On February 1, 2016, FERC denied a complaint filed by NRG Power Marketing LLC (“NRG”) against the Midcontinent Independent System Operator, Inc. (“MISO”) alleging that MISO violated its tariff when it modified the Commercial Pricing Nodes (“CPNodes”) in the MISO South region to reflect the incorporation of Entergy into MISO. In particular, NRG claimed MISO’s modifications to the CPNodes effectively nullified the results of the Financial Transmission Right (“FTR”) auctions and rendered the FTRs purchased by NRG in those auctions “valueless.”
NRG alleged that the modifications to the CPNodes made by MISO following the 2013 annual FTR Auction and the October 2013 multi-period monthly FTR auction effectively nullified the results of those auctions, which resulted in NRG’s FTRs becoming “worthless.” NRG’s complaint explained that, following these FTR auctions and Entergy’s integration, MISO informed market participants that it had redefined the CPNodes in MISO South as a single CPNode, which NRG claimed resulted in the devaluation of their FTRs. As a result, NRG requested that FERC require MISO to compensate NRG for the value of the FTRs. NRG paid approximately $240,000 for the FTRs, but estimated the loss in value to be $13.5 million.
FERC denied NRG’s complaint and concluded that NRG failed to demonstrate that MISO’s actions violated its tariff. FERC explained that pre-MISO South FTRs and post-MISO South FTRs are fundamentally different products and, although NRG purchased the former, its complaint sought compensation for the value of the latter. FERC reasoned that language in MISO’s tariff contemplates that FTRs for new zones like the single MISO South CPNode should only be procured through the MISO’s Partial-Year FTR Allocation, which is different than the auctions in which NRG purchased its FTRs. FERC stated that NRG should have known that, when purchasing FTRs with sources and sinks in the region that ultimately became MISO South prior to the Partial-Year FTR Allocation, such FTRs would not provide the same value after the creation of the new MISO South CPNode. Further, FERC noted that MISO provided notice of the treatment and allocation of FTRs upon MISO South integration to market participants at a working group meeting, which NRG attended, and such notice was consistent with FERC’s reading of the MISO tariff.
A copy of FERC’s order denying NRG’s complaint can be found here.