On September 26, 2025, the United States Court of Appeals for
the D.C. Circuit vacated a 2023 Federal Energy Regulatory
Commission ("FERC") order that granted the request of
Midcontinent Independent System Operator, Inc. ("MISO")
to stop providing generation owners revenue for providing reactive
power service to the electric grid. Sheppard Mullin led a coalition
of renewable energy clients in appealing FERC's decision and
the D.C. Circuit found in the clients' favor. It held that
FERC's decision was arbitrary because it allowed MISO to
eliminate this compensation immediately, but did not adequately
address the generators' argument that they relied on
reactive-power compensation when they entered into loans and
negotiated long-term power-purchase agreements with wholesale
customers. The Court found that FERC failed to reasonably explain
why the generators' short-term financial concerns were
unfounded, immaterial, or outweighed by countervailing policy
concerns, vacated the FERC orders and remanded the financial
reliance issue to FERC to consider. Subject to any further
proceedings at FERC, the ruling allows the affected generators to
potentially collect reactive-power compensations from when
MISO eliminated this compensation on December 1, 2022, until
January 27, 2025, when a separate FERC order stopped this
compensation nationwide across all transmission providers. That
later order is currently on appeal at the United States Court of
Appeals for the Fifth Circuit, which appeal is also being handled
by Sheppard Mullin.
Read the opinion here.
Sheppard Mullin partners Bruce Grabow and Jennifer Brough represented the coalition of energy clients in the appeal.