projects in

101

PJM October 11, 2024 Answer at 4.

102

Id. at 7; IMM Answer at 4-5.

103

IMM Answer at 4-5; PJM October 11, 2024 Answer at 7.

104

PJM October 11, 2024 Answer at 5 (citing PJM Interconnection, L.L.C., 124 FERC ¶ 61,272, at P 115, order on clarification,

125 FERC ¶ 61,222 (2008)).

87a

the load forecast was an available and sufficient alternative to participation as a supplier in RPM auctions.105

45. PJM alleges that the Commission held in NYISO

that Order No. 2222 does not require energy efficiency

to be a supply-side resource in capacity markets.106 PJM

contends that the fact that PJM has previously allowed

Energy Efficiency Resources to participate as supplyside resources does not prevent PJM from changing its

Tariff or render inapplicable the Commission’s NYISO

holding.107 IMM argues that Order No. 2222 is not relevant to PJM’s proposal because the current PJM rules

do not treat Energy Efficiency Resources as supply.108

46. PJM also maintains that its proposal does not violate

the filed rate doctrine or rule against retroactive ratemaking because: (1) it only affects future RPM auctions,

and therefore does not affect the legal consequences of

commitments made by Energy Efficiency Resource providers in past auctions; (2) the existing Tariff provided

conditional participation rights that Energy Efficiency

Resources that clear an auction for a delivery year “may

be offered … but shall not be assured of clearing” in

three additional delivery year auctions but did not guarantee future participation;109 (3) the Commission has approved several capacity market reforms as prospective

notwithstanding that they changed the obligations of capacity resources for a delivery year even after the

105

Id. at 7-8.

106

Id. at 8 (citing NYISO, 179 FERC ¶ 61,198).

107

Id. at 10-11.

108

IMM Answer at 12.

109

PJM October 11, 2024 Answer at 14 (citing Tariff, Attachment DD-1, § L.4; RAA Schedule 6, § L.4 (emphasis added)).

88a

completion of the relevant RPM auctions;110 and (4)

IMM’s arguments over several years and PJM’s ongoing

stakeholder process since October 2023 make it difficult

to accept protesters’ suggestion that Energy Efficiency

Resources reasonably relied on their continued participation in the RPM.111

47. IMM adds that PJM’s proposal does not violate the

rule against retroactive ratemaking because the rules

that pay what IMM characterizes as a subsidy to Energy

Efficiency Resources—i.e., the addback—are not in the

filed tariff.112 Therefore, IMM argues that PJM’s instant

proposal does not change any filed tariff rule. IMM also

maintains that PJM’s proposal is explicitly forward looking, and that, through operation of the addback, no Energy Efficiency Resource has cleared in a capacity auction since 2016, as Tariff, Attachment DD-1 and RAA

Schedule 6 require for an Energy Efficiency Resource to

be eligible to offer in up to three additional consecutive

delivery year auctions.

48. PJM and IMM also oppose arguments for a transition period. PJM and IMM argue that an additional

110

Id. at 14-15 (citing PJM Interconnection, L.L.C., 151 FERC

¶ 61,208, at P 6 (2015), order on reh’g, 155 FERC ¶ 61,157 (2016);

PJM Interconnection, L.L.C., Docket No. ER21-2582-000, Notice of

Filing Taking Effect by Operation of Law (Sept. 29, 2021), reh’g denied, 177 FERC ¶ 62,105 (Nov. 29, 2021), pet. for review denied,

PJM Power Providers Grp. v. FERC, 88 F.4th 250 (3rd Cir. 2023),

cert. denied sub nom. Pub. Utils. Comm’n of Ohio v. FERC, No. No.

23-1069 (Oct. 7, 2024); PJM Interconnection, L.L.C., 186 FERC

¶ 61,080 at P 36, reh’g denied, 186 FERC ¶ 62,168 (2024); PJM Interconnection, L.L.C., 176 FERC ¶ 61,056, reh’g denied, 176 FERC

¶ 62,159 (2021)).

111

Id. at 15.

112

IMM Answer at 2, 6-7.

89a

transition period is neither required nor appropriate because they allege that: (1) PJM’s proposal already incorporates a transition period by honoring existing capacity

commitments that are currently in place for Energy Efficiency Resources; (2) PJM’s proposal allows energy efficiency providers to continue offering Energy Efficiency Resources into the RPM auctions through the

2025/2026 Delivery Year;113 (3) continued participation

since PJM’s 2016 load forecast methodology improvements has also provided a transition process given the

fact that IMM asserts that Energy Efficiency Resources

are not capacity resources;114 (4) customers would benefit from acceptance of PJM’s proposal, and would not

benefit in any meaningful way from a transition,115 which

would impose significant and unjustified costs on PJM

customers;116 and (5) a proposal with an additional transition period is not before the Commission and therefore

need not be considered in this proceeding.117

49. In addition, PJM argues that its load forecast methodology is just and reasonable. PJM asserts that Commission precedent requires load forecast methodologies

to be just and reasonable, not perfect.118 According to

113

Id. at 11; PJM October 11, 2024 Answer at 31-32.

114

IMM Answer at 11.

115

PJM October 11, 2024 Answer at 31-32 (citing Cent. Hudson

Gas & Elec. Corp. v. FERC, 783 F.3d 92 (2d Cir. 2015)).

116

IMM Answer at 11.

117

PJM October 11, 2024 Answer at 32.

118

Id. at 17-18, 21 (citing Joint Consumer Representatives

v. PJM Interconnection, L.L.C., 153 FERC ¶ 61,187, P 32 n. 45

(2015) (citing Ala. Elec. Co-Op., Inc. v. FERC, 684 F.2d 20, 27 (D.C.

Cir. 1982) & Colo. Interstate Gas v. FPC, 324 U.S. 581, 589 (1945)).

90a

PJM, EIA data is a widely used source that both governments and utilities use—and that load forecasting without using EIA data would be questionable given existing

industry standards and practices. PJM also explains

that energy intensities are but one component in its topdown load forecast methodology that also incorporates

economics, weather, distributed solar generation, and

electric vehicles. PJM adds that it is not possible for its

load forecast to underestimate energy efficiency load reductions in the 2023/2024 Delivery Year or the 2024/2025

Delivery Year, especially to the magnitude alleged by

protesters, because the weather normal peak load in

2023 for the 2023/2024 Delivery Year exceeded the forecasted peak load and the most recent load forecasts for

2024/2025 Delivery Year used for the third incremental

RPM auction were actually 1,510 MW higher than the

older forecast for 2024/2025 Delivery Year used for the

BRA.119 Conversely, PJM argues that if it were to rely

exclusively on market-cleared energy efficiency for its

load forecast modeling, it would almost certainly overestimate load.

50. PJM also contests protesters’ opposition to its

claims about lack of a causal link between capacity market payments and deployment of energy efficiency projects. PJM asserts that it focused on lack of causation

not to set a new standard for capacity market participation but rather to explain the unique challenges that Energy Efficiency Resources face in demonstrating why

their purported energy reduction benefits necessitate

receiving capacity payments from PJM customers.120

PJM argues that its observation about those challenges

119

Id. at 20 (citing Gledhill Aff. ¶¶ 33-34).

120

Id. at 22-23, 26-28.

91a

acknowledged that Energy Efficiency Resources are not

similarly situated to other capacity resources and that

therefore its proposal is not unduly discriminatory. In

response to Public Interest Organization’s protest, PJM

argues that the fact that a generation plant’s projected

energy and ancillary services revenues might exceed its

avoidable costs does not prove that the plant would have

been constructed without the opportunity to receive capacity payments—which it asserts is the relevant question raised by its proposal. PJM adds that, while Affirmed Energy claims that capacity payments to energy

efficiency providers that pay retailers to claim energy

efficiency savings may encourage actions to increase

sales, there is no evidence that retailers actually change,

or are required to change, product placement as a result

of contracts with providers, nor that such a change

would demonstrate that capacity revenues would cause

any given purchase. PJM argues that the unique challenges related to Energy Efficiency Resource valuation

do not create disputed issues of material fact that require a trial-type hearing.121

51. PJM also argues that Energy Efficiency Resources

are not similarly situated to other capacity resources because: (1) unlike thermal generation resources, Energy

Efficiency Resources are installed in diffuse locations,

and their installation and load reduction performance is

not well documented; (2) the investments that other capacity resources make to sell energy and capacity expose those suppliers to greater performance risk in the

121

PJM argues that exhibits attached to Affirmed Energy’s

protest do not justify a hearing and should be disregarded because

neither letter is sworn, both letters are from persons or entities that

appear to benefit from PJM capacity payments, and one letter is

vague and conclusory while the other does not mention PJM nor capacity payments specifically. Id. at 28.

92a

face of vigorously price-sensitive competition than faced

by installers of energy efficiency measures; and (3) capacity resources that actually produce energy and create

capacity are subject to a robust system of oversight to

determine whether their capacity offers are justified.122

In addition, contrary to PJM’s claim that its capacity

market rules do not explicitly require a showing that capacity payments to Energy Efficiency Resources effectuate reductions in energy consumption,123 IMM argues

that Energy Efficiency Resources are required under

PJM’s Tariff to cause decreases in energy consumption

at an end-use customer’s location.124 IMM further adds

that Energy Efficiency Resources are not capacity resources, cannot be used to replace capacity resources,

and do not contribute to PJM system reliability as defined by the capacity market.125

52. PJM reiterates that incorporating energy efficiency

load reductions into the load forecast provides superior

benefits to customers. PJM disputes arguments that the

availability of capacity payments allow energy efficiency

installers to capture the capacity benefit of the resources

they install because a large share of capacity payments

currently go to midstream and upstream energy efficiency aggregators.126 PJM therefore asserts that, on

net, more benefits will be realized by end-use customers

when these aggregators are removed. PJM further argues that including energy efficiency in the load forecast

122

PJM October 11, 2024 Answer at 25-26.

123

See Transmittal at 38.

124

IMM Answer at 7.

125

Id. at 3.

126

PJM October 11, 2024 Answer at 29-30.

93a

as a demand reducer provides additional benefits to customers because it also reduces the reserve margin that

would be associated with the incrementally higher load

forecast that did not include energy efficiency reductions.

53. Lastly, PJM argues that the Commission is under no

obligation to consider alternatives to PJM’s proposal in

this proceeding despite requests from protesters.127

PJM notes that stakeholders may continue to explore

the development of other programs more narrowly focused on emerging technologies and with more prescriptive requirements, but that opportunity does not provide grounds to reject PJM’s instant proposal. Rather,

according to PJM, the only question properly before the

Commission is whether PJM’s proposal is just and reasonable. Further, IMM argues that no technical conference is warranted because PJM stakeholders have discussed issues related to Energy Efficiency Resource

participation in PJM markets at length, culminating in

endorsement of the substance of PJM’s proposal by a

sector-weighted super-majority of PJM’s stakeholders.128

54. In its answer, Public Interest Organizations argue

that PJM’s proposal does not constitute a targeted effort

to address double counting of energy efficiency and instead, Public Interest Organizations assert that PJM’s

127

Id. at 1, 32-33 (citing N.Y. State Pub. Serv. Comm’n

v. FERC, 104 F.4th 886, 891 (D.C. Cir. 2024); Indep. Power Producers of N.Y., Inc. v. FERC, No. 21-1166, 2022 WL 3210362, at *2 (D.C.

Cir. Aug. 9, 2022) (per curiam) (unpublished); Midcontinent Indep.

Sys. Operator, Inc., 170 FERC ¶ 61,215, at P 81 & n.165 (2020); OXY

USA Inc. v. FERC, 64 F.3d 679, 692 (D.C. Cir. 1995); Cal. Indep.

Sys. Operator Corp., 128 FERC ¶ 61,265, at P 21 (2009)).

128

IMM Answer at 12.

94a

proposal will exclude some energy efficiency measures

from both the supply and demand sides of PJM’s capacity market because PJM’s load forecast does not reflect

the effects of certain energy efficiency measures.129

Public Interest Organizations contend that energy efficiency measures not reflected in the load forecast should

continue to have the opportunity to sell into the capacity

market on the supply side. In addition, Public Interest

Organizations and Affirmed Energy again suggest that

numerous factors aside from energy efficiency could explain why PJM’s load forecast underestimated actual

load in the 2023/2024 Delivery Year—including that

PJM could have underestimated load growth unrelated

to energy efficiency,130 and that, when applying the actual conditions to the load forecast model, PJM found

that the model consistently overestimated load by 1-3%,

consistent with a significant underestimate of energy efficiency.131

55. AEMA contests PJM’s claim that load reductions

from energy efficiency measures naturally occur independent from capacity market payments to Energy Efficiency Resources because Energy Efficiency Resources by definition must exceed relevant building

codes and energy efficiency standards.132 Rather,

129

Public Interest Organizations Answer at 2-5 (citing Public

Interest Organization Protest Ex. A at 6-7).

130

Affirmed Energy Answer at 4.

131

Public Interest Organizations Answer at 5 (citing Molly

Mooney, Review of Preliminary Summer 2024 Loads at 9 (Sept. 19,

2024), https://www.pjm.com/-/media/committees-groups/subcommittees/las/2024/20240919/20240919-item-03---review-preliminarysummer-2024-loads.ashx).

132

AEMA Answer at 2-6.

95a

AEMA asserts that development of Energy Efficiency

Resources requires years of planning, investment, and

coordination by an energy efficiency provider so that an

end-use customer purchases a device or appliance that is

more efficient than the default choice available to them.

For that reason, AEMA also contests PJM’s claim that

other capacity resources’ significant capital investment

to construct, operate, and maintain their facilities distinguishes those resources from Energy Efficiency Resources. In addition, AEMA argues that the fact that

creation, measurement, and verification of Energy Efficiency Resources may be less capital-intensive than for

other capacity resources does not warrant the removal

of Energy Efficiency Resources from PJM’s capacity

market.

56. Affirmed Energy reiterates that the lack of a transition mechanism al

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