On May 2, 2014, FERC granted the Illinois Municipal Electric Agency (“IMEA”) a waiver from certain PJM Interconnection, L.L.C. (“PJM”) tariff requirements so it could utilize PJM’s Fixed Resource Requirement (“FRR”) Alternative for load delivery.  As a result, IMEA can self-supply its Naperville, Illinois load with generation located outside of the Commonwealth Edison (“ComEd”) Locational Deliverability Area (“LDA”) starting on June 1, 2017.

On March 28, 2014, PJM informed IMEA that due to certain tariff provisions, IMEA would be required to fulfill 72.4 percent of its capacity obligations from resources located within the ComEd LDA.  As a result of this development, IMEA submitted its proposal to utilize the FRR Alternative – which allows entities to maintain reliable service through self-supply or bilateral agreements – so that it could self-supply 100 percent of its Naperville load with resources located outside the ComEd LDA.  IMEA argued in its waiver request that it had invested significant resources in external generation and capacity rights to ensure the self-supply of its ComEd load, and its inability to utilize these resources would result in significant economic hardship.  IMEA also noted that disallowing IMEA to self-supply its ComEd load from external resources would cost an additional $24 million per year.  Notably, PJM confirmed that IMEA’s proposal had met the eligibility requirements to utilize the FRR Alternative, and that PJM did not oppose IMEA’s waiver request.

FERC approved IMEA’s waiver request and held that no undesirable consequences would result, as IMEA’s 100 percent external self-supply would not limit other utilities use of available transmission rights or contribute to a regional shortage.  FERC also held that IMEA had acted in good faith when it submitted its proposal to PJM to utilize the FRR Alternative before the ComEd LDA internal resource requirement took effect.  Finally, FERC explained that the waiver was of limited scope and would remedy a narrow, concrete problem.

Commissioner Philip Moeller dissented from FERC’s order.  In his dissent, Commissioner Moeller stated that while FERC maintained a good rationale for approving IMEA’s waiver request, doing so only shifted costs to others in the Chicago area without adequate justification.

A copy of the order is available here.