On September 8, 2016, the Commission denied a complaint filed by Boundless Energy NE, LLC, CityGreen Transmission, Inc. and Miller Bros. (collectively, “Competitive Transmission Developers” or “CTD”) against the New York Independent System Operator, Inc. (“NYISO”), alleging that NYISO violated its Open Access Transmission Tariff (“OATT”) in its most-recent solicitation for projects to address public policy transmission needs identified by the New York State Public Service Commission (“NYPSC”). The Commission determined that CTD had failed to demonstrate that NYISO had violated its OATT, or that NYISO had improperly abdicated its responsibilities to the NYPSC in the implementation of its public policy transmission planning process.
FERC Denies Complaint Challenging PJM Weather Normalization Adjustments
On September 14, 2016, FERC denied a Federal Power Act (“FPA”) Section 206 complaint filed by Vineland Municipal Electric Utility (“Vineland”) alleging that Atlantic City Electric Company (“ACE”) applied unauthorized weather normalization adjustments to Vineland’s capacity peak load contribution, which increased the capacity charge PJM Interconnection, LLC (“PJM”) assessed to Vineland during the 2015-2016 delivery year by 18.6 percent, or $1.6 million. In denying the complaint, FERC validated ACE’s application of the weather normalization adjustment and precluded Vineland from receiving refunds requested for past adjustments.
FERC Acts on APS Request to Participate in CAISO’s Energy Imbalance Market Using Market-Based Rates
On August 31, 2016, FERC conditionally approved Arizona Public Service Company’s (“APS”) request to amend its market-based rate tariff to facilitate APS’ participation in the western Energy Imbalance Market (“EIM”) administered by the California Independent System Operator Corporation (“CAISO”). Another western utility, Puget Sound Energy (“PSE”) is also expected to join the EIM. With respect to its market-based rate authorization to participate in the EIM, PSE filed a Non-Material Change in Status on March 9 in Docket ER10-2374-010. FERC has not yet acted on this submittal. On October 1, 2016, APS and PSE are expected to begin participating in the EIM alongside existing members—PacifiCorp, and NV Energy—to form a six-balancing authority area EIM footprint.
FERC Accepts ISO-NE’s Ten-Percent Threshold for Mitigating Generator Retirement Bids
On July 27, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) accepted a compliance filing from ISO New England (“ISO-NE”) that establishes a ten-percent materiality threshold before ISO-NE will mitigate a retirement bid in its annual Forward Capacity Auction (“FCA”). In an April 2016 order, FERC previously accepted a set of proposed revisions to ISO-NE’s Transmission, Markets, and Services Tariff (“Tariff”) regarding capacity market power and FCA prices on the condition that the ISO include a price mitigation threshold for retirement bids (see April 18, 2016, edition of the WER).
FERC Amends the Pro Forma SGIA to Require Frequency and Voltage Ride-Through Capability for Small Generators
On July 21, 2016, FERC issued a final rule (“Order No. 828”) modifying the pro forma Small Generator Interconnection Agreement (“SGIA”) to require newly interconnecting small generators to “ride-through” voltage and frequency variations rather than having those generators disconnect from the larger transmission system. With this final rule, FERC obligates new small generators—those less than 20 MW—to have comparable ride-through capabilities as those currently imposed on their large-scale counterparts through the pro forma Large Generator Interconnection Agreement (“LGIA”).
FERC Ordered to Participate in Full Civil Trial to Affirm Prior Market Manipulation Penalty
On July 21, 2016, the U.S. District Court for the District of Massachusetts (“District Court”) determined that review of a FERC-issued penalty for alleged market manipulation must be treated as an “ordinary civil action” requiring de novo review and finding against FERC’s arguments to the contrary. The District Court further ordered in its decision, FERC v. Maxim Power Corp., et al., that in the corresponding civil action—to determine whether to affirm FERC’s prior penalty assessment against the owners and operators of a power plant in Pittsfield, Massachusetts (“Maxim”) and one of their employees (together, “Respondents”)—the Respondents will be entitled to the full discovery of an ordinary civil case, and the proceeding can be decided by a jury, if necessary.
D.C. Circuit Issues Opinion Affecting Oil Pipeline Ratemaking
On July 1, 2016, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rendered an opinion affecting the return-on-equity and cost-of-service components of oil pipeline ratemaking. Specifically, the D.C. Circuit ordered FERC to either justify or amend its practice of granting income tax allowances for limited partnership pipelines, questioned FERC’s rationale in deciding what financial data should be used to calculate real rate of return on equity, and upheld FERC’s determination that a pipeline’s cost-of-service rates can already account for changes in costs associated with rate indexes. The D.C. Circuit remanded the case back to FERC on the income tax allowance and real rate of return on equity issues.