On September 2, 2021, FERC accepted a new Market Seller Offer Cap (“MSOC”) in the PJM Interconnection, L.L.C. (“PJM”) capacity market that will require all capacity market sellers that fail PJM’s market structure test and offer above $0/MW-day to, at their election, obtain approval for their offer from PJM’s Market Monitor or utilize a default MSOC equal to the resource’s applicable net Avoidable Cost Rate (“ACR”)—i.e., its annual operating costs—less the resource’s net energy and ancillary services (“E&AS”) revenues (“ACR Proposal”). Commissioner James Danly issued a separate dissenting statement in which he argued that the ACR Proposal will lead to over-mitigation, in part because it will require the Market Monitor to review a higher number of capacity offers than under PJM’s previously-effective MSOC. In a compliance filing on FERC’s September 2 order, PJM asked for a 55-day delay of its upcoming capacity auction (currently scheduled to begin December 1, 2021) in order to allow time for the Market Monitor to perform the required unit-specific review under the new MSOC. As of this writing, FERC has not yet acted on PJM’s request.

On September 23, 2021, the Federal Energy Regulatory Commission (“FERC”) and the North American Electric Reliability Corporation (“NERC”) Staff released their report and recommendations regarding the 2021 Winter Freeze during the September Open Meeting at FERC. In this joint review, Staff reviewed what happened during the freeze, what caused the failure, and outlined various recommendations to prevent similar events in the future.

On September 23, 2021, FERC issued an order rejecting a unilateral offer of settlement regarding the compensation for reactive power by Panda Hummel Station LLC (“Panda”) under Schedule 2 of the PJM Interconnection LLC (“PJM”) OATT, remanding the proceeding to the Chief Administrative Law Judge (“Chief ALJ”) to resume hearing procedures.  FERC found Panda’s proposed methodology flawed and inconsistent with FERC policy. 

On August 31, 2021, FERC denied Cross-Sound Cable Company, LLC’s (“Cross-Sound Cable”) application for incentive rate treatment to create a regulatory asset to recover costs incurred between 2016 and 2021 to comply with Interconnection Reliability Operating Limits (“IROL”) Critical Infrastructure Protection (“IROL-CIP”) costs under Schedule 17 of the ISO-New England (“ISO-NE”) Tariff.

On August 27, 2021, in Oklahoma Gas and Electric Company v. FERC, Case No. 20-1062, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied petitions for review of FERC’s orders involving the Southwest Power Pool, Inc. (“SPP”) process for reimbursing certain of its customers for transmission system upgrades that those customers paid for pursuant to Attachment Z2 of SPP’s Open Access Transmission Tariff (“Tariff”). The D.C. Circuit’s order upheld FERC’s decision to deny retroactive waiver of Section I.7.1 of SPP’s Tariff—which provides that any billing adjustments must be made within one year after the charges were incurred—thus preventing SPP from implementing the Attachment Z2 revenue crediting process retroactively from 2008-2016. The court also upheld FERC’s orders requiring SPP to refund any charges it previously collected for the 2008-2016 period. Basing its decision on the filed rate doctrine, the court concluded that “the filed rate requirements are a formidable obstacle for entities regulated by FERC that wish to obtain retroactive relief from the terms of their tariff.”

On September 7, 2021, FERC staff issued a whitepaper to frame discussions ahead of two technical conferences planning to discuss potential ancillary services reforms.  The whitepaper summarizes approaches that RTOs/ISOs are currently evaluating to reform energy and ancillary services markets to address the need for greater operational flexibility, including increasing shortage prices, procuring higher quantities of existing “traditional” ancillary services products (like an operating reserve demand curve), and creating new ancillary services products.

In June 2021, Senators Lisa Murkowski (R-AK) and Maria Cantwell (D-WA) introduced The Maintaining and Enhancing Hydroelectric and River Restoration Act of 2021, which would establish a tax credit for certain investments in dam safety and environmental improvements at qualified dams and separate tax credit to incentivize the removal of obsolete river obstructions, including nonpowered dams.

On July 14, 2021, the City and County of Denver, Colorado, acting through its Board of Water Commissioners (“Denver Water”), filed a Complaint in the United States District Court for the District of Colorado, requesting declaratory and injunctive relief against Boulder County over the County’s alleged efforts to delay and obstruct Denver Water’s expansion of the Gross Reservoir Hydroelectric Project.

On July 15, 2021, the Federal Energy Regulatory Commission (“Commission” or “FERC”) issued a Final Rule amending its regulations pertaining to: (1) the information required to be filed with a notice of intent to construct a qualifying conduit facility and (2) the licensing requirements applicable to major projects up to 10 megawatts (MW).  The Final Rule was issued to align the Commission’s regulations with changes to the Federal Power Act (“FPA”) that were made as part of the Hydropower Regulatory Efficiency Act (“HREA”) of 2013.