Market Policy

Subscribe to Market Policy via RSS

On July 19, 2019, FERC largely denied four complaints filed in May and June of 2015 (“2015 Complaints”) concerning the results of the Midcontinent Independent System Operator, Inc.’s (“MISO”) 2015/16 Planning Resource Auction (“2015/16 Auction”) for Local Resource Zone 4 (“Zone 4”).  In relevant part, FERC: (1) found that the results of the 2015/16 Auction for Zone 4 were just and reasonable; and (2) denied requests to hold an evidentiary hearing to resolve issues related to the 2015/16 Auction.  Specifically, FERC found no evidence in the record indicating that certain Auction offers violated the MISO Tariff, and the resulting Zone 4 auction-clearing price was just and reasonable.

On June 27, 2019, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region that would have required demand resources to be available year-round.  PJM argued that the proposed revisions better aligned its Price Responsive Demand (“PRD”) program with the year-around availability obligation of other supply-side “Capacity Performance Resources” participating in PJM’s capacity market. On review, however, FERC agreed with concerns raised by PJM’s Independent Market Monitor (“IMM”) and other parties that, among other things, the price-responsive demand program must be more consistent with the annual peak-based billing framework for capacity procurement by Load Serving Entities (“LSEs”).  FERC also agreed that, as a result, PJM’s proposal failed to accurately reflect PRD participants’ load reduction capabilities.

On June 20, 2019, FERC issued an Order on Voluntary Remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) directing PJM Interconnection, L.L.C. (“PJM”) to refund certain line loss over-collection amounts to certain virtual traders.  Upon re-examining its refund authority in light of recent court precedent, FERC determined that it has greater discretion to order refunds in cost allocation and rate design proceedings than it previously had determined.

On June 7, 2019, Judge Dennis Montali of the U.S. Bankruptcy Court of the Northern District of California San Francisco Division found that FERC’s finding that it had concurrent jurisdiction with the U.S. bankruptcy court over wholesale power agreements was “unenforceable in bankruptcy court and of no force on the parties before it.” Judge Montali further noted that if necessary, the U.S. bankruptcy court will “enjoin FERC from perpetuating its attempt to exercise power it wholly lacks.” At issue, on review by the bankruptcy court, was whether, pursuant to 28 U.S.C. 2201, the bankruptcy court has exclusive jurisdiction over Pacific Gas & Electric Company’s and Pacific Gas & Electric Corporation’s (collectively “Debtors”) right to reject a power purchase agreement (“PPA”) under Section 365 of the Bankruptcy Code, and whether FERC has concurrent jurisdiction to grant or deny PG&E’s rejection of any PPAs.

On June 12, 2019, FERC issued an order on paper hearing (“June 12 Order”) finding that Southwest Power Pool, Inc.’s (“SPP”) quick-start pricing practices are unjust and unreasonable and directing SPP to revise its Open Access Transmission Tariff (“Tariff”) to: implement quick-start pricing provisions in order to more accurately reflect the marginal cost of serving load; provide clear and transparent price signals that better reflect investment decisions; minimize production costs; and reduce uplift. Quick-start resources (also referred to as “fast-start resources”) are able to start within ten minutes or less to meet transient or unforeseen system needs. Previously, energy supply from quick-start resources had not necessarily been included in SPP’s unified pricing and dispatch run, but after the June 12 Order, quick-start resources in SPP may participate in setting market-clearing energy prices under certain circumstances.

On May 21, 2019, FERC announced that it will convene a staff-led public meeting on July 15, 2019 to discuss ISO New England Inc.’s (“ISO-NE”) development of tariff revisions addressing the regional fuel security concerns discussed by FERC in a July 2, 2018 order.  Commissioners from FERC are invited to attend and participate in the meeting, along with their staffs.

On May 16, 2019, FERC denied several rehearing requests and partially granted clarification of its Order No. 841 regarding the participation of electric storage resources (“ESRs”) in regional markets operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) (“Order No. 841-A”).  Most notably, FERC upheld its decision not to adopt a state opt-out of ESR participation in wholesale markets.  Commissioner McNamee issued a partial dissent discussing the need to recognize states’ interests in the impacts of Order Nos. 841 and 841-A.

On May 16, 2019, FERC issued four orders on related complaints against the Midcontinent Independent System Operator, Inc. (“MISO”) by Tilton Energy LLC (“Tilton”), American Municipal Power, Inc. (“AMP”), and Dynegy Marketing and Trade, LLC/Illinois Power Marketing Company (“Dynegy Companies” or “Dynegy”), as well as a complaint against PJM Interconnection, L.L.C. (“PJM”) by AMP and the Northern Illinois Municipal Power Agency (“NIMPA”).  The complaints alleged that MISO’s and PJM’s assessment of congestion and other costs for resources physically located in MISO but pseudo-tied into PJM violated MISO’s and PJM’s Tariffs by imposing duplicative charges.  The complaints also alleged that MISO and PJM subjected the complainants to unjust and unreasonable duplicative congestion charges.  FERC’s orders denied arguments that MISO’s and PJM’s assessment of congestion and other charges violated their respective Tariffs, but found that MISO and PJM may have assessed duplicative congestion charges prior to FERC’s acceptance of revisions to the MISO-PJM Joint Operating Agreement (“JOA”) to address such charges beginning in July 2018.  After consolidating the proceedings, FERC’s orders established hearing and settlement procedures to determine appropriate refunds.

On May 3, 2018, FERC accepted revisions proposed by PJM Interconnection, L.L.C. (“PJM”) to its Open Access Transmission Tariff, Amended and Restated Operating Agreement, and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region, to reflect load reductions from Summer-period Demand Response resources in load forecasts for PJM’s capacity market (“Peak Shaving Adjustment”).

As part of its overall proposal to implement carbon pricing to incorporate the social cost of carbon emissions in the wholesale power market, New York Independent System Operator, Inc. (“NYISO”) staff made a presentation at the Market Issues Working Group (“MIWG”) meeting on April 30, 2019 (“MIWG Presentation”).  The MIWG Presentation set forth NYISO’s proposed methodology to calculate the estimated impact of carbon pricing on locational-based marginal prices (“LBMP”).  Specifically, the MIWG Presentation provides additional details about how NYISO proposes to calculate the location-based marginal price-carbon (“LBMPc”), which would consider the impact of carbon pricing on LBMPs for purposes of subtracting from an energy supplier’s ultimate bid during the market settlement phase.