On December 23, 2020, FERC accepted Southwest Power Pool, Inc.’s (“SPP”) proposal to implement the Western Energy Imbalance Service Market (“WEIS Market”), a voluntary market providing for security-constrained economic dispatch to balance supply and demand every five minutes. SPP’s proposal consisted of a Tariff to implement the WEIS Market, a joint dispatch agreement executed by eight participating entities, and the Western Markets Executive Committee Charter to establish the WEIS Market’s governance structure and procedures. The December 23rd order follows FERC’s rejection of SPP’s WEIS Market proposal in July 2020.
Continue Reading FERC Accepts SPP Energy Imbalance Market Proposal

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.
Continue Reading FERC Alters Mystic’s Cost-of-Service Agreement; Commissioner Glick Dissents Again

On December 7, 2020, FERC issued an order on rehearing sustaining its previous order in which it: found that PJM Interconnection, L.L.C.’s (“PJM”) uplift allocation rules were unjust, unreasonable, and unduly preferential as they did not allocate uplift to Up-to-Congestion (“UTC”) transactions; and directed PJM to update its rate. FERC disagreed with comments provided by XO Energy MA, LP (“XO Energy”) that FERC’s previous order was inconsistent with cost causation principles, since the record in the proceedings did not support a finding that UTCs are the cause of capacity-related costs that would be passed through as uplift.
Continue Reading FERC Affirms Previous Order Requiring PJM to Bill UTC Transactions for Uplift

On December 2, 2020, FERC ordered ISO New England, Inc. (“ISO-NE”) to remove the price-lock mechanism and zero-price offer rule (together, the “New Entrant Rules”) from Tariff provisions relating to its Forward Capacity Market (“FCM”), finding that the price certainty benefit afforded by these rules no longer outweighs their price suppressive effects. FERC also clarified that its termination of these rules would not impact price-lock agreements in effect prior to the issuance of its order. FERC thus ordered ISO-NE to eliminate the New Entrant rules starting in its sixteenth Forward Capacity Auction (“FCA”).
Continue Reading FERC Orders ISO-NE to Remove FCM New Entrant Rules From its Tariff

On November 30, 2020, in a late night voice vote, the U.S. Senate confirmed the nominations of Mark Christie and Allison Clements as FERC Commissioners. Once they are sworn in as Commissioners, the bipartisan pairing will fill the remaining two seats on the five-member Commission, with Christie occupying the seat last held by former Commissioner Bernard McNamee for a term ending on June 30, 2025 and Clements occupying the seat last held by Commissioner Cheryl LaFleur for a term ending on June 30, 2024.
Continue Reading Senate Confirms Christie and Clements to Fill Remaining Commission Seats

On November 19, 2020, FERC upheld its March 2018 order addressing ISO New England, Inc.’s (“ISO-NE”) Competitive Auctions with Sponsored Policy Resources (“CASPR”) proposal to integrate certain state-supported resources into its capacity market (see March 20, 2018 edition of the WER). FERC’s November 19 order upheld its prior conclusion that the CASPR program is a just and reasonable modification to ISO-NE’s Forward Capacity Market (“FCM”) design that appropriately balances consumer as well as supplier interests. In a separate dissenting opinion, Commissioner Richard Glick concluded that the CASPR program has not shown to be an effective means of accommodating state public policies in the FCM.
Continue Reading FERC Upholds ISO-NE CASPR Program on Rehearing

On November 12, 2020, FERC accepted two compliance filings submitted by PJM Interconnection, L.LC. (“PJM”) in which PJM proposed updates to its reserve market and forward-looking energy and ancillary services offset (“E&AS Offset”) used in PJM’s capacity market. Commissioner Glick filed a partial dissent, stating that, while he agreed with the implementation of the E&AS Offset, the order was otherwise implementing an unjust and unreasonable rate.
Continue Reading FERC Largely Accepts PJM Reserve Market Compliance Filings

On November 3, 2020, FERC upheld its May 2020 order finding PJM Interconnection, L.L.C.’s (“PJM”) reserve market design to be unjust and unreasonable, and establishing a replacement market design including, among other elements, a downward-sloping Operating Reserve Demand Cure (“ORDC”) and a $2,000/MWh price ceiling (see May 28, 2020 edition of the WER). FERC also upheld its prior finding that PJM should implement a new, forward looking energy and ancillary services offset (“E&AS Offset”). FERC’s November 3 order addressed rehearing requests filed by PJM’s Independent Market Monitor (“IMM”), the Maryland Public Service Commission, and Old Dominion Electric Cooperative and the PJM Load/Customer Coalition. Commissioner Richard Glick issued a separate dissenting statement in which he concluded that FERC failed to show that PJM’s existing reserve market design is unjust and unreasonable, and that FERC “rubber stamp[ed]” PJM’s proposed replacement ORDC. Commissioner Glick echoed his dissent in the May 2020 order, explaining that the downward-sloping ORDC will force customers to pay billons of dollars in scarcity pricing when no shortage exists and will produce a windfall for generators.

Importantly, the November 3 order was limited to addressing arguments raised on rehearing of the May 2020 order. PJM’s August 5, 2020 filing, proposing tariff revisions to implement a forward-looking E&AS offset in compliance with the May 2020 order (“August 2020 Compliance Filing”), remains pending before FERC. In the proceeding addressing PJM’s revisions to its Minimum Offer Price Rule (“MOPR Proceeding”), FERC recently stated that the revisions proposed in the August 2020 Compliance Filing will have an impact on the default offer price floors and E&AS Offsets that will be used in the Base Residual Auctions (“BRAs”) and Incremental Auctions for Delivery Year 2022-23 and going forward. FERC therefore stated in the MOPR Proceeding that PJM cannot conduct the BRA for the 2022-23 Delivery Year until FERC has issued an order on PJM’s August 2020 Compliance Filing (see October 22, 2020 edition of the WER).
Continue Reading FERC Upholds Changes to PJM Reserve Market Design and E&AS Offset Calculation

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.
Continue Reading FERC Rejects ISO-NE’s Long-Term Fuel Security Proposal

On October 30, 2020, FERC announced that the FERC Chairman will convene a roundtable discussion on December 3, 2020 regarding the increased deployment of electric vehicles (“EVs”) and EV charging infrastructure nationwide and their impact on the FERC-jurisdictional transmission system and wholesale electric markets. Separately, on November 4, 2020, FERC announced that FERC staff will convene a technical conference on February 25 and 26, 2021 to discuss principles and best practices for credit risk management in organized wholesale electric markets.

Continue Reading FERC to Host Technical Conferences on Electric Vehicles and Credit Risk Management in Organized Wholesale Markets