On December 18, 2009, FERC conditionally approved PJM Interconnection, L.L.C.’s (“PJM”) Order No. 719 compliance filing, which contained proposed revisions to the PJM tariff regarding organized wholesale electricity markets.  The Commission also clarified the market power mitigation roles of PJM and Monitoring Analytics, PJM’s independent market monitoring unit (“MMU”), in the order.

In October of 2008, the Commission released Order No. 719, a final rule that applied to the six Independent System Operators (“ISOs”) and Regional Transmission Organizations (“RTOs”) that operate day-ahead and/or real-time organized energy markets, including PJM.  Order No. 719 proposed various reforms in order to improve wholesale competition.  These reforms included providing more supply options during periods of operating reserve shortage, encouraging new entry and innovation, spurring deployment of new technologies, removing barriers to demand response, improving operating performance, exerting downward pressure on costs, and shifting risk away from consumers. 

For the most part, PJM’s compliance filing was limited to Order No. 719 reforms, which were largely approved so long as some minor alterations and clarifications are made in a future compliance filing from PJM.  However, PJM also proposed tariff revisions that would prohibit the MMU from exercising final authority over all aspects of PJM’s tariff administration, including “prospective” mitigation of market power.  While some parties agreed that PJM should be the ultimate arbiter of its tariff, several other parties argued that PJM’s proposal would weaken the MMU’s ability to perform the role previously envisioned by the Commission for PJM. 

The Commission ultimately agreed with PJM, stating that PJM is not obligated to accept the MMU’s decisions on mitigation inputs and other cost-related matters.  The Commission went on to state that while the MMU can provide input on such matters, including retrospective mitigation issues, Order No. 719 requires that the RTO has ultimate authority over its own tariff. 

Aside from PJM’s compliance filing, the Commission already accepted the compliance filings of New York ISO, California ISO, and Southwest Power Pool Inc. in November of 2009.  The only pending compliance filings that remain are those from ISO New England and the Midwest ISO.  The Commission’s order conditionally accepting PJM’s compliance filing can be under Docket No. ER09-1063 at: http://www.ferc.gov/.