On April 21, 2022, FERC directed each regional transmission organization/independent system operator (“RTO/ISO”) to submit information related to their wholesale markets, including how changing resource mixes and load profiles are affecting system needs. FERC stated it will review the reports and any public comments filed to determine whether further action is appropriate.
FERC previously held two technical conferences examining the potential need for market reforms to meet changing system needs (see September 15, 2021 edition of the WER). The first conference focused on key drivers of the need for additional operational flexibility in RTO and ISO markets, revising existing operating reserve demand curves, creating new products to address operational flexibility needs, and RTO/ISO market design issues and tradeoffs to consider in any such reforms. The second technical conference focused on incenting resources to reflect their full operational flexibility in energy and ancillary services (“E&AS”) markets; maximizing the operational flexibility of new and emerging resource types; revising RTO/ISO market models, optimization, and other software elements; and out-of-market operator actions. Following the conferences, FERC invited all interested parties to submit post-conference comments to address the issues discussed.
After considering the post-conference comments, FERC declined to propose a generic solution to address changing system needs. FERC pointed to the diversity of needs across RTOs and ISOs and a lack of compelling record to support any one-size-fits-all solution for meeting those needs. Instead, FERC found it appropriate to gather additional information to enhance its understanding of changing system needs and potential mechanisms for addressing those needs. FERC therefore directed each RTO and ISO to file a report within 180 days of the order describing:
- Current RTO/ISO system needs given changing resource mixes and load profiles;
- How each RTO/ISO expects its system needs to change over the next five years and over the next 10 years; whether and how each RTO/ISO plans to reform its E&AS markets to meet expected system needs over the next five years and over the next 10 years; and
- Information about any other reforms, including capacity market reforms and any other resource adequacy reforms that would help each RTO/ISO meet changes in system needs.
Public comments in response to the reports may be submitted within 60 days of the filing of the reports.
Commissioners James Danly and Mark Christie wrote separately in concurrence. Commissioner Danly posed additional questions seeking to understand whether price signals were providing the proper incentives, and if not, what needed to change. Commissioner Christie also posed additional questions that focused on the RTO and ISO markets more comprehensively, suggesting that the scope of the mandated reports should be expanded beyond E&AS markets in light of recent Midcontinent Independent System Operator, Inc. capacity auction results and noting trade press discussing the same.
A copy of the order is available here.