Market Policy

Subscribe to Market Policy

On November 18, 2022, FERC accepted a September 19, 2022 proposal from the California Independent System Operator (“CAISO”) to correct “excessively high” payments being made to electric storage resources that are forced to discharge to meet state of charge requirements when providing ancillary services. The proposal also aims to encourage those resources to reflect opportunity costs through their ancillary services bids rather than energy bids.…

Continue Reading FERC Accepts CAISO Proposal to Correct Payment Overcollections by Storage Resources

On October 20, 2022, the Federal Energy Regulatory Commission (“FERC”) issued an Order rejecting a request by the California Public Utilities Commission (“CPUC”) seeking a rehearing of a Justification Order.  FERC’s Order declining rehearing comes after an October 7, 2020 filing where Tri-State Generation and Transmission Association, Inc. (“Tri-State”) filed its justification for spot market sales that exceeded the Western Electricity Coordinating Council (“WECC”) soft price cap of $1,000/MWh during the summer months of 2020.  On May 20, 2022, the Commission issued an order finding that Tri-State had sufficient justification for certain spot market sales above the soft price cap but had not justified amounts charged above the relevant index price.  Ultimately, the Commission rejected the CPUC’s rehearing request.…

Continue Reading FERC Affirms Use of Certain Price Indices for Justifying Prices above WECC Soft Price Cap

On September 22, 2022, FERC denied a complaint filed on October 14, 2020 by Cricket Valley Energy Center LLC and Empire Generating Company, LLC. Complainants alleged that the New York Independent System Operator, Inc.’s (“NYISO’s”) capacity market offer floor rules—termed buyer-side market power mitigation rules (“BSM Rules”)—were unjust and unduly discriminatory because they failed to address price suppression in NYISO’s installed capacity (“ICAP”) spot market auctions. Complainants requested that FERC require NYISO to implement a minimum offer price rule (“MOPR”) that applies to all new and existing resources that receive out-of-market subsidies, with few or no exceptions. In denying the complaint, FERC relied on a May 2022 order accepting changes to NYISO’s BSM Rules to automatically exclude wind, solar, hydroelectric, geothermal, fuel cells that do not use fossil fuel, and demand response resources from adhering to an offer floor when bidding into NYISO’s capacity market. Commissioner James Danly issued a dissenting statement and Commissioner Mark Christie issued a concurring statement.…

Continue Reading FERC Denies Complaint Requesting Broadly-Applicable MOPR in NYISO

On August 26, 2022, Commissioner James Danly issued a statement in the FERC docket addressing PJM Interconnection, L.L.C.’s (“PJM”) replacement, focused Minimum Offer Price Rule (“Focused MOPR”). Commissioner Danly argued that the FERC Solicitor’s Office should not have filed its brief defending the Focused MOPR in the United States Court of Appeals for the Third Circuit (“Third Circuit”), and that doing so violated the Department of Energy Organization Act (“DOE Organization Act”) and the Administrative Procedure Act (“APA”). Following the statement, on September 7, 2022, certain Petitioners in the Third Circuit appeal proceedings filed a motion to strike FERC’s brief. Their motion argues that FERC’s brief should not have been filed because the Commission never voted to accept the Focused MOPR, and that filing the brief violates both the DOE Organization Act and constitutional limitations on the authority of executive officials. The Third Circuit has not yet acted on the motion.
Continue Reading Commissioner Danly Issues Statement Objecting to FERC Brief Defending MOPR in Third Circuit Appeal Proceedings; Third Circuit Petitioners Move to Strike FERC’s Brief

On August 31, 2022, FERC issued two orders regarding two proposals to revise the Midcontinent Independent System Operator’s (“MISO”) resource adequacy requirements. In the first order, FERC accepted MISO’s proposal to move to seasonal resource adequacy requirements rather than a single requirement based on the summer peak. MISO proposed this seasonal resource adequacy construct to address significant increases in emergency events that occur year-round, driven by factors including generation retirements, reliance on intermittent resources, outages resulting from extreme weather events, and declining excess reserve margin. MISO will implement the new seasonal resource adequacy construct in the next Planning Resource Auction (“Auction”) to be held in April 2023. In the second order, FERC rejected MISO’s proposal to require a Minimum Capacity Obligation for participants in MISO’s Auction (“MCO Proposal”).
Continue Reading FERC Approves MISO Seasonal Resource Adequacy Requirements but Rejects Minimum Capacity Obligation

On July 28, 2022, FERC issued a show cause order indicating that several regional transmission organization (“RTO”) and independent system operator (“ISO”) tariffs appear to be unjust and unreasonable because they lack certain credit risk management practices.  FERC also issued a related Notice of Proposed Rulemaking (“NOPR”) to allow all market operators to share credit-related information among themselves so that they can more accurately assess market participants’ credit risks.  Both actions aim to improve credit risk management in organized wholesale electric power markets.
Continue Reading FERC Issues Show Cause Order and NOPR on Credit Risk

On July 28, 2022, FERC upheld changes to PJM Interconnection, L.L.C.’s (“PJM”) Reserve Market that it first required in a December 2021 order on voluntary remand from the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”). FERC’s July 28 order continues to require PJM to: (1) consolidate its Tier 1 and Tier 2 Synchronized Reserve Products; (2) align reserve procurement in the day-ahead and real-time markets by establishing two 10-minute reserve requirements and one 30-minute reserve requirement in each market; (3) revert back to a stepped Operating Reserve Demand Curve (“ORDC”) and $850/MWh Reserve Penalty Factors; and (4) revert to a backward-looking Energy & Ancillary Services (“E&AS”) Offset in the Net Cost of New Entry calculation. The July 28 order also addressed challenges to the December 2021 order on the basis that the motion for voluntary remand was not filed in the D.C. Circuit pursuant to FERC’s tradition of polling the Commissioners for major litigation decisions. The order makes certain clarifications on the Chairman’s role to oversee the executive and administrative operation of FERC, including the direction of litigation. Commissioner James Danly filed a separate dissenting statement.
Continue Reading FERC Upholds PJM Reserve Market Changes, Clarifies Chairman’s Role to Oversee Major Litigation Decisions

On May 27, 2022, a divided FERC ultimately agreed to allow ISO New England Inc. (“ISO-NE”) to sunset its current minimum offer price rule (“MOPR”) as part of its capacity market. During the next two capacity auctions, ISO-NE will permit a specified quantity of resources to enter the market without being subject to buyer-side market power mitigation review.  Thereafter, ISO-NE will replace the current MOPR with a reformed buyer-side market power mitigation construct (the “MOPR Reforms”). Each of the five commissioners wrote separately, with Chairman Richard Glick, Commissioners Allison Clements and Willie Phillips, and Commissioner Mark Christie writing in concurrence and Commissioner James Daly writing in dissent.
Continue Reading A Divided FERC Accepts ISO-NE’s Request to End its MOPR in Two Years

On May 19, 2022, FERC staff released its 2022 Summer Energy Market and Reliability Assessment (“Summer Assessment”). The Summer Assessment forecasts “higher than average” temperatures for the summer, which are expected to have a significant impact on demand for electricity, amid a continuation of extreme drought conditions in the West, and coming on the heels of the retirement of thousands of megawatts of baseload conventional resources.
Continue Reading FERC Staff Releases Annual Assessment Signaling Higher Energy Prices and Ongoing Operational Challenges During Extreme Weather Events

On April 22, 2022, the Commission on remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”), reversed its approval of the California Independent System Operator Corporation’s (“CAISO”) proposed Capacity Market Adder (“20% adder”). The Commission ordered CAISO to submit a compliance filing that removes the 20% adder from its Open Access Transmission Tariff (“OATT”) and replace it with an alternative methodology that excludes the 20% adder.
Continue Reading FERC Reverses Approval of CAISO Capacity Market Adder