On April 29, 2019, FERC accepted revisions proposed by PJM Interconnection, L.L.C. (“PJM”) to its Open Access Transmission Tariff (“Tariff”) and Amended and Restated Operating Agreement (“Operating Agreement”) to allow market participants to submit day-ahead offers that vary by hour and to update such offers in real time (“April Order”).  FERC also denied PJM’s motion for clarification as to whether PJM’s Independent Market Monitor (“IMM”) may file certain complaints against PJM.

On June 17, 2016, FERC issued an order finding that PJM’s existing Tariff and Operating Agreement were unjust and unreasonable because they did not allow market participants to submit hourly offers and directed PJM to submit a compliance filing.  FERC accepted PJM’s compliance filing on February 3, 2017, but directed PJM to make additional changes and clarifications, mostly focused around PJM’s treatment of market sellers’ Fuel Cost Policies.  On March 6, 2017, PJM submitted the proposed revisions pursuant to FERC’s order (“March Revisions”), along with a motion for clarification as to whether the IMM could file certain complaints against PJM.

In the April Order, FERC conditionally accepted PJM’s proposed revisions, subject to PJM’s submission of a further compliance filing.  FERC addressed various issues but notably accepted PJM’s proposed standard of review related to the Fuel Cost Policy.  FERC found that the standard for review provides sufficient information about a Market Seller’s fuel procurement practices, describes how Market Sellers used those practices to compute their cost-based offers, and reflects a Market Seller’s applicable commodity and/or transportation contracts including a Market Seller’s method of calculating and purchasing fuel.  FERC also found that PJM’s proposed penalty structure appropriately shows how penalties will be assessed and treated for failure to adhere to the standards set forth in Schedule 2 of the Operating Agreement.  Further, FERC accepted proposed revisions to the Operating Agreement specifying specific milestones as to how PJM will process Fuel Cost Policies submitted by market sellers.

FERC denied PJM’s motion for clarification asking FERC to specify that the IMM could not initiate a complaint against PJM under section 206 of the Federal Power Act (“FPA”) when the IMM disagrees with (i) PJM’s acceptance of a Fuel Cost Policy, (ii) PJM’s acceptance of market participant’s offer under their Fuel Cost Policy, and (iii) PJM’s application of penalties as they apply to a market participant’s offer.  Specifically, FERC found that a recent decision of the U.S. Court of Appeals for the D.C. Circuit, wherein the Court found the IMM lacked standing to intervene in an appeal of a FERC order, does not affect the IMM’s rights to file complaints related to PJM under section 206 of the FPA.

Commissioner Richard Glick filed a concurrence, joining the April Order in full. He expressed his support for FERC’s denial of the motion for clarification, stating that a market monitor’s ability to bring a complaint under section 206 of the FPA is an important tool that assists in the identification of market design flaws.

A copy of the April 29, 2019 FERC order can be found here.