On July 24, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) affirmed FERC’s 2015 and 2016 orders denying challenges to ISO New England’s (“ISO-NE”) ninth and tenth Forward Capacity Auctions (“FCA 9” and “FCA 10”) and approving the results of those auctions.  The D.C. Circuit found that petitioners, Utility Workers Union of America Local 464 and its President, Robert Clark, failed to establish standing to challenge the FERC orders approving the results of FCA 9 and FCA 10.

Shortly before ISO-NE’s eighth FCA (“FCA 8”), in February 2014, the owners of the Brayton Point Power Station (“Brayton Point”), a coal-fired electric generating unit in Somerset, Massachusetts, announced the plant’s retirement.  Because the plant’s owners announced the retirement after the deadline for other wholesale electricity suppliers to participate in FCA 8, petitioners challenged the plant’s closure before FERC, contending that the restricted supply caused by the plant’s retirement constituted market manipulation that caused a spike in the auction clearing price, to the detriment of retail electricity customers and to the benefit of the Brayton Point owner’s other plants.  The Commission has yet to act on petitioners’ challenge to the results of FCA 8, which went into effect by operation of law on September 16, 2014 (see November 3, 2014 edition of the WER).

In 2015 and 2016, ISO-NE held FCA 9 and FCA 10, in which Brayton Point did not participate.  FCA 9 yielded prices above the historical baseline, but lower than those that resulted from FCA 8.  FCA 10 yielded prices lower than both FCA 8 and 9, but above those of prior auctions.  Despite challenges from petitioners, FERC approved the results of both FCA 9 and 10 as just and reasonable.  The petitioners then challenged both decisions on rehearing, again asking FERC to consider whether the retirement of Brayton Point constituted illegal market manipulation.  FERC denied both requests for rehearing, stating that it was not persuaded, and the record contained no evidence to show that Brayton Point’s retirement constituted market manipulation that affected FCA 9 and 10.

Petitioners sought review in the D.C. Circuit, contending that FERC erred by failing to credit, further investigate, or refute their evidence that Brayton Point’s retirement was illegal market manipulation.  They asserted that, because Brayton Point retired after the deadline for new entrants to participate in FCA 8, the retirement shrunk the pool of eligible bidders to participate in FCA 9 and FCA 10, which elevated the clearing price in those auctions.

The D.C. Circuit dismissed the petition, finding that petitioners lacked standing.  Specifically, the court found that because petitioners brought forward no evidence of a relationship between Brayton Point’s shutdown and alleged manipulation of FCA 8 and the clearing prices of FCA 9 and 10, they failed to establish the causation element of their standing claim.

The court’s opinion is available here.