Generation

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On January 26, 2018, a divided panel of the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated a series of FERC orders that removed from transmission owners in the Midcontinent Independent System Operator, Inc. (“MISO”) the ability to elect to fund the construction of network upgrades on their transmission systems to accommodate the interconnection of new generation.  The D.C. Circuit vacated FERC’s orders and remanded the case back to FERC for further proceedings.

On January 12, 2018, FERC denied authorization to transfer a 1,159 MW coal-fired generation facility (“Pleasants Facility”) owned by Allegheny Energy Supply Company, LLC (“AE Supply”) to its affiliate, Monongahela Power Company (“Mon Power”).  After considering the applicable tests for affiliate transfers under the Federal Power Act (“FPA”), FERC determined that the parties’ proposed transaction was not in the public interest because it presented potential concerns of captive ratepayers cross-subsidizing non-regulated entities and because certain solicitation criteria were not met.  The denial is without prejudice, so Mon Power and AE Supply may resubmit an application that corrects the shortcomings identified by FERC.

On December 1, 2017, FERC concluded that it has exclusive jurisdiction over the participation of energy efficiency resources (“EERs”) in wholesale electricity markets.  FERC also found that: (1) state or local regulators may not bar or restrict EER participation in wholesale electricity markets, unless given express authority to do so by FERC; and (2) FERC’s previous Order No. 719 on demand response may not be interpreted to permit a state or local regulator to exercise an opt-out and bar or restrict the participation of EERs.

The California Independent System Operator Corp. (“CAISO”) is moving forward on a slate of proposals which are intended to enhance grid reliability.  These proposals include addressing issues related to generation retirement, entering into a specific reliability must-run contract, modifications to incentives related to the resource adequacy program, as well as adjusting the compensation given to its Board of Governors (the “Board”).  On November 2, 2017, the Board approved the four proposals, and CAISO will file any resulting tariff related changes with FERC at a later date.  

On November 3, 2017, FERC largely denied rehearing requests from a group of generation developers (“Generation Developers”) regarding the Midcontinent Independent System Operator, Inc.’s (“MISO”) revisions to its Generator Interconnection Procedures (“GIP”) and its pro forma Generator Interconnection Agreement (“GIA”).  With the exception of one issue, FERC otherwise rejected the Generation Developers requests that FERC reconsider prior MISO revisions regarding the efficiency and timeliness of MISO’s generator interconnection queue process contained in Attachment X of its Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”).

On October 23, 2017, FERC approved San Diego Gas & Electric Company’s (“SDG&E”) and Sempra Gas & Power Marketing, LLC’s (“Sempra”; collectively, “Applicants”) request for authorization for SDG&E to purchase Resource Adequacy capacity at market-based rates from its affiliate, Sempra, pursuant to a competitive solicitation process.  In doing so, FERC concluded that the solicitation did not unduly favor Sempra and thus satisfied FERC’s concerns regarding affiliate abuse.

On October 19, 2017, FERC accepted modifications to the Midcontinent Independent System Operator, Inc.’s (“MISO”) Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”), subject to certain conditions and further compliance in response to FERC’s January 3, 2017 order (“January 3 Order”) directing MISO to modify certain provisions of its Generator Interconnection Procedures concerning how MISO provides interconnection service to two classes of interconnection customers.  

On October 6, 2017, FERC accepted a tariff filing from ISO New England Inc. (“ISO-NE”) proposing updated calculations for various Forward Capacity Market input values, including Cost of New Entry (“CONE”), Net CONE, and Offer Review Trigger Price (“ORTP”).  As part of its order, FERC also approved ISO-NE’s choice of a simple cycle gas turbine as the reference technology for establishing CONE and Net CONE values—thereby replacing the combined cycle natural gas turbine that had been used as a reference technology by ISO-NE since 2014.

On October 2, 2017, FERC issued notice of the September 29, 2017 Notice of Proposed Rulemaking (“NOPR”) from the United States Department of Energy (“DOE”) under section 403 of the Department of Energy Organization Act.  In the NOPR, DOE urges FERC to act quickly to enact rules requiring regional transmission organizations and independent system operators (“RTOs/ISOs”) to provide just and reasonable rates for “fuel-secure” generation units (see October 2, 2017 edition of the WER).  Shortly thereafter, on October 4, FERC staff issued a Request for Information, listing various questions for commenters to address in aiding the Commission to better understand the NOPR’s implications.  Commenting parties have until October 23, 2017 to file initial comments and until November 7, 2017 to file reply comments.  In recent testimony before the Senate’s Committee on Energy and Natural Resources, FERC General Counsel, James Danly, confirmed that FERC intends to review the comments and take final action within 60 days of the NOPR’s publication, as requested by the DOE.