On October 24, 2019, FERC denied Harbor Cogeneration Company, LLC’s (“Harbor”) complaint alleging that Southern California Edison Company (“SoCal Edison”) misclassified certain interconnection facilities contrary to FERC’s Order No. 2003 and violated SoCal Edison’s Transmission Owner Tariff (“TO Tariff”) in directly assigning the facility costs to Harbor without FERC “approval.” FERC denied the complaint and rejected Harbor’s request for refunds, reasoning that the charges constituted valid filed rates notwithstanding that FERC did not use the word “approve” in its delegated letter orders, and that, therefore, the charges were lawfully imposed regardless of any alleged conflicts with FERC interconnection pricing policies.

On October 28, 2019, the Attorneys General of California, Connecticut, Delaware, the District of Columbia, Maryland, Massachusetts, Michigan, North Carolina, Oregon, Pennsylvania, and Rhode Island (collectively “State AGs”) wrote to FERC to discuss opportunities for the State AGs and FERC to work cooperatively to promote state-level clean energy policies that benefit consumers and enhance grid reliability. The State AGs expressed an “urgent need” for further action to address climate change’s “massive” environmental, health, and economic harms in their states, and noted that the Commission’s actions related to market design, natural gas siting, and grid reliability significantly impact each state’s ability to achieve their clean energy goals.

On October 30, 2019, the House Committee on Energy & Commerce held a hearing in furtherance of its development of comprehensive climate legislation focused on reaching a 100 percent clean energy economy by 2050.  John Bear, the Chief Executive Officer of the Midcontinent Independent System Operator, Inc. (“MISO”) testified at the hearing while Southwest Power Pool, Inc. (“SPP”) and PJM Interconnection, L.L.C. (“PJM”) provided input in response to an earlier request from the Committee. The three Regional Transmission Organizations (“RTOs”) generally reported increases in both renewable and distributed generation in their regions over the past several years, highlighting the operational and reliability challenges that can come along with the growing prevalence of both. The RTOs also recognized the widely divergent state decarbonization policies and the associated impacts to the regional wholesale markets.

On October 25, 2019, FERC found that Vitol, Inc. (“Vitol”) and one of its traders, Federico Corteggiano, violated the Federal Power Act (“FPA”) and FERC’s rules prohibiting energy market manipulation by importing power at a loss from October 28 through November 1, 2013, at the border of the California Independent System Operator Corporation’s (“CAISO”) wholesale electric market in order to relieve transmission congestion and to benefit Vitol’s congestion revenue rights (“CRRs”) sourced at that location. The order follows an investigation into Vitol’s and Corteggiano’s trading practices that was initiated in 2014 by FERC’s Office of Enforcement. In July 2019, following the completion of Enforcement Staff’s investigation, FERC issued an order directing Vitol and Corteggiano to show cause why they should not be assessed Enforcement Staff’s recommended civil penalties of $6 million and $800,000 respectively, and directing Vitol to show cause why it should not disgorge $1,227,143 in unjust profits. FERC’s October 25 order affirmed Enforcement Staff’s conclusion that Vitol and Corteggiano engaged in market manipulation, and ordered Vitol to disgorge $1,227,143 in unjust profits. However, FERC significantly reduced Vitol’s civil penalty to $1.5 million and increased Corteggiano’s civil penalty to $1 million after concluding that Corteggiano was primarily responsible for the manipulative conduct.

On October 17, 2019, FERC directed PJM Interconnection, L.L.C. (“PJM”) and other interested parties to provide information with respect to how uplift costs—i.e., the costs associated with make-whole payments provided by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to market participants whose commitment and dispatch resulted in a shortfall between the generator’s offer and the revenue earned through market-clearing prices—should be allocated to virtual transactions in PJM, and in particular to Up-to-Congestion (“UTC”) transactions. FERC’s order seeks to update the record in an ongoing Federal Power Act Section 206 investigation into PJM’s UTC and uplift practices that FERC initiated in 2014.

On October 17, 2019, FERC issued its 2019-2020 Winter Energy Market Assessment (“Assessment”), which is a summary of staff’s expectations about market preparedness, including a high‐level assessment of the risks and challenges anticipated in the coming winter operating season. In its 2019-2020 Assessment, FERC highlighted that: 1) the National Oceanic and Atmospheric Administration (“NOAA”) forecasts a warmer than average winter; 2) natural gas storage levels are expected to be average going into the winter; 3) natural gas futures prices are lower than last winter; 4) a diverse and changing generation resource mix will maintain electric reliability this winter; and 5) expected winter reserve margins exceed reference levels in all regions.

On October 17, 2019, FERC denied Public Citizen, Inc.’s (“Public Citizen”) complaint alleging that PJM Interconnection, L.L.C. (“PJM”) recovered improper campaign contributions and lobbying expenses through its filed rate and failed to disclose its spending on political activity. In doing so, FERC concluded that PJM could recover the expenses in question through its rates because they represent an educational, outreach, or informational function essential to PJM’s core operations and because PJM determined that such expenditures are in the collective best interest of PJM’s stakeholders.

On October 23, 2019, FERC issued twin orders denying rehearing of the PJM Interconnection, L.L.C. (“PJM”) Phase 1 and Phase 2 Revisions, which sought to resolve overlapping congestion charges on pseudo-tied generation in Midcontinent Independent System Operator, Inc. (“MISO”) and PJM. American Municipal Power (“AMP”) requested rehearing, arguing that FERC engaged in impermissible piecemeal ratemaking, failed to evaluate the ultimate end result of the revisions, and did not fully address overlapping congestion charges. FERC rejected AMP’s arguments, confirming that it fully considered the proposed revisions and found them just and reasonable.

On October 17, 2019, FERC issued two separate orders accepting in part PJM Interconnection L.L.C.’s (“PJM”), and Southwest Power Pool, Inc.’s (“SPP”) proposals to comply with FERC’s orders addressing energy storage resources’ (“ESR”) participation in Regional Transmission Organization (“RTO”)-operated markets, subject to further compliance (see February 20, 2018 edition of the WER; April 10, 2019 edition of the WER; and May 22, 2019 edition of the WER for more background and context on Order No. 841). SPP’s and PJM’s ESR participation proposals are the first to be accepted by FERC, which found that the RTOs generally complied with Order No. 841 by enabling ESRs to provide all services they are technically capable of providing, to be compensated for those services in the same manner as other resources, and by recognizing ESRs’ unique physical and operational characteristics. However, FERC initiated further proceedings to require both RTOs to include the minimum run-time requirements applicable to ESRs and other generation resources in their Tariffs, and initiated an investigation into whether PJM’s application of minimum run-time requirements to ESRs participating in its capacity markets is just and reasonable. FERC also directed SPP and PJM to take further action, requiring both RTOs to submit compliance filings within 60 days that, as one example, address the basic metering and accounting practices applicable to ESRs. Commissioner McNamee issued separate opinions concurring with both orders.

On October 17, 2019, FERC denied rehearing of its order denying a complaint filed by CXA La Paloma, LLC (“La Paloma”), which argued that the California Independent System Operator Corporation’s (“CAISO”) resource adequacy regime had become unjust and unreasonable. Stakeholders asserted, among other things, that FERC ignored certain evidence suggesting inadequate capacity prices would lead to near-term reliability problems; FERC disagreed, restating the evidence and arguments initially presented in the complaint, and explaining that based on the evidence presented it did not find CAISO’s resource adequacy regime unjust and unreasonable. In its order denying rehearing, FERC weighed in (again) on low capacity prices and reliability concerns in California, as well as the scope of its section 206 authority.