On October 26, 2020, FERC issued an order on rehearing sustaining its previous order in which it accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to the PJM Operating Agreement related to the Regional Transmission Expansion Plan (“RTEP”) that allow project developers to submit voluntary binding cost commitment proposals and that specify PJM’s methodology for considering the cost-effectiveness of such proposals. FERC disagreed with arguments raised by certain PJM transmission owners that the revisions would usurp FERC’s authority, that they lacked specificity, and that the revisions were not submitted in compliance with the procedural requirements of PJM’s Operating Agreement.

On November 5, 2020, President Donald Trump designated sitting FERC Commissioner James Danly to assume the Chairmanship of the Commission. Chairman Danly joined FERC as general counsel in 2017, and served as a Commissioner from March through November 2020. Chairman Danly replaces Neil Chatterjee in the role, who will remain a Commissioner. Commissioner Chatterjee’s term expires June 30, 2021.

On October 27, 2020, FERC accepted Midcontinent Independent System Operator, Inc.’s (“MISO’s”) proposal to require conventional, non-intermittent capacity resources with Energy Resource Interconnection Service (“ERIS”) to secure firm transmission service in the amount of the resource’s full Installed Capacity (“ICAP”) in order to meet its capacity market deliverability requirements. In addition, if a capacity resource obtains firm transmission service in an amount less than the resource’s full ICAP, MISO will prorate the amount of capacity credits that resource receives.

On October 20, 2020, Voltus, Inc. (“Voltus”) filed a complaint with FERC against the Midcontinent Independent System Operator, Inc. (“MISO”) and requested fast track processing pursuant to the Commission’s regulations. The complaint asked FERC to: (1) find that MISO tariff provisions prohibiting third party demand response providers from participating in MISO’s wholesale markets are inconsistent with jurisdictional provisions of the Federal Power Act (“FPA”) and are unjust, unreasonable, unduly discriminatory, and preferential; (2) find that certain electric retail regulatory authorities (“RERRAs”) in MISO issued prohibitions against third party demand response providers in a manner inconsistent with the terms of 18 C.F.R. § 35.28(g)(iii) and that such prohibitions are therefore void; and (3) issue a notice of proposed rulemaking to repeal the provisions in 18 C.F.R. § 35.28(g)(iii) that allow RERRAs to bar third party demand response aggregators from participating in wholesale markets.

On October 16, 2020, FERC issued a number of orders at its open meeting that addressed unrelated requests for retroactive waiver of various Regional Transmission Organization and utility tariff provisions. Commissioner James Danly issued a separate statement in each proceeding. Commissioner Danly dissented from many of the orders granting waiver and concurred in the result when the orders dismissed the requests for waiver or granted waiver in certain specific circumstances. In his dissent from an order granting Sunflower Electric Power Cooperative’s (“Sunflower’s”) petition for waiver of certain Southwest Power Pool, Inc. Tariff provisions, Commissioner Danly stated his belief that FERC has no legal discretion to grant retroactive waivers unless the waivers meet certain well-defined exceptions: first, if the parties had notice that tariff provision could be waived retroactively, or second, if the tariff provision is embodied in a private contract between parties who have agreed in the contract to make the rate effective prior to filing the contract with the Commission.

On October 15, 2020, FERC issued a notice of proposed policy statement (“Proposed Policy Statement”) with proposed guidance for oil pipeline carriers to demonstrate through tariff filings or declaratory order petitions that the rates and terms in long-term contracts with affiliate shippers (“Affiliate Contracts”) are just, reasonable, and not unduly discriminatory under the Interstate Commerce Act (“ICA”).

On October 15, 2020, FERC issued a notice of proposed policy statement on state-determined carbon pricing in wholesale markets that clarified the agency’s jurisdiction over wholesale market rules incorporating state-determined carbon prices and encouraged regional market operators to consider establishing such rules. FERC is seeking comment on the type of information it should consider when reviewing any such filings. While the Commissioners agree that FERC has jurisdiction to review these issues under 205 with respect to organized markets, they have signaled a divide with respect to the best course of action for addressing carbon pricing.

PJM Interconnection, L.L.C. (“PJM”) postponed its May 2019 annual capacity auction (known as a Base Residual Auction or “BRA”) pending further FERC orders over the expansion of PJM’s Minimum Offer Price Rule (“MOPR”) to cover all resources receiving “State Subsidies.” In an October 15, 2020 order (“October 2020 Order”) addressing arguments on rehearing, PJM’s MOPR-related compliance filings, and PJM’s proposed May 2019 BRA implementation schedule, FERC largely upheld its April 16, 2020 order on rehearing (“April 2020 Order”) (see April 22, 2020 edition of the WER) of its December 19, 2019 order in which it directed PJM to apply the MOPR to all state-subsidized capacity resources (“Replacement Rate Order”) (see December 20, 2019 edition of the WER). In the October 2020 Order, FERC also largely accepted PJM’s March 2020 and June 2020 MOPR-related compliance filings; directed PJM to submit a further compliance filing on certain issues; and set aside its April 2020 Order on limited grounds.

Most notably, FERC:

  • Set aside its finding in the April 2020 Order that state default service auctions meet the definition of State Subsidy, and accepted in PJM’s proposal to exclude independently evaluated, non-discriminatory, fuel-neutral, competitive state-directed default service auctions from application of the expanded MOPR;
  • Directed PJM to submit a compliance filing:
    • proposing further revisions to the provisions governing which resources are eligible to elect the Competitive Exemption from the MOPR;
    • modifying its proposal regarding the gaming provisions that dictate under what circumstances a resource that elects the Competitive Exemption and then accepts a State Subsidy will forfeit its capacity revenue; and
    • modifying its tariff to provide 30 days for sellers to notify PJM of a material change in subsidy status unless such material change occurs within 30 days of the auction, in which case sellers will have five days to notify PJM of the change; and
  • Granted PJM’s proposed implementation schedule for the 2019 BRA and subsequent BRAs, but found that PJM could not commence the BRA schedule until FERC has issued a subsequent order on compliance filing in another case in which FERC directed PJM to adopt operating reserve demand curves and to calculate forward looking energy and ancillary service off-sets reflecting this market rule change (“Reserves Proceeding”) (see May 28, 2020 edition of the WER).

On October 15, 2020, FERC issued an order sustaining, with modifications, its previous denial of a complaint that claimed New York Independent System Operator, Inc.’s (“NYISO”) buyer-side market (“BSM”) power mitigation rules were unjust, unreasonable and unduly discriminatory. FERC upheld its previous determination that the application of BSM rules to electric storage resources (“ESRs”) does not inappropriately interfere with state policies and that the complainants failed to show that NYISO’s existing rate was unjust and unreasonable because it over-mitigates electric storage resources. FERC’s order sparked a dissent from Commissioner Glick who argued that the majority’s order was arbitrary and capricious, and that BSM power mitigation should only apply to buyers with market power.

On October 15, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to revise its regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”) to permit Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment to be certified as cogeneration qualifying facilities (“QFs”). FERC proposed the changes in response to what it termed the “technical evolution of cogeneration,” and in response to Bloom Energy Corporation’s (“Bloom Energy”) petitioning FERC for such revisions.