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On January 26, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rejected a challenge to FERC’s approval of tariff revisions from the PJM Interconnection, L.L.C. (“PJM”) regarding the so-called cost-of-new-entry (“CONE”), or the anticipated revenues required to recover costs in PJM’s wholesale capacity market.  A coalition of generators challenged PJM’s CONE as too low, which they argued undercut their own recovery in the capacity market.  In a brief opinion, the D.C. Circuit held that petitioners’ claims failed to overcome the deferential standard of review applied to factual challenges to agency orders.

On January 19, 2018, the United States Court of Appeals for the District of Columbia (the “D.C. Circuit”) rejected the New England Power Generators Association’s (the “Association”) challenge to two FERC orders on ISO New England Inc.’s (“ISO-NE”) scarcity pricing mechanisms in ISO-NE’s real-time and capacity markets.  The D.C. Circuit rejected the challenge both on procedural grounds and on the merits.

On January 22, 2018, a New York state trial court largely rejected motions to dismiss various challenges to the state’s zero emission credit (“ZEC”) program established in 2016 by the New York Public Service Commission (“NYPSC”).  The ZEC program, which is also being challenged in federal court, provides subsidies to financially struggling in-state nuclear energy generators.  Although the court allowed five of the six claims against the program to proceed to trial, the court dismissed 56 of the 61 petitioners for failing to timely raise their challenges.

On January 12, 2018, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposal to revise its allocation of the costs associated with day-ahead Operating Reserves and real-time balancing Operating Reserves.  Specifically, PJM proposed to allocate uplift charges related to these reserves to Up-to-Congestion transactions (“UTCs”), a type of virtual transaction, in the same way that such uplift is allocated to other virtual transactions—namely, incremental offers of supply (“INC”) and decrement demand bids (“DEC”).  FERC rejected PJM’s proposal, without prejudice, on the grounds that PJM had failed to demonstrate that UTCs were sufficiently similar to INCs and DECs to justify allocating uplift to UTCs in the same manner that it allocates uplift to INCs and DECs.

On January 18, 2018, FERC approved California Independent System Operator Corporation’s (“CAISO”) changes to its resource adequacy program to, among other things, (1) allow capacity located in a local capacity area, but procured as system capacity, to provide system substitution capacity during forced outages and (2) cap a load serving entity’s (“LSE”) monthly local capacity requirement at its monthly system capacity requirement.

On December 29, 2017, FERC conditionally accepted revisions to the Joint Operating Agreement (“JOA”) between PJM Interconnection, L.L.C. (“PJM”) and Midcontinent Independent Operator System, Inc. (“MISO”) that are intended to improve the coordination of resources that are pseudo-tied between the two regional transmission organizations (“RTOs”).   A “pseudo-tie” is a mechanism used by one Balancing Authority (“BA”) to control generating resources that are physically located in another BA.  The proposed revisions were given an effective date of October 1, 2017, subject to a ministerial compliance filing.

On December 21, 2017, FERC issued an order accepting a proposal from the Midcontinent Independent System Operator, Inc. (“MISO”) to revise its Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”) and establish Dynamic Narrow Constrained Areas (“Dynamic NCAs”).  FERC found that MISO’s proposal would strengthen existing market power mitigation measures in MISO and help ensure that the potential exercise of market power during such transitory conditions would be properly mitigated.

On December 8, 2017, FERC issued an order on remand, rejecting PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to the minimum offer price rule (“MOPR”) in its entirety, reinstating PJM’s prior FERC-approved market design.  FERC further determined that it would not require PJM to rerun the markets for the period in which the now defunct MOPR rules were in operation, as doing so would be burdensome and significantly disrupt the market. 

On November 17, 2017, FERC conditionally accepted a proposal filed by the PJM Interconnection, LLC (“PJM”) to establish pseudo-tie requirements for new external resources desiring to participate in PJM’s forward capacity auction, as well as a transition period to allow existing “pseudo-tie” resources to comply with the new requirements.  PJM’s proposal was given a May 9, 2017 effective date, provided that it submits further compliance filings addressing FERC’s concerns in its order.