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On April 16, 2020, FERC issued two orders in the proceedings related to PJM Interconnection, L.L.C.’s (“PJM”) Minimum Offer Price Rule (“MOPR”). First, FERC denied requests for rehearing and granted limited clarification with respect to its June 29, 2018 order (“Paper Hearing Order”) where it (i) found PJM’s then-existing tariff to be unjust and unreasonable because it failed to address the suppressive effect of resources receiving out-of-market payments on the capacity market, and (ii) implemented a paper hearing to establish a revised MOPR to apply to both new and existing resources receiving out-of-market payments, regardless of resource type (see July 11, 2018 edition of the WER). Second, FERC largely affirmed its December 19, 2019 order arising out of the paper hearing, in which it directed PJM to apply the MOPR to all state-subsidized capacity resources (“Replacement Rate Order”) (see December 20, 2019 edition of the WER).

On April 13, 2020, numerous industry groups and business associations (“Industry Stakeholders”) submitted a joint request asking FERC to organize a technical conference or workshop to discuss potential issues with the implementation of state, regional, and national carbon pricing in regions with organized wholesale electric energy markets. The Industry Stakeholders proposed that the workshop examine both the mechanics needed to account for the implementation of carbon pricing as well as the mechanics that are already in place. Industry Stakeholders stated that such a conference could open a dialogue among stakeholders and interested parties regarding the opportunities and potential difficulties presented by carbon pricing.

On April 10, 2020, FERC consolidated two separate dockets resulting from PJM Interconnection, L.L.C.’s (“PJM”) Order No. 841 compliance proceeding, and established paper hearing procedures to examine PJM’s methodology for calculating capacity values—not just for Electric Storage Resources (“ESRs”) participating in its capacity markets, but for all resource types, including run-of-river hydroelectric resources with and without reservoir storage capability. However, FERC held the proceedings in abeyance through October 30, 2020 to permit PJM and its stakeholders time to consider replacing the current capacity value calculation methodology with a new, Effective Load Carrying Capability (“ELCC”) approach. FERC concluded that the October 30 deadline would provide sufficient time to consider the new approach, while also allowing for new rules to become effective in advance of PJM’s next capacity auction. Commissioner Richard Glick issued partial dissent, explaining that he would have held the proceedings in abeyance until January 29, 2021.

On April 7, 2020, FERC and the National Association of Regulatory Utility Commissioners (“NARUC”), the national organization representing state public service commissions, sent a letter to the Federal Reserve supporting a request from the Edison Electric Institute (“EEI”), the American Gas Association and the National Association of Water Companies (together, the “Trade Groups”) to expand access to short-term debt available to the utility industry during the COVID-19 pandemic, as utilities are facing decreasing load and increasing bill nonpayment.

On March 30, 2020, FERC issued an order establishing a paper hearing to evaluate Energy Harbor LLC’s (formerly known as FirstEnergy Solutions Corp.) proposed rejection in bankruptcy of a variety of FERC-jurisdictional contracts (“Jurisdictional Contracts”). FERC’s order follows a recent decision of the United States Court of Appeals for the Sixth Circuit ordering the bankruptcy court to take public interest factors into account when reviewing the proposed rejection of the Jurisdictional Contracts, and to invite FERC to provide its opinion on the issue (see December 19, 2019 edition of the WER).  FERC initiated the paper hearing to consider these public interest factors.

On April 2, 2020, FERC issued several orders aimed at helping regulated entities manage compliance deadlines and related issues in the wake of COVID-19 response.  Chairman Neil Chatterjee also issued a press release confirming the pandemic qualifies as an emergency under the Commission’s rules and detailing additional steps in FERC’s plan to help regulated entities manage potential enforcement and compliance-related burdens during the pandemic, including two new task forces to expedite standards of conduct waiver requests and no-action letters.

On March 20, 2020, FERC denied rehearing of a February 2018 order accepting the Midcontinent Independent System Operator, Inc.’s (“MISO”) resource adequacy Tariff provisions (see March 5, 2018 edition of the WER). FERC noted that many of the arguments raised on rehearing sought to impose on MISO the rules and requirements used in the centralized capacity markets in the eastern Regional Transmission Organizations/Independent System Operators (“RTOs/ISOs”). FERC rejected those arguments, concluding that unlike the centralized capacity constructs used in the eastern RTOs/ISOs, MISO’s capacity auction is not, and never has been, the primary mechanism for Load-Serving Entities (“LSEs”) to procure capacity.

On March 10, 2020, FERC granted rehearing of its November 9, 2018 order that accepted revisions to ISO New England Inc.’s (“ISO-NE”) Tariff modifying the calculation of the economic life of existing capacity resources seeking to retire or permanently leave the ISO-NE capacity market, to better reflect competitive market behavior. FERC determined the benefits of the Tariff revisions did not outweigh the disruption to capacity market participants’ settled expectations and, therefore rejected the economic life revisions in their entirety, effective August 10, 2018, and declined to rerun any Forward Capacity Auctions (“FCA”) to preserve market certainty.  

On March 10, 2020, FERC accepted and suspended Midcontinent Independent System Operator, Inc.’s (“MISO”) proposal to allow for the selection of a storage facility as a transmission-only asset (“SATOA”) in the MISO Transmission Expansion Plan (“MTEP”). FERC found that MISO failed to demonstrate that the proposal was just and reasonable and not unduly discriminatory, and directed staff to convene a technical conference to explore issues including:

  1. Evaluation and selection criteria for a SATOA in the MTEP;
  2. Permitted market activities for SATOAs and potential wholesale market impacts;
  3. How MISO’s current formula rate structure accommodates cost recovery for SATOAs;
  4. A SATOA’s potential impact on MISO’s generator interconnection queue; and
  5. Operating guidelines that will apply to a SATOA.

On February 27, 2020, FERC granted Southwest Power Pool, Inc.’s (“SPP”) request to further delay implementation of reforms designed to facilitate energy storage resource (“ESR”) participation in SPP’s markets. SPP requested the deferral in December 2019, explaining that it would not be able to implement its ESR participation model as scheduled due to ongoing delays in the development of a new market and transmission settlement system and software changes associated with FERC’s Order No. 841 reforms. FERC accepted SPP’s deferral request and ordered a new, August 5, 2021 effective date for SPP’s underlying Order No. 841 tariff changes. Commissioner Bernard McNamee issued a separate opinion concurring with FERC’s order.