Generation

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On March 27, 2020, FERC denied NorthWestern Corporation’s (“NorthWestern” or the Company) petition for a declaratory order regarding Qualifying Facility (“QF”) avoided cost pricing during times of excess generation. In its petition, NorthWestern asked the Commission to determine that (1) when excess generation occurs, QF pricing should be set to zero, and (2) nothing in the Public Utilities Regulatory Policies Act (“PURPA”), including the rule against non-discrimination in avoided cost pricing, permits establishing a rate in excess of the utility’s avoided cost. In exercising its discretion to deny the petition, FERC did not reject NorthWestern’s request on the merits, but rather, stated that whether avoided energy costs can be zero depends on the facts of the case, and that NorthWestern had failed to provide sufficient information to support its request.

On March 6, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) and the New England Power Pool Participants Committee’s proposed revisions to the ISO-NE Tariff intended to eliminate ISO-NE’s ability to retain a resource for local transmission reliability needs if that resource has been previously retained for fuel security purposes (“Proposed Tariff Revisions”). FERC found that the Tariff Revisions were not just and reasonable because they would limit ISO-NE’s ability to address potential future transmission reliability issues without alternative transmission solutions yet being in place.

On February 12, 2020, the U.S. International Trade Commission (“ITC”) issued a notice stating that it will investigate and report on the potential economic effects of renewable energy commitments, including the role of renewable energy imports, in Massachusetts and the broader New England region as requested by the Committee on Ways and Means of the U.S. House of Representatives (“Committee”). The ITC intends to send the report to the Committee by January 25, 2021.

On February 14, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) and the New England Power Pool Participants Committee’s (together with ISO-NE, the “Filing Parties”) proposed revisions to the ISO-NE tariff intended to allow for the termination of ISO-NE’s Fuel Security Reliability Retention Mechanism (“Fuel Security Mechanism”) at the end of Forward Capacity Auction (“FCA”) 14 – one year earlier than currently provided in the tariff. The Fuel Security Mechanism allows ISO-NE to retain resources for fuel security that seek to retire in FCAs 13, 14, or 15 and was initially implemented following ISO-NE’s 2018 petition for waiver seeking to retain two retiring Mystic Units through FCA 15 (“Mystic Units”). FERC rejected the filing because ISO-NE had not yet submitted its proposed long-term solutions to address fuel security concerns and because it found that that ISO-NE’s proposed interim solutions were inadequate. FERC Commissioner Richard Glick dissented from the order, arguing the majority lacked a reasoned basis to find that ISO-NE’s filing was not just and reasonable.

On February 20, 2020, FERC issued Order No. 861-A, granting certain clarifications about, and denying rehearing of, FERC’s sweeping market-based rate reforms in Order No. 861 (see July 24, 2019 edition of the WER). In Order No. 861-A, FERC held that sellers of capacity located in the California Independent System Operator Corporation (“CAISO”) market must continue to submit indicative screens in order to obtain authorization to make capacity sales at market-based rates. FERC also affirmed that capacity sellers located in CAISO may not rely on a rebuttable presumption that the Capacity Procurement Mechanism (“CPM”) adequately mitigates these sellers’ horizontal market power. FERC issued Order No. 861-A in response to requests for rehearing and clarification from CAISO and Pacific Gas & Electric Company (“PG&E”).

On January 29, 2020, thirty-six Democratic members of the U.S. House of Representatives (“Representatives”) signed a letter expressing their concern about FERC’s December 19, 2019 Order (“Order”) directing PJM Interconnection, L.L.C (“PJM”) to apply its Minimum Offer Price Rule (“MOPR”) to all state-subsidized capacity resources (see December 20, 2019 edition of the WER). According to the Representatives, the Order “nullif[ies]” state energy preferences, prohibits states from pursuing their policy goals, increases consumer costs by forcing them to buy duplicative capacity, runs contrary to FERC’s duty to ensure energy markets are truly competitive, and places deregulated markets at risk. The Representatives requested that the Commission provide a response to each concern discussed in the letter.

On January 9, 2020, FERC rejected Constellation Mystic Power, LLC’s (“Mystic”) proposed amendment to its cost-of-service agreement (“Mystic Agreement”) with ISO New England Inc. (“ISO-NE”) that would have provided Mystic the option to unilaterally retire Mystic Generating Station units 8 and 9 (“Mystic Generators”).  FERC found that giving Mystic the option to retire the Mystic Generators early would pose an unacceptable risk to reliability.  Commissioner Glick concurred in part and dissented in part.

On December 30, 2019, FERC accepted tariff revisions by the California Independent System Operator Corporation (“CAISO”) to apply three previously accepted-interim provisions designed to address the Aliso Canyon natural gas storage facility’s (“Aliso Canyon”) continued operational limitations and impacts on CAISO’s system.

On October 17, 2019, FERC issued its 2019-2020 Winter Energy Market Assessment (“Assessment”), which is a summary of staff’s expectations about market preparedness, including a high‐level assessment of the risks and challenges anticipated in the coming winter operating season. In its 2019-2020 Assessment, FERC highlighted that: 1) the National Oceanic and Atmospheric Administration (“NOAA”) forecasts a warmer than average winter; 2) natural gas storage levels are expected to be average going into the winter; 3) natural gas futures prices are lower than last winter; 4) a diverse and changing generation resource mix will maintain electric reliability this winter; and 5) expected winter reserve margins exceed reference levels in all regions.

On September 19, 2019, FERC granted a petition for declaratory order by the New England Ratepayers Association (“New England Ratepayers”), which asked FERC to find that a New Hampshire statute, Senate Bill 365 (“SB 365”), mandating a purchase price for wholesale sales of certain biomass and waste generators in the state, is preempted by the Federal Power Act (“FPA”) and violates section 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”).