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On September 23, 2021, FERC issued an order rejecting a unilateral offer of settlement regarding the compensation for reactive power by Panda Hummel Station LLC (“Panda”) under Schedule 2 of the PJM Interconnection LLC (“PJM”) OATT, remanding the proceeding to the Chief Administrative Law Judge (“Chief ALJ”) to resume hearing procedures.  FERC found Panda’s proposed methodology flawed and inconsistent with FERC policy. 

On September 7, 2021, FERC staff issued a whitepaper to frame discussions ahead of two technical conferences planning to discuss potential ancillary services reforms.  The whitepaper summarizes approaches that RTOs/ISOs are currently evaluating to reform energy and ancillary services markets to address the need for greater operational flexibility, including increasing shortage prices, procuring higher quantities of existing “traditional” ancillary services products (like an operating reserve demand curve), and creating new ancillary services products.

On June 17, 2021, FERC set aside its previous decision in Order No. 2222-A that allowed state regulatory authorities to prohibit demand response resources from participating in distributed energy resource (“DER”) aggregations in wholesale energy markets when the DER aggregation contains only demand response resources. As a result, upon the effective date of Order No. 2222-B, state regulatory authorities will be able to prohibit demand response resources from participating in all wholesale DER aggregations. However, FERC also stated that it will further consider the issue in the Notice of Inquiry (“NOI”) proceeding established in Order No. 2222-A to consider whether to revise its regulations to remove the demand response opt-out established in Order Nos. 719 and 719-A. FERC also extended the comment period in the NOI proceeding to ensure an adequate opportunity for interested parties to comment on these issues. Finally, Order No. 2222-B clarified the appropriate restrictions to avoid double counting of services and the compensation of demand response resources that participate in DER aggregations. Commissioners Neil Chatterjee and James Danly wrote separate concurring opinions; Commissioner Mark Christie concurred in part and dissented in part.

On March 18, 2021, FERC issued Order No. 2222-A, setting aside its finding in Order No. 2222 that demand response resource participation in heterogeneous distributed energy resource (“DER”) aggregations are subject to the opt-out and opt-in requirements of Order Nos. 719 and 719-A, as well as clarifying other requirements in Order No. 2222 concerning Qualifying Facility (“QF”) interconnection policies, restrictions to avoid double-counting services, and information sharing and criteria for the distribution utility review process. Concurrent with Order No. 2222-A, FERC also issued a Notice of Inquiry (“NOI”) seeking comment on whether to revise its more than a decade-old regulations requiring Regional Transmission Organizations and Independent System Operators (“RTO/ISO”) not to accept bids from an aggregator of retail customers (“ARC”) where the relevant electric retail regulatory authority (“RERRA”) prohibits such customers’ demand response resources from being bid into organized markets (“Demand Response Opt-Out”). Specifically, the NOI applies only to regulations where an ARC aggregates the demand response of the customers of utilities that distributed more than four million megawatt-hours in the previous fiscal year and is intended to examine whether changing circumstances warrant revision of the Demand Response Opt-Out and whether the RTO/ISO market would benefit from including currently barred Demand Response Opt-Out resources.

On January 19, 2021, FERC issued a Notice of Inquiry (“NOI”) seeking comments on the appropriate accounting and reporting treatment for certain renewable energy assets and for the purchase, generation and use of renewable energy credits (“REC”). Specifically, FERC requested input on the potential creation of new, non-hydro renewable technology accounts within the Uniform System of Accounts (“USofA”), the potential reporting requirements for such accounts, and how the creation of such accounts may impact formula rates. FERC also asked for comments on whether to codify the accounting treatment of the purchase, generation, and use of RECs. Initial comments are due March 27, 2021, with reply comments due April 26, 2021.

On January 19, 2021, FERC directed Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to submit informational reports regarding four hybrid resources issues: (1) terminology; (2) interconnection; (3) market participation; and (4) capacity valuation. Specifically, FERC directed that each RTO or ISO file a report within 180 days from the order providing:  (1) a description of its current practices related to these four issues; (2) an update on the status of any ongoing efforts to develop reforms related to the four issues; and (3) responses to the specific requests for information contained in the January 19, 2021 order. FERC’s request for reports follows a technical conference focusing on technical and market issues raised by hybrid resources (see April 14, 2020 edition of the WER) and a Notice Inviting Post-Technical Conference Comments.

On December 21, 2020, FERC modified its previous cost-of-service compensation decisions allowing Constellation Mystic Power, LLC (“Mystic”) to continue operating two gas-fired generation facilities (“Mystic 8 and 9”) fueled exclusively by an affiliate, Everett Marine Terminal (“Everett”), which, like Mystic, is owned by Exelon Generation Company, LLC (“Exelon”). Commissioner Richard Glick dissented, reiterating his belief that FERC has exceeded its jurisdiction to “bail out” the liquified natural gas (“LNG”) import terminal.

On December 2, 2020, FERC clarified that when an entity with passive equity holdings in a company later wants to assume operational responsibilities over the company, the entity must obtain authorization under Federal Power Act (“FPA”) section 203 prior to the assumption of operational management responsibilities. FERC’s December 2 order on rehearing modified the discussion in a May 29, 2020 order in the proceedings approving Tenaska Lotus Holdings, LLC’s (“Tenaska Lotus”) assumption of rights as operations manager of 41MB 8me, LLC (“Project Company”) (together, “Applicants”), a 51 MW solar facility in California.

On October 30, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) proposed revisions to the ISO-NE tariff to resolve long-term fuel security concerns in the New England region. FERC found that ISO-NE’s proposed solutions would substantially increase consumer costs without meaningfully improving fuel security in the region, and offered guidance on how ISO-NE might develop a just and reasonable approach to address its fuel security concerns.

On October 27, 2020, FERC accepted Midcontinent Independent System Operator, Inc.’s (“MISO’s”) proposal to require conventional, non-intermittent capacity resources with Energy Resource Interconnection Service (“ERIS”) to secure firm transmission service in the amount of the resource’s full Installed Capacity (“ICAP”) in order to meet its capacity market deliverability requirements. In addition, if a capacity resource obtains firm transmission service in an amount less than the resource’s full ICAP, MISO will prorate the amount of capacity credits that resource receives.