On April 21, the Federal Energy Regulatory Commission (FERC or Commission) released its Notice of Proposed Rulemaking (NOPR) to reform its policies regarding Regional Transmission Planning and Cost Allocation. The NOPR follows from an Advanced Notice of Proposed Rulemaking (ANOPR) on these reforms, which FERC issued in July 2021. Representing FERC’s most significant action on transmission planning and cost allocation in more than a decade, the NOPR outlines six major proposals:
Continue Reading Summary of FERC’s April 2022 NOPR on Transmission Planning, Cost Allocation, and Generator Interconnection

On March 28, 2022 and March 29, 2022, FERC issued two orders approving stipulation and consent agreements between FERC’s Office of Enforcement and Dynegy Marketing and Trade, LLC (“Dynegy”) and Constellation NewEnergy Inc. (“Constellation”), respectively. Among other things, Dynegy agreed to pay a $450,000 civil penalty for alleged violations of PJM Interconnection, L.L.C. (“PJM”) capacity tariff requirements, and Constellation agreed to pay a $2.4 million civil penalty for alleged violations of California Independent System Operator Corp. (“CAISO”) resource adequacy tariff requirements.
Continue Reading FERC Approves Civil Penalties for Alleged Violations of CAISO and PJM Market Rules

On February 17, 2022, FERC set aside its September 2020 order rejecting the New York Independent System Operator Corporations (“NYISO’s”) tariff revisions to the “Part A Test,” a component of NYISO’s buyer-side mitigation (“BSM”) rules. The now-approved changes on rehearing permit NYISO to prioritize entry of renewable resources, battery storage, and other zero emission resources (“Public Policy Resources”) in New York’s Installed Capacity (“ICAP”) Market, rather than prioritizing new resources purely on a least-cost basis. FERC also ordered NYISO to submit a compliance filing within 30 days proposing a new effective date for its tariff revisions. Commissioner James Danly issued a separate dissenting statement, arguing that the reversal was a “cynical attempt” to preference renewable resources. Commissioner Mark Christie issued a separate concurring statement, agreeing with the majority that the result was just and reasonable in NYISO after concluding that the costs of the change would be confined to New York.
Continue Reading FERC Reverses Prior Order, Allows NYISO to Prioritize Entry of Zero Emission Resources in New York’s Capacity Market

On February 4, 2022, the United States Court of Appeals for the District of Columbia Circuit (“DC Circuit”) issued a per curiam order granting NTE Connecticut, LLC’s (“NTE”) petition for issuance of a writ under the All Writs Act to stay a FERC order issued January 3, 2022 (“January 3 Order”). The January 3 Order terminated the Killingly Energy Center’s capacity commitments in the ISO-New England, Inc. (“ISO-NE”) capacity market. The DC Circuit’s order stays FERC’s January 3 Order until 30 days after FERC resolves NTE’s pending request for rehearing of the January 3 Order. The DC Circuit’s order also states that an opinion will follow in due course.  As a result of the DC Circuit’s order, ISO-NE ran its Forward Capacity Auction on February 7, 2022 as scheduled but after “unwind[ing] the actions it had taken to terminate Killingly.” ISO-NE has stated that it will update the auction results if FERC confirms Killingly’s termination. 
Continue Reading D.C. Circuit Grants Emergency Petition for Stay of FERC’s Order Terminating Killingly Energy Center’s ISO-NE Capacity Commitments

On January 20, 2022, FERC issued an order on remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) directing PJM Interconnection, L.L.C. (“PJM”) to remove provisions from its Tariff that applied a 10 percent adder to the energy and ancillary services (“E&AS”) offset in PJM’s net Cost of New Entry (“CONE”) calculation. FERC acknowledged that energy market rules permit generators to increase their offers into the energy market by 10 percent above estimated costs. That fact alone, FERC concluded, does not justify application of the 10 percent adder to the E&AS offset in the Net CONE calculation used to establish the Variable Resource Requirement Curve (“VRR Curve”). Moreover, FERC concluded, PJM failed to present sufficient evidence to support inclusion of the 10 percent adder. FERC directed PJM to remove the 10 percent adder from its VRR Curve determination for the 2023-2024 Base Residual Auction (“BRA”) and subsequent auctions. FERC previously directed PJM to delay the start of the 2023-2024 BRA (see January 18, 2022 edition of the WER). In the January 20 order, FERC stated its expectation that PJM propose an amended BRA schedule that would provide it adequate time to remove the 10 percent adder from its Tariff. Commissioner James Danly issued a separate dissenting statement.
Continue Reading On Remand, FERC Reverses Prior Approval of PJM 10% Net CONE Adder

On December 22, 2021, FERC issued an order on voluntary remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) directing changes to PJM Interconnection, L.L.C.’s (“PJM’s”) reserve market design. FERC’s December 22 order reverses certain changes it previously ordered in May 2020 (“May 2020 Order”). The December 22 order affirmed FERC’s decision in the May 2020 Order to accept PJM’s proposal to consolidate its Tier 1 and Tier 2 Synchronized Reserve Products. However, the December 22 order required PJM to revert back to its currently-effective Reserve Penalty Factors, two-step Operating Reserve Demand Curve (“ORDC”), and a backward-looking Energy and Ancillary Services (“E&AS”) Offset. FERC directed PJM to apply the backward-looking E&AS Offset to the 2023/24 Base Residual Auction (“BRA”), which was previously scheduled to run in January 2022, notwithstanding any resulting delay to the auction schedule. FERC required PJM to submit a revised BRA schedule on compliance. Commissioner Christie issued a concurring opinion, and Commissioner Danly dissented in part.
Continue Reading FERC Reverses Certain Changes to PJM Reserve Market in Voluntary Remand Proceeding

On November 26, 2021, FERC issued a notice stating that it would not review a Notice of Penalty filed by the North American Electric Reliability Corporation (“NERC”) against Ohio Valley Electric Corporation (“OVEC”). FERC’s November 26 notice effectively approves a $300,000 settlement between OVEC and the regional reliability entity, ReliabilityFirst Corporation (“RF”), for violations of NERC reliability standards FAC-003-4 R2 and FAC-003-4 R6, which address vegetation management. The settlement followed a 4.5-hour outage to one of OVEC’s 345 kV transmission lines in September 2018 that resulted when contact with a cedar tree growing in close proximity tripped the line out of service. OVEC neither admitted nor denied the violations, but agreed to the assessed $300,000 penalty.
Continue Reading FERC Approves $300,000 Settlement Between ReliabilityFirst and Ohio Valley Electric Corp. for Violations of NERC Reliability Standards

On November 29, 2021, FERC issued a notice stating that the requests for rehearing on PJM Interconnection, L.L.C.’s Focused Minimum Offer Price Rule (“Focused MOPR”) policy, which went into effect by operation of law on September 29, 2021 (see October 29, 2021 edition of the WER) were deemed denied by operation of law. FERC’s notice triggers a 60-day clock under the Federal Power Act for parties to petition for appellate review. The November 29 notice followed rehearing requests filed by parties including the Pennsylvania Public Utility Commission, Public Utilities Commission of Ohio, Electric Power Supply Association, Old Dominion Electric Cooperative, Vistra Corporation, and the New Jersey Board of Public Utilities. In addition to the rehearing requests, the PJM Power Providers Group has already appealed the Focused MOPR to the United States Court of Appeals for the Third Circuit, and submitted comments responding to Chairman Glick’s and Commissioner Clements’ joint statement in support of the Focused MOPR.
Continue Reading Parties Request Rehearing of PJM’s Focused MOPR Policy

On September 29, 2021, FERC recognized that PJM’s Minimum Offer Price Rule (“MOPR”) replacement proposal, previously filed with FERC on July 30, 2021, went into effect by operation of law after the Commission failed to act on PJM’s filing within the 60-day statutory deadline. FERC’s notice stated that FERC did not act on PJM’s filing because the Commissioners are divided two-to-two as to the filing’s lawfulness. Consistent with the Federal Power Act (“FPA”), the Commissioners each issued a statement explaining his or her view on PJM’s MOPR replacement proposal. Going forward, PJM’s MOPR replacement proposal has already been appealed based on an emergency request for rehearing of FERC’s September 29 notice. Additional requests for rehearing continue to be filed prior to the October 29 deadline.
Continue Reading PJM MOPR Replacement Takes Effect by Operation of Law; Commissioners Issue Separate Statements

On September 2, 2021, FERC accepted a new Market Seller Offer Cap (“MSOC”) in the PJM Interconnection, L.L.C. (“PJM”) capacity market that will require all capacity market sellers that fail PJM’s market structure test and offer above $0/MW-day to, at their election, obtain approval for their offer from PJM’s Market Monitor or utilize a default MSOC equal to the resource’s applicable net Avoidable Cost Rate (“ACR”)—i.e., its annual operating costs—less the resource’s net energy and ancillary services (“E&AS”) revenues (“ACR Proposal”). Commissioner James Danly issued a separate dissenting statement in which he argued that the ACR Proposal will lead to over-mitigation, in part because it will require the Market Monitor to review a higher number of capacity offers than under PJM’s previously-effective MSOC. In a compliance filing on FERC’s September 2 order, PJM asked for a 55-day delay of its upcoming capacity auction (currently scheduled to begin December 1, 2021) in order to allow time for the Market Monitor to perform the required unit-specific review under the new MSOC. As of this writing, FERC has not yet acted on PJM’s request.
Continue Reading FERC Accepts Replacement Offer Cap for PJM Capacity Markets; PJM Requests Capacity Auction Delay to Implement New Offer Cap