On May 17, 2018, FERC issued Order No. 833-A wherein it denied rehearing of Order No. 833 and granted, in part, Edison Electric Institute’s (“EEI”) request for clarification of Order No. 833. Order No. 833 amended FERC’s regulations regarding Critical Energy Infrastructure Information (“CEII”), as directed by the FAST Act. The FAST Act, signed into law on December 4, 2015, added section 215A to the Federal Power Act (“FPA”) to improve the security and resilience of energy infrastructure in the face of emergencies. The FAST Act also directed FERC to issue regulations on the procedures for designating certain material as CEII, provided for the imposition of sanctions on any party who knowingly discloses CEII, and authorized the voluntary sharing of CEII material.
Continue Reading FERC Clarifies CEII Rules
Christopher Zentz
FERC Rejects PJM Tariff Proposal to Reduce Capacity Market Arbitraging
On May 8, 2018, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff (“Tariff”) and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region. PJM stated that these revisions would reform its Incremental Auctions and its method for addressing excess capacity in the PJM region (“Incremental Auction Proposal”). PJM specified that its current market rules do not protect against, and may in fact provide an incentive to engage in, speculative behavior, which distort price signals on the value of capacity. FERC rejected PJM’s Incremental Auction Proposal because, according to FERC, PJM did not support its argument that speculative behavior is actually transpiring, and PJM already had procedures in place to address this activity if it is actually occurring.
Continue Reading FERC Rejects PJM Tariff Proposal to Reduce Capacity Market Arbitraging
FERC Rejects Rehearing Request Regarding SPP Congestion Charge Exemptions
On April 27, 2018 (“April 27 Order”), FERC denied a rehearing request of Basin Electric Power Cooperative (“Basin Electric”), Heartland Consumers Power District (“Heartland”), and Missouri River Energy Services (“Missouri River”; collectively, “Rehearing Parties”). The Rehearing Parties contended that their grandfathered agreement regarding the Missouri Basin Power Project was eligible for carve-out treatment under the Southwest Power Pool, Inc. (“SPP”) Open Access Transmission Tariff (“SPP Tariff”). In this proceeding, “carve-out treatment” refers to an exemption from congestion charges and marginal losses. FERC ultimately rejected the rehearing request because it found, among other reasons, that Rehearing Parties are not similarly situated to another party, who had already been given carve-out treatment.
Continue Reading FERC Rejects Rehearing Request Regarding SPP Congestion Charge Exemptions
D.C. Circuit Holds that FERC Lacks Jurisdiction over Certain Interstate Gas Sales by Municipalities
On April 24, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) held that FERC lacks jurisdiction over certain of the City of Clarksville, Tennessee’s (“Clarksville”) interstate sales of natural gas for resale, because the plain language of the Natural Gas Act (“NGA”) excludes sales by municipalities from FERC’s jurisdiction, which extends to interstate sales of natural gas for resale under NGA section 7.
Continue Reading D.C. Circuit Holds that FERC Lacks Jurisdiction over Certain Interstate Gas Sales by Municipalities
FERC Issues Final Rule Regarding Transparency in Price Formation
On April 19, 2018, FERC issued a final rule (“Order No. 844”) addressing transparency in markets operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”). FERC required that each RTO/ISO establish in its tariff: requirements to report information about uplift payments for each resource and transmission zone; requirements to report information on each operator-initiated commitment; and the transmission constraint penalty factors used in its market software. Order No. 844 will become effective 75 days after publication in the Federal Register.
Continue Reading FERC Issues Final Rule Regarding Transparency in Price Formation
FERC Approves Settlement with ETRACOM for Market Manipulation Allegations
On April 10, 2018, FERC approved a Stipulation and Consent Agreement (“Settlement”) among the Office of Enforcement (“OE”), ETRACOM LLC (“ETRACOM”), and Michael Rosenberg (together, with ETRACOM, “Respondents”) as in the public interest. OE claimed that Respondents violated federal law and FERC’s rules against anti-manipulation in the California Independent System Operator Corp. (“CAISO”) wholesale electric market. FERC determined that the Settlement was fair and reasonable and resolved all outstanding claims and proceedings between OE and the Respondents.
Continue Reading FERC Approves Settlement with ETRACOM for Market Manipulation Allegations
FERC Establishes Technical Conference Regarding PJM Frequency Regulation Complaints
On March 30, 2018, FERC issued an order establishing a technical conference and partially granting one of two complaints against various changes to the PJM Interconnection, L.L.C. (“PJM”) frequency regulation market. In partially granting one complaint, FERC found that PJM’s tariff is unjust and unreasonable in so far as it omits the methodology for calculating certain regulation-related cost curves, as well as the parameters governing certain regulation market signals. In the forthcoming technical conference, FERC intends to consider both: (1) whether PJM’s recent frequency regulation market changes hamper the full participation of storage resources, for example, to provide regulation services, and (2) whether PJM’s regulation market design as a whole is consistent with prior FERC precedent.
Continue Reading FERC Establishes Technical Conference Regarding PJM Frequency Regulation Complaints
FERC Approves Regional Equipment Sharing Program
On April 3, 2018, FERC pre-approved numerous utilities’ request to enter into certain future transmission system related transactions in the event of a catastrophic grid reliability event (“Triggering Event”). As a result, participant-utilities in the Regional Equipment Sharing for Transmission Outage Restoration Agreement (“RESTORE Agreement”) are eligible to purchase certain replacement transmission system equipment (the “Proposed Transactions”) from other participant-utilities if there is a Triggering Event that impacts transmission service capabilities. In addition, FERC also granted the utility-applicants’ (“Applicants’”) request for waiver of certain affiliate purchase restrictions in the event that qualifying transactions between affiliates becomes necessary.
Continue Reading FERC Approves Regional Equipment Sharing Program
FERC Partially Accepts MISO Order No. 831 Compliance Filing, Orders Further Modifications to MISO Tariff
On March 28, 2018, FERC partially accepted the Midcontinent Independent System Operator, Inc.’s (“MISO”) Order No. 831 compliance filing (“March 28 Order”). In Order Nos. 831 and 831-A, FERC required Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to amend their respective tariff provisions governing existing offer caps on incremental energy offers, which FERC determined was necessary to: (1) avoid suppressing Locational Marginal Prices (“LMPs”) below the marginal cost of production; and (2) fully compensate generation resources for the costs incurred to serve load (see November 21, 2016 edition of the WER).
Continue Reading FERC Partially Accepts MISO Order No. 831 Compliance Filing, Orders Further Modifications to MISO Tariff
FERC Finds Idaho Power Lacks Market Power in Its Own BAA and Terminates FPA Section 206 Proceeding
On March 19, 2018, FERC issued an order terminating its proceeding under section 206 of the Federal Power Act (“FPA”), accepting Idaho Power Company’s (“Idaho Power”) updated market power analysis, and concluding that Idaho Power successfully rebutted the presumption of market power. In doing so, FERC concluded that Idaho Power satisfied the Commission’s standards for market-based rate authority in its own Balancing Authority Area (“BAA”). In finding that Idaho Power had rebutted the presumption of market power, FERC relied on Idaho Power’s delivered price test (“DPT”) analysis and various sensitivity analyses using transaction data from both the Idaho Power BAA and an adjacent trading hub.
Continue Reading FERC Finds Idaho Power Lacks Market Power in Its Own BAA and Terminates FPA Section 206 Proceeding