On July 15, 2022, a FERC Administrative Law Judge (“Presiding Judge”) issued an initial decision in a proceeding involving the “threshold” issue of whether four solar generating facilities (collectively, “Facilities”) interconnected at the distribution level are eligible to receive reactive power compensation under Schedule 2 of the PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariff (“Tariff”). The Presiding Judge concluded that the Facilities are ineligible to receive reactive power rates because the facilities in question did not satisfy the so-called capability requirement, as explained further below.
Renewables
A Divided FERC Accepts ISO-NE’s Request to End its MOPR in Two Years
On May 27, 2022, a divided FERC ultimately agreed to allow ISO New England Inc. (“ISO-NE”) to sunset its current minimum offer price rule (“MOPR”) as part of its capacity market. During the next two capacity auctions, ISO-NE will permit a specified quantity of resources to enter the market without being subject to buyer-side market power mitigation review. Thereafter, ISO-NE will replace the current MOPR with a reformed buyer-side market power mitigation construct (the “MOPR Reforms”). Each of the five commissioners wrote separately, with Chairman Richard Glick, Commissioners Allison Clements and Willie Phillips, and Commissioner Mark Christie writing in concurrence and Commissioner James Daly writing in dissent.
FERC Reverses September 2020 Order, Reinstating Long-Standing “Send Out” Test for Small Power Production QF 80MW Threshold
On March 19, 2021, FERC set aside a September 1, 2020 order (“September Order”) that had upended 40 years’ worth of FERC precedent regarding how to determine the 80MW threshold for small power production qualifying facilities (“QFs”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). Specifically, FERC rejected the September Order’s denial of QF status to a hybrid photovoltaic solar and storage facility owned by Broadview Solar LLC (“Broadview”) as a result of the facility’s 160 MW gross capacity, as opposed to the facility’s 80 MW maximum net output or “send out.” After further consideration, FERC explained that it had erred by departing from and overturning its longstanding “send out” precedent. Commissioner Danly dissented, arguing that the September Order correctly applied PURPA in relying on gross power production capacity.
In PJM MOPR Proceeding, FERC Vacates Footnote Prompting Danly Dissent
On February 18, 2021, FERC took action in a multi-year dispute over the PJM Interconnection’s capacity market pricing rule known as the Minimum Offer Price Rule (or, “MOPR”) by vacating a single troublesome footnote from its last order, making way for PJM to move ahead with its annual capacity auction after years of delay. The U.S. Court of Appeals for the Seventh Circuit will soon take up a host of appeals of FERC’s decisions on the controversial MOPR.
President Biden Suspends Bulk Power System Executive Order; Directs Agencies to Address Public Health- and Climate-Related Rules
On January 20, 2021, President Joseph Biden issued Executive Order No. 13990 (“Executive Order”), which, among other things, suspended Executive Order 13920, “Securing the United States Bulk-Power System” (“Executive Order 13920”) until April 20, 2021 and directed all executive departments and agencies to review and take action to address all actions taken during former-President Donald Trump’s tenure in office that conflict with President Biden’s stated goals of improving public health, environmental protection, reducing greenhouse gas emissions, bolstering resilience to the impacts of climate change, and confronting the climate crisis.
FERC Alters Mystic’s Cost-of-Service Agreement; Commissioner Glick Dissents Again
On December 21, 2020, FERC modified its previous cost-of-service compensation decisions allowing Constellation Mystic Power, LLC (“Mystic”) to continue operating two gas-fired generation facilities (“Mystic 8 and 9”) fueled exclusively by an affiliate, Everett Marine Terminal (“Everett”), which, like Mystic, is owned by Exelon Generation Company, LLC (“Exelon”). Commissioner Richard Glick dissented, reiterating his belief that FERC has exceeded its jurisdiction to “bail out” the liquified natural gas (“LNG”) import terminal.
FERC to Host Technical Conferences on Electric Vehicles and Credit Risk Management in Organized Wholesale Markets
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.
FERC Holds a Technical Conference on Carbon Pricing in Organized Markets
On September 30, 2020, FERC held a technical conference focusing on how state-adopted carbon pricing intersects with a Regional Transmission Organization/Independent System Operator (“RTO/ISO”) administered market, and specifically what considerations a carbon-pricing framework may raise for FERC and/or the markets it oversees. The conference included three panels focused on: (i) the legal considerations associated with the integration of state carbon prices in FERC-regulated markets, including FERC’s statutory authority to implement carbon pricing in RTO/ISO markets and prior FERC precedent on RTO/ISO proposals to incorporate costs associated with state cap-and-trade programs, (ii) carbon pricing mechanisms, including current RTO/ISO initiatives to consider the integration of state carbon pricing actions and challenges for carbon pricing in multi-state RTO/ISO markets, and (iii) market design considerations, such as methods to reduce leakage and the potential operational impacts arising from carbon pricing. Finally, the technical conference concluded with a roundtable discussion reflecting on key issues and insights raised during the conference (see September 10, 2020 edition of the WER).
FERC Rejects NYISO Buyer-Side Mitigation Proposal Aimed at Clean Energy Transition
On September 4, 2020, FERC rejected the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to its buyer-side mitigation (“BSM”) rules that sought to prioritize storage, wind, solar, and other zero-emitting resources (“Public Policy Resources”) in NYISO’s Installed Capacity (“ICAP”) Market, rather than prioritizing new resources purely on a least-cost basis. While NYISO argued the state’s carbon and nitrogen oxide emissions reduction goals mean that a resource’s cost structure is no longer the best predictor of whether it will ultimately be developed, FERC held that NYISO’s proposal was unduly discriminatory because it prioritized Public Policy Resources over other non-Public Policy Resources. The decision sparked a dissent from Commissioner Richard Glick, who characterized FERC’s order as appearing to stake out the “radical” position that it is improper for NYISO to design its Tariff in a way that acknowledges state public policies, and a departure from FERC precedent focused on balancing the effects of state policies with measures to address how those policies affect capacity market prices.
PJM Planning Committee Holds Stakeholder Meeting About Process for States to Fund New Transmission Projects
On July 7, 2020, the PJM Interconnection, L.L.C. (“PJM”) Planning Committee held an informational session on its State Agreement Approach, a transmission planning process that allows one or more states to request the studying and funding of new transmission projects within the PJM footprint to address identified public policy needs. The State Agreement Approach could help accommodate the anticipated growth in offshore wind generation by allowing states to submit transmission expansion or extension projects in the Regional Transmission Expansion Plan (“RTEP”) so long as the states agree to assume responsibility for project costs.