Market Policy

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On November 26, 2018, FERC partially granted the California Independent System Operator Corp. (“CAISO”) a temporary extension of two sets of tariff provisions concerning natural gas system limitations on CAISO’s system and corresponding market operations.  While FERC temporarily extended six tariff provisions related to the Aliso Canyon gas storage facility (“Aliso Canyon”) effective November 30, 2018, and December 16, 2018, as requested, it rejected CAISO’s proposal to temporarily extend the tariff revisions regarding gas price scalars.

On November 27, 2018, the Senate Committee on Energy and Natural Resources (“ENR Committee”) advanced FERC nominee Bernard McNamee to a full vote on the Senate floor.  The ENR Committee furthered Mr. McNamee’s nomination with a bipartisan vote of 13-10, with one Democrat joining the entire Republican majority on the ENR Committee.  If confirmed by the full Senate, Mr. McNamee will join current FERC Commissioners Cheryl A. LaFleur, Richard Glick, Kevin McIntyre, and Chairman Neil Chatterjee.

On November 15, 2018, FERC issued a Notice of Proposed Rulemaking (“NOPR”) addressing the effect of the Tax Cuts and Jobs Act of 2017 (“TCJA”), which lowered the federal corporate tax rate from 35 percent to 21 percent, on accumulated deferred income tax (“ADIT”) balances. Specifically, FERC proposed to require transmission companies to remove excess ADIT or add deficient ADIT to their rate bases. In addition, FERC issued a policy statement providing accounting and ratemaking guidance related to the treatment of ADIT (“Policy Statement”).

On November 6, 2018, clean energy ballot initiatives failed in several states.  In particular, voters rejected Arizona’s 50 percent renewable energy mandate, Washington’s fee on carbon emissions, Colorado’s limits on oil and gas drilling and Nevada’s retail choice initiative.  However, voters passed Nevada’s 50 percent renewable energy portfolio.

On November 5, 2018, the American Wind Energy Association and the Wind Coalition (together, the “Wind Developers”) filed a complaint against Southwest Power Pool, Inc. (“SPP”) regarding SPP’s Bylaws and Membership Agreement.  Specifically, the Wind Developers object to the sections of the Bylaws and Membership Agreement which impose financial obligations (“exit fees”) on independent power producers (“IPPs”), other comparable non-transmission owners (“non-TOs”), and non-load-serving entities (“non-LSEs”).  The Wind Developers argue that the exit fee violates cost causation principles, may pose a barrier to entry into SPP to vote on critical issues, directly affects jurisdictional rates, and that therefore, the exit fee is unjust, unreasonable, and unduly discriminatory.

On October 31, 2018, FERC accepted revisions to the Midcontinent Independent System Operator, Inc.’s (“MISO”) Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) to enhance the locational aspects of its resource adequacy construct (“Filing”).  In March of 2018 (“March 2018 Filing”), MISO had proposed a similar filing, which FERC rejected, without prejudice, on August 2, 2018.  There, FERC found two elements of the March 2018 Filing to be unjust and unreasonable, but FERC provided MISO with guidance with respect to any future filing.  With the exception of those two elements, MISO stated that its Filing contains the same proposal and justification for the proposal as in its March 2018 Filing.

On October 31, 2018, FERC approved three proposed revisions to the Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”) of the Midcontinent Independent System Operator, Inc. (“MISO”).  These revisions establish categorical time limits to expressly bar settlement disputes submitted after these specified time periods (“Time Bar Revisions”).  The proposed Tariff revisions became effective November 1, 2018.

On October 29, 2018, FERC approved the California Independent System Operator Corp.’s (“CAISO”) tariff revisions related to its Energy Imbalance Market (“EIM”) bid adders, which reflect EIM participating resources’ costs to comply with the California Air Resources Board’s (“CARB”) greenhouse gas (“GHG”) regulations.  Specifically, FERC accepted CAISO’s proposal to limit the hourly megawatt quantity included in an EIM bid adder to the range between the EIM resource’s base schedule and its effective upper economic bid for that hour.

On October 18, 2018, FERC accepted Southwest Power Pool’s (“SPP”) tariff revisions to implement a major maintenance cost component for mitigated start-up offers and mitigated no-load offers.  FERC found SPP’s proposal to be a just and reasonable means of addressing concerns over the recovery of costs resulting from the gradual deterioration of resources’ operating equipment in the SPP Integrated Marketplace.

On October 5, 2018, FERC accepted revisions to the New York Independent System Operator, Inc.’s (“NYISO”) methodology used to determine Locational Installed Capacity Requirements (“LCRs”) in NYISO’s Installed Capacity (“ICAP”) market. In doing so, FERC found that the proposed Alternative LCR Methodology was just and reasonable because, among other things, the Alternative LCR Methodology results in LCRs, and thus capacity costs, that are reasonably aligned with the associated reliability benefits.