Light Power & Gas of NY LLC (LPGNY) has requested rehearing of the FERC's June 20, 2019 Order denying its complaint in which LPGNY had alleged that NYISO violated its Open Access Transmission Tariff (OATT) by attributing to LPGNY the outstanding debts of North Energy Power LLC (North Energy), a bankrupt former NYISO market participant, for purposes of considering LPGNY’s application for registration in NYISO’s markets.

See more details on LPGNY's complaint in here

In brief, FERC found that, "We find that NYISO’s decision to treat LPGNY as the same entity as North Energy is reasonable in light of the record, particularly the close overlap in not only those entities’ relevant personnel, but also their business activities. Namely, both entities have the same contacts and administrators, similar addresses, are engaged in the same business in the same territory, and seek to serve the same customers ... NYISO submitted affidavits detailing the roles of the principal figures in both North Energy and LPGNY, stating that Abe Leiber, Jack Klein, and Hindy Gruber are contacts and/or administrators for both companies and have similar roles in each company. LPGNY does not dispute that it has the same contacts and administrators or that LPGNY intends to serve the same customers in the same market as North Energy. NYISO also states that, although LPGNY was established as a company several years ago, LPGNY did not begin engaging in business until North Energy defaulted on its NYISO obligations. Thus, we find that, in these factual circumstances, it is reasonable to disregard North Energy’s and LPGNY’s separate corporate forms to ensure that an entity that had incurred debts could not shift its business activities into a different corporate entity to continue to do business while avoiding paying those debts," FERC said

See ECM's story here on FERC's order denying the complaint

In its rehearing request, LPGNY said, "The Commission’s Denial Order denies LPGNY’s January 29, 2019 complaint ('Complaint') against the New York Independent System Operator ('NYISO'), wrongfully expanding the NYISO’s ability to pursue affiliates of defaulting market participants even when applicable tariffs and principles of state law successor liability do not provide such rights, but merely because two entities are presumed—based on unpublished, unknown factors—to share an undefined list of common business characteristics."

In its rehearing request, LPGNY said, "In the Denial Order, the Commission departed from precedent and the rule of law by, among other things, explicitly refusing to rule on the NYISO’s expressly-stated basis for its determination—successor liability—but rather, on a post-hoc assessment of common business characteristics, such as personnel, service territory, the location of the business address. The Denial Order does so without making the requisite finding of tariff ambiguity, and based on misrepresented facts, and in circumvention of LPGNY’s rights. It allows NYISO to invent a murky, undefinable standard out of thin air, cover its tracks with false statements, and retroactively apply that standard to LPGNY, while simultaneously recognizing and attempting to fix the very tariff gap identified in the Complaint by encouraging NYISO to add language to its OATT 'setting forth the factors it will consider' to 'avoid such situations in the future.'"

In its rehearing request, LPGNY said, "In addition to improperly relying on extrinsic evidence in its decision-making process, the Denial Order mischaracterizes that evidence by stating that 'LPGNY does not dispute that it has the same contacts and administrators or that LPGNY intends to serve the same customers in the same market as North Energy.' LPGNY in fact did dispute that evidence, clearly stating that 'It is improper for the NYISO to rely on speculation and hearsay statements of NYISO employee Sheri Prevratil,' and 'NYISO’s fact affidavits do not establish any facts, but merely speculate and rely on rank hearsay as to connections between North Energy and LPGNY,' and noting that 'in order to deny the Complaint and find that NYISO’s determination is proper, the Commission would be required to resolve disputed questions of fact in favor of NYISO’s raw speculation.' The Commission did not resolve those disputed questions of fact, and mischaracterizes LPGNY’s position in the Denial Order."

In its rehearing request, LPGNY said, "The Denial Order glosses over disputed facts and imposes consequences on LPGNY without applying adequate fact-finding procedures and in contravention of Commission precedent. In contrast to the Denial Order’s finding that 'LPGNY has had an opportunity to respond to, and has responded to, NYISO’s assertions in this proceeding, providing it with any necessary due process,' LPGNY had no procedure by which to challenge NYISO’s factual assumptions, other than to point out their disputed nature, which, as noted above, was misconstrued by the Commission. As a result, the Denial Order is predicated on NYISO’s hearsay statements, speculation, and raw allegations of its staff acting in the role of judge and litigant-creditor. This is precisely the reason why due process is a crucial element to agency decision-making, particularly in a case involving fact-intensive questions of successor liability and corporate disregard."

Docket No. EL19-39