On November 19, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to reform its regulations and pro forma OATT to improve the accuracy and transparency of transmission line ratings. According to FERC, more accurate line ratings will reduce congestion costs and result in substantial cost savings for consumers, whereas inaccurate line ratings may result in unjust and unreasonable rates. Continue Reading FERC Issues Proposed Rulemaking on Transmission Line Ratings

On December 2, 2020, FERC ordered ISO New England, Inc. (“ISO-NE”) to remove the price-lock mechanism and zero-price offer rule (together, the “New Entrant Rules”) from Tariff provisions relating to its Forward Capacity Market (“FCM”), finding that the price certainty benefit afforded by these rules no longer outweighs their price suppressive effects. FERC also clarified that its termination of these rules would not impact price-lock agreements in effect prior to the issuance of its order. FERC thus ordered ISO-NE to eliminate the New Entrant rules starting in its sixteenth Forward Capacity Auction (“FCA”). Continue Reading FERC Orders ISO-NE to Remove FCM New Entrant Rules From its Tariff

On November 30, 2020, in a late night voice vote, the U.S. Senate confirmed the nominations of Mark Christie and Allison Clements as FERC Commissioners. Once they are sworn in as Commissioners, the bipartisan pairing will fill the remaining two seats on the five-member Commission, with Christie occupying the seat last held by former Commissioner Bernard McNamee for a term ending on June 30, 2025 and Clements occupying the seat last held by Commissioner Cheryl LaFleur for a term ending on June 30, 2024. Continue Reading Senate Confirms Christie and Clements to Fill Remaining Commission Seats

On November 19, 2020, FERC issued Opinion No. 569-B, in which it made minor modifications to the discussion in, but largely reaffirmed, its previously-issued Opinion No. 569-A wherein FERC revised its return on equity (“ROE”) analysis and methodology. Specifically, FERC reaffirmed the three-model methodology it had established in Opinion 569-A, while clarifying that one of the models, the “Risk Premium Model”, would employ historical rather than forward-looking bond yields. FERC also updated the Risk Premium Model to both correct typographical errors and include an inadvertently omitted case. Continue Reading FERC Issues Minor Revisions to Public Utility ROE Methodology

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 19, 2020, FERC issued Order No. 872-A, an order denying rehearing and clarifying portions of Order No. 872, which revised the regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”). In Order No. 872-A, FERC affirmed its previous PURPA regulation amendments in Order No. 872, but provided further explanation regarding six key reforms: (1) states’ use of tiered avoided cost pricing; (2) states’ use of variable energy rates in qualifying facility (“QF”) contracts and availability of utility avoided cost data; (3) the role of independent entities overseeing competitive solicitations that set avoided cost rates; (4) the circumstances under which a small power production QF needs to recertify; (5) the application of the rebuttable presumption of separate sites for the purpose of determining the power production capacity of small power production facilities; and (6) the PURPA section 210(m) rebuttable presumption of nondiscriminatory access to markets and accompanying regulatory text. Continue Reading FERC Denies Rehearing, But Clarifies Various Aspects of the New PURPA Rules

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 October 30, FERC (under then-Chairman Neil Chatterjee) announced that it planned to convene a roundtable discussion (“Roundtable”) on the increased deployment of electric vehicles (“EVs”) and EV charging infrastructure nationwide, as well as their corresponding impact on the FERC-jurisdictional transmission system and wholesale electric markets (see November 10, 2020 issue of the WER).  The Roundtable was set to take place on December 3, 2020.  On November 10, 2020, FERC (under now-Chairman James Danly) issued a notice that the Roundtable was cancelled.

The November 10, 2020 notice is available here.

On November 5, 2020, FERC approved Southern California Edison Company’s (“SoCal Edison”) request to utilize a May 2020 formula rate sales forecast rather than its April 2020 sales forecast, as required by Appendix IX of SoCal Edison’s Transmission Owner Tariff (“Tariff”). The updated sales forecast, which informs SoCal Edison’s wholesale and retail transmission rate-recovery and true-up calculations, reflects a decrease in sales revenues due to the COVID-19 pandemic. In a dissenting opinion, then-Commissioner James Danly opposed the waiver, citing previous criticisms that such FERC action violates the filed rate doctrine and the rule against retroactive ratemaking (see October 28, 2020 edition of the WER). Continue Reading FERC Grants Formula Rate Tariff Waiver; Then-Commissioner Danly Reiterates Criticisms of Retroactivity

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