On October 15, 2014, the Commission granted Indianapolis Power & Light Company’s (“IPL”) request for a limited, one-time waiver of certain provisions of the Midcontinent Independent System Operator’s (“MISO”) Open Access Transmission Tariff (“OATT”) in connection with IPL’s retirement of Eagle Valley coal units 3-6 (“Eagle Valley”) to comply with the EPA’s Mercury and Air Toxics Standards (“MATS”).
IPL’s Eagle Valley facility is required to meet the MATS emissions limitations within three years of the rule’s effective date, or April 16, 2015. In its request for waiver, IPL stated that it had previously obtained a one-year extension from the Indiana Department of Environmental Management allowing Eagle Valley to continue operating until April 16, 2016, after which IPL plans to retire the facility because it will be unable to meet the MATS requirements. Because the MISO 2015-2016 capacity planning year runs from June 1, 2015 to May 31, 2016, there is an approximately 6.5 week gap between Eagle Valley’s MATS compliance date and the end of the MISO planning year. Furthermore, MISO’s OATT requires that capacity resources be available for service and make offers into the market for the entire planning year. To meet this requirement under the MISO OATT, IPL argued that Eagle Valley would have to be operated for approximately 6.5 weeks after the MATS compliance date, thereby risking significant civil penalties from the EPA. Moreover, IPL noted that the MISO OATT also requires that entities purchase replacement capacity if a planning resource is retired prior to the end of the planning year. As a result, IPL sought, among other things, waiver of these two MISO requirements in order to avoid potential compliance issues with the MATS rules, or, in the alternative, retirement of Eagle Valley prior to the commencement of the 2015-2016 planning year.
The Commission granted IPL a limited, one-time waiver of MISO’s must-offer requirement and the requirement to purchase replacement capacity for the period of April 16, 2016 to May 31, 2016. In doing so, the Commission reasoned that: 1) the waiver was limited in scope; 2) a concrete problem needed to be remedied; and 3) the waiver did not have undesirable consequences, such as harming third parties. The Commission also explained that MISO and its stakeholders had previously recognized the gap between the MATS compliance date and the end of the MISO capacity planning year, and had spent over a year attempting to resolve the problem through a tariff amendment, without success. The Commission further noted that MISO had previously determined that Eagle Valley was not necessary for the reliability of the transmission system beyond April 16, 2016, and that, despite the granting of the waiver for Valley Electric, IPL remained obligated to procure sufficient capacity for the remainder of the 2015-2016 planning year.
In their concurrence, Commissioners Clark and Moeller described the difficult circumstances confronting IPL due to the mismatch between the end of the MISO planning year and the MATS compliance date. Commissioners Clark and Moeller also described the evidence supporting the Commission’s conclusion that the granting of the waiver would not adversely impact reliability, and noted that the Commission’s actions in no way required the Commission to grant waivers to other entities under different sets of circumstances.
In his dissent, Commissioner Bay argued that IPL had failed to meet its burden to justify the requested waiver. Commissioner Bay expressed his belief that the Commission should have required IPL to purchase replacement capacity for the 6.5 week gap as long as such capacity was available at a just and reasonable rate.