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

On October 26, 2020, FERC issued an order on rehearing sustaining its previous order in which it accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to the PJM Operating Agreement related to the Regional Transmission Expansion Plan (“RTEP”) that allow project developers to submit voluntary binding cost commitment proposals and that specify PJM’s methodology for considering the cost-effectiveness of such proposals. FERC disagreed with arguments raised by certain PJM transmission owners that the revisions would usurp FERC’s authority, that they lacked specificity, and that the revisions were not submitted in compliance with the procedural requirements of PJM’s Operating Agreement.
Continue Reading FERC Affirms PJM’s Voluntary Binding Cost Commitment Requirements Related to RTEP

On October 27, 2020, FERC accepted Midcontinent Independent System Operator, Inc.’s (“MISO’s”) proposal to require conventional, non-intermittent capacity resources with Energy Resource Interconnection Service (“ERIS”) to secure firm transmission service in the amount of the resource’s full Installed Capacity (“ICAP”) in order to meet its capacity market deliverability requirements. In addition, if a capacity resource obtains firm transmission service in an amount less than the resource’s full ICAP, MISO will prorate the amount of capacity credits that resource receives.
Continue Reading MISO Beefs Up Deliverability Requirements for Conventional Capacity Resources

On October 20, 2020, Voltus, Inc. (“Voltus”) filed a complaint with FERC against the Midcontinent Independent System Operator, Inc. (“MISO”) and requested fast track processing pursuant to the Commission’s regulations. The complaint asked FERC to: (1) find that MISO tariff provisions prohibiting third party demand response providers from participating in MISO’s wholesale markets are inconsistent with jurisdictional provisions of the Federal Power Act (“FPA”) and are unjust, unreasonable, unduly discriminatory, and preferential; (2) find that certain electric retail regulatory authorities (“RERRAs”) in MISO issued prohibitions against third party demand response providers in a manner inconsistent with the terms of 18 C.F.R. § 35.28(g)(iii) and that such prohibitions are therefore void; and (3) issue a notice of proposed rulemaking to repeal the provisions in 18 C.F.R. § 35.28(g)(iii) that allow RERRAs to bar third party demand response aggregators from participating in wholesale markets.

Continue Reading Demand Response Aggregator Files Complaint Urging MISO to Set Aside State Opt-out Rules

On October 15, 2020, FERC issued a notice of proposed policy statement on state-determined carbon pricing in wholesale markets that clarified the agency’s jurisdiction over wholesale market rules incorporating state-determined carbon prices and encouraged regional market operators to consider establishing such rules. FERC is seeking comment on the type of information it should consider when reviewing any such filings. While the Commissioners agree that FERC has jurisdiction to review these issues under 205 with respect to organized markets, they have signaled a divide with respect to the best course of action for addressing carbon pricing.
Continue Reading Commissioners Clash Over Proposed Policy Statement on Carbon Pricing

PJM Interconnection, L.L.C. (“PJM”) postponed its May 2019 annual capacity auction (known as a Base Residual Auction or “BRA”) pending further FERC orders over the expansion of PJM’s Minimum Offer Price Rule (“MOPR”) to cover all resources receiving “State Subsidies.” In an October 15, 2020 order (“October 2020 Order”) addressing arguments on rehearing, PJM’s MOPR-related compliance filings, and PJM’s proposed May 2019 BRA implementation schedule, FERC largely upheld its April 16, 2020 order on rehearing (“April 2020 Order”) (see April 22, 2020 edition of the WER) of its December 19, 2019 order 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). In the October 2020 Order, FERC also largely accepted PJM’s March 2020 and June 2020 MOPR-related compliance filings; directed PJM to submit a further compliance filing on certain issues; and set aside its April 2020 Order on limited grounds.

Most notably, FERC:

  • Set aside its finding in the April 2020 Order that state default service auctions meet the definition of State Subsidy, and accepted in PJM’s proposal to exclude independently evaluated, non-discriminatory, fuel-neutral, competitive state-directed default service auctions from application of the expanded MOPR;
  • Directed PJM to submit a compliance filing:
    • proposing further revisions to the provisions governing which resources are eligible to elect the Competitive Exemption from the MOPR;
    • modifying its proposal regarding the gaming provisions that dictate under what circumstances a resource that elects the Competitive Exemption and then accepts a State Subsidy will forfeit its capacity revenue; and
    • modifying its tariff to provide 30 days for sellers to notify PJM of a material change in subsidy status unless such material change occurs within 30 days of the auction, in which case sellers will have five days to notify PJM of the change; and
  • Granted PJM’s proposed implementation schedule for the 2019 BRA and subsequent BRAs, but found that PJM could not commence the BRA schedule until FERC has issued a subsequent order on compliance filing in another case in which FERC directed PJM to adopt operating reserve demand curves and to calculate forward looking energy and ancillary service off-sets reflecting this market rule change (“Reserves Proceeding”) (see May 28, 2020 edition of the WER).


Continue Reading FERC Issues Order on Rehearing and Compliance in the PJM MOPR Proceeding; Directs PJM to Wait to Conduct 2019 BRA for 2022/23 Until the Issuance of Another FERC Order