On February 27, 2020, FERC accepted a compliance filing from PJM Interconnection, L.L.C. (“PJM”) that proposed identical revisions to Attachment K of the PJM Tariff and Schedule 1 of the PJM Operating Agreement, finding that the revisions met the requirements of Opinion No. 566, issued August 26, 2019. In accepting PJM’s compliance filing, FERC found that the PJM Tariff now includes greater transparency regarding the process used to evaluate requests to build network upgrades in order to obtain Incremental Auction Revenue Rights (“IARRs”).

PJM proposed revisions stem from complaints filed by merchant transmission developer, TranSource, LLC (“TranSource”), alleging, among other things, that PJM violated its Tariff when processing TranSource’s requests to build network transmission upgrades to obtain IARRs. TranSource argued that PJM’s IARR study process was flawed, nontransparent, and discriminatory. After a hearing, FERC’s presiding judge determined PJM’s study process was nontransparent and discriminatory, and therefore unjust and unreasonable. In Opinion No. 556, however, FERC reversed the presiding judge’s findings, but held that PJM’s Tariff lacked clarity, because it omits material terms regarding PJM’s process for studying upgrade requests, and directed PJM to propose revisions to its Tariff.  More specifically, FERC found the PJM Tariff did not comply with FERC’s policy that all practices that significantly affect rates, terms and conditions of service must be included in a tariff as opposed to manuals or other documents that are not on file with the Commission.

FERC determined PJM’s proposed Tariff revisions comply with the requirements of Opinion No. 566. FERC found that the proposed revisions include a definition of the models used to evaluate IARR requests, a description of how operative constraints in the market model are determined, and a detailed explanation of how simultaneous feasibility is determined for IARR requests. FERC declined to address the PJM Market Monitor’s comments recommending the elimination of IARRs, explaining that they were beyond the scope of the proceeding, which was solely to determine whether PJM had met its compliance obligations.

A copy of the order is available here.