On September 16, 2020, the United States Senate Committee on Energy and Natural Resources (“Committee”) held a hearing to consider Allison Clements’ and Mark C. Christies’ pending FERC nominations as FERC Commissioners. Ms. Clements is slated to join the Commission for a term expiring June 24, 2024, and Mr. Christie is set to join for a term expiring June 30, 2025.

Continue Reading Senate Committee Holds Hearing to Consider Pending FERC Nominations

On September 4, 2020, FERC rejected the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to its buyer-side mitigation (“BSM”) rules that sought to prioritize storage, wind, solar, and other zero-emitting resources (“Public Policy Resources”) in NYISO’s Installed Capacity (“ICAP”) Market, rather than prioritizing new resources purely on a least-cost basis. While NYISO argued the state’s carbon and nitrogen oxide emissions reduction goals mean that a resource’s cost structure is no longer the best predictor of whether it will ultimately be developed, FERC held that NYISO’s proposal was unduly discriminatory because it prioritized Public Policy Resources over other non-Public Policy Resources. The decision sparked a dissent from Commissioner Richard Glick, who characterized FERC’s order as appearing to stake out the “radical” position that it is improper for NYISO to design its Tariff in a way that acknowledges state public policies, and a departure from FERC precedent focused on balancing the effects of state policies with measures to address how those policies affect capacity market prices.
Continue Reading FERC Rejects NYISO Buyer-Side Mitigation Proposal Aimed at Clean Energy Transition

On July 22, 2020, FERC approved a mitigation proposal that Sun Jupiter Holdings, LLC (“Sun Jupiter”) and El Paso Electric Company (“El Paso”) (together, “Applicants”) submitted in response to FERC’s March 30, 2020 order (“March 2020 Order”) conditioning approval of Sun Jupiter’s merger with and into El Paso and requiring the Applicants to address the transaction’s adverse impact on competition in certain circumstances. FERC also dismissed, on procedural grounds, United States Senators Jeffrey A. Merkley (D-OR), Edward J. Markey (D-MA), and Bernard Sanders (D-VT) (collectively, “Senators”) request for rehearing, and denied Public Citizen, Inc.’s  (“Public Citizen”) request for rehearing of FERC’s March 2020 Order.

Continue Reading FERC Approves Sun Jupiter’s and El Paso’s Mitigation Proposal, Dismisses U.S. Senators’ and Public Citizen’s Requests for Rehearing

On July 16, 2020, FERC responded to a petition for declaratory order filed by a group of merchant generators (“Petitioners”) requesting that the Commission provide guidance and clarification on six areas of its cost-based reactive power ratemaking policy. While FERC declined to address five of Petitioners’ specific requests, explaining that it would address them in another ongoing reactive rate proceeding, FERC established paper hearing procedures on a single question: “what proxies, if any, may be used by merchant generators for reactive power service ratemaking purposes other than the use of the capital structure and the cost of capital of the interconnected utility.”
Continue Reading FERC to Consider Merchant Cost of Capital for Reactive Power Rates

On July 10, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued an opinion resolving jurisdictional challenges under the Federal Power Act (“FPA”) of FERC’s electric storage resource (“ESR”) participation rule, holding that the challenges “fail to show that Order Nos. 841 and 841-A run afoul of the [FPA’s] jurisdictional bifurcation or that they are otherwise arbitrary and capricious” because they do not include a state opt-out provision.
Continue Reading D.C. Circuit Upholds FERC Storage Rule’s Lack of a State Opt-Out

On June 18, 2020, FERC issued an order finding that PJM Interconnection, L.L.C. (“PJM”) has been inconsistently implementing Order No. 1000’s immediate need reliability project exemption and directed PJM to implement certain aspects of the exemption more fully and transparently. Concurrently, in separate orders, FERC concluded there was insufficient evidence to find that either Southwest Power Pool, Inc.’s (“SPP”) or ISO New England Inc.’s (“ISO-NE”) implementation of the immediate need reliability project exemption was unjust, unreasonable, or unduly discriminatory or preferential.
Continue Reading FERC Finds PJM Not In Compliance With Order No. 1000 Immediate Need Reliability Project Exemption

On June 18, 2020, FERC issued a Notice of Inquiry (“NOI”) requesting comment on whether the currently-effective Critical Infrastructure Protection (“CIP”) Reliability Standards adequately address: (i) cybersecurity risks pertaining to data security; (ii) detection of anomalies and events; and (iii) mitigation of cyber security events. FERC also seeks comment on the potential risk of a coordinated cyberattack on geographically distributed targets and whether Commission action, including potential modifications to the CIP Reliability Standards, would be appropriate to address such risk. In addition, FERC staff issued a White Paper seeking comment on a potential new framework for providing transmission incentives to utilities for their cybersecurity investments.
Continue Reading FERC Seeks Comment on Potential Enhancements to CIP Reliability Standards and Potential Transmission Incentives Framework for Cybersecurity Investments

On May 29, 2020, Shell Energy North America (US), L.P. (“Shell”) filed a petition asking FERC to interpret PJM Interconnection, L.L.C.’s (“PJM’s”) Tariff provisions regarding bilateral transfers of Financial Transmission Rights (“FTRs”). Shell’s petition stems from a pending breach of contract claim brought by GreenHat Energy, LLC (“GreenHat”) against Shell in Texas. Shell’s petition asks FERC to assert primary jurisdiction over GreenHat’s contract claim to allow Shell to seek dismissal of GreenHat’s suit.
Continue Reading Shell Seeks FERC Interpretation of PJM Tariff to Assist on Texas Breach of Contract Claim

On May 29, 2020, FERC accepted the California Independent System Operator Corporation’s (“CAISO”) proposed update to its capacity procurement mechanism (“CPM”) compensation for offers above the soft offer cap, where a participating resource will be compensated at the resource’s going-forward fixed costs plus a 20 percent adder. The new CPM compensation formula will go into effect June 1, 2020. Commissioner Richard Glick dissented, stating that while he agreed that CPM compensation should be determined by a resource’s going-forward fixed costs, CAISO had failed to show that the 20 percent adder was just and reasonable.
Continue Reading CAISO Updates Capacity Procurement Mechanism Compensation for Offers Above the Soft Cap

On May 12, 2020, FERC clarified that the offer floor price calculation for Special Case Resources (“SCRs”)—demand response resources participating in the New York Independent System Operator, Inc.’s (“NYISO”) Installed Capacity market (“ICAP”)—must include any payment or other benefit provided by state-sponsored programs. FERC’s order follows a February 2020 order directing NYISO to apply its buyer-side mitigation (“BSM”) rules to all new SCRs, and finding that the offer floor calculation for SCRs should include only the incremental costs of providing wholesale-level capacity services rather than payments from retail-level demand response programs designed to address distribution-level reliability needs. Commissioner Richard Glick issued a separate statement concurring with FERC’s clarification as to the SCR offer floor price calculation, but added that NYISO’s BSM regime will impose arbitrarily high offer floors on SCRs that are not exercising market power.
Continue Reading FERC Clarifies Offer Floor Calculation for NYISO Special Case Resources Includes State-Sponsored Benefits