On February 14, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) and the New England Power Pool Participants Committee’s (together with ISO-NE, the “Filing Parties”) proposed revisions to the ISO-NE tariff intended to allow for the termination of ISO-NE’s Fuel Security Reliability Retention Mechanism (“Fuel Security Mechanism”) at the end of Forward Capacity Auction (“FCA”) 14 – one year earlier than currently provided in the tariff. The Fuel Security Mechanism allows ISO-NE to retain resources for fuel security that seek to retire in FCAs 13, 14, or 15 and was initially implemented following ISO-NE’s 2018 petition for waiver seeking to retain two retiring Mystic Units through FCA 15 (“Mystic Units”). FERC rejected the filing because ISO-NE had not yet submitted its proposed long-term solutions to address fuel security concerns and because it found that that ISO-NE’s proposed interim solutions were inadequate. FERC Commissioner Richard Glick dissented from the order, arguing the majority lacked a reasoned basis to find that ISO-NE’s filing was not just and reasonable. Continue Reading FERC Rejects ISO-NE’s Proposed Early Sunsetting Revisions to Fuel Security Mechanism

On February 20, 2020, FERC issued four separate orders with significant impacts on renewable and storage resources under the New York Independent System Operator, Inc.’s (“NYISO”) buyer-side mitigation (“BSM”) rules (collectively, “February 20 Orders”). BSM rules serve some of the same purposes as PJM’s Minimum Offer Price Rule or “MOPR.” While the orders explicitly limit or reject proposed renewable and storage exemptions, the orders are equally important for what they do not do. Focused on the cases and records before it, FERC declined to extend BSM to apply outside of the so-called Mitigated Capacity Zones or “MCZs” (New York City, or Zone J, and the Lower Hudson Valley, or Zones G through J). Consequently, BSM still does NOT apply to any units, including renewable, storage or nuclear units, outside of these MCZs. FERC also directed NYISO to better tailor a renewable exemption specific to the MCZs. The extent to which this will help the new development of offshore wind in New York remains to be seen.  In dissenting opinions, Commissioner Richard Glick argued, among other things, that the majority’s overall approach to BSM will protect incumbent generators while impeding state clean energy policies. Continue Reading FERC Issues Four Orders Affecting Renewable and Storage Resources’ Ability to Obtain Capacity Market Revenues Under NYISO’s Buyer-Side Mitigation Rules

On February 20, 2020, FERC issued a notice of inquiry (“NOI”) to learn more about the potential benefits and risks of virtualization and cloud computing services in the bulk electric system operations. The NOI also seeks information about the barriers that exist in FERC-approved Critical Infrastructure Protection (“CIP”) Reliability Standards that impede the voluntary adoption of virtualization or cloud computing services.

Continue Reading FERC Opens Inquiry into Virtualization and Cloud Computing Services

On February 20, 2020, FERC issued Order No. 861-A, granting certain clarifications about, and denying rehearing of, FERC’s sweeping market-based rate reforms in Order No. 861 (see July 24, 2019 edition of the WER). In Order No. 861-A, FERC held that sellers of capacity located in the California Independent System Operator Corporation (“CAISO”) market must continue to submit indicative screens in order to obtain authorization to make capacity sales at market-based rates. FERC also affirmed that capacity sellers located in CAISO may not rely on a rebuttable presumption that the Capacity Procurement Mechanism (“CPM”) adequately mitigates these sellers’ horizontal market power. FERC issued Order No. 861-A in response to requests for rehearing and clarification from CAISO and Pacific Gas & Electric Company (“PG&E”). Continue Reading FERC Affirms Market-Based Rate Rule, Requires Capacity Sellers in CAISO to Submit Indicative Screens to Obtain Market-Based Rate Authority

On February 10, 2020, FERC filed its Rehearing En Banc Brief (“Brief”) regarding opposition to FERC’s authorization of the construction of Transcontinental Gas Pipe Line Company, LLC’s (“Transco”) proposed Atlantic Sunrise Project (“Project”)—an interstate pipeline designed to supply enough natural gas to meet the daily needs of more than 7 million American homes. The United States Court of Appeals for the District of Columbia (“D.C. Circuit”) issued an opinion on August 2, 2019, upholding FERC’s decision to conditionally approve the Project. However, on September 16, 2019, Hilltop Hollow Limited Partnership, Hilltop Hollow Limited Partnership, LLC, and Stephen D. Hoffman (“Petitioners”) petitioned the court for rehearing of the court’s opinion en banc. The Petitioner’s main challenge was FERC’s usage of tolling orders, which allows FERC to delay rehearing after granting a pipeline certificate, as impermissible under the Natural Gas Act (“NGA”) and the Due Process Clause of the Fifth Amendment. The court granted that petition and vacated the underlying judgment in a December 5, 2019 order (see December 11, 2019 WER). Continue Reading FERC Defends Use of Tolling Orders Before the DC Circuit En Banc

On February 11, 2020, the U.S. Court of Appeals for the Fourth Circuit (“Fourth Circuit”) held that FERC’s claim for civil penalties under the Federal Power Act (“FPA”) against Powhatan Energy Fund, LLC and certain of its traders and affiliates (“Powhatan”) was not barred by the statute of limitations. In doing so, the Fourth Circuit held that FERC’s claim in federal district court did not accrue for statute of limitation purposes until all of the legal prerequisites for filing the suit had been met, including failure by Powhatan to pay its assessed penalties.   Continue Reading Fourth Circuit Rules FERC Acted Within Statute of Limitations in Enforcement Action Against Powhatan Energy

On February 5, 2020, FERC denied a request from demand-side energy management company Enerwise Global Technologies, Inc. d/b/a CPower (“CPower”) for a one-time waiver of ISO New England, Inc’s (“ISO-NE”) Market Rule 1 in order to permit CPower’s summer-only demand capacity distributed generation resources, for which it elected Renewable Technology Resource (“RTR”) treatment, to participate in ISO-NE’s fourteenth Forward Capacity Auction (“FCA 14”) and the substitution auction. CPower presented two alternative options for waiver, arguing that an unintended interaction between ISO-NE’s RTR and “composite offer” Tariff provisions caused its resources to be excluded from FCA 14 and the substitution auction. FERC denied CPower’s request, even though ISO-NE supported one of the alternatives that CPower presented. Commissioner Richard Glick dissented in part, explaining that he also would have granted one of CPower’s proffered waiver options. Continue Reading FERC Denies DER Projects’ Request to Participate in ISO-NE Capacity Auction, Sparking Dissent from Commissioner Glick

On January 31, 2020, FERC granted Xcel Energy Services Inc.’s application to terminate Southwestern Public Service Company’s (“SPS”) mandatory purchase obligation under Public Utility Regulatory Policies Act of 1978 (“PURPA”). In its order, FERC specifically found that (i) SPS, as a member of Southwest Power Pool, Inc. (“SPP”), is entitled to the presumption that qualifying cogeneration or small power production facilities (“QFs”) within SPS’s footprint have nondiscriminatory access to markets, and (ii) the protestors failed to adequately rebut this presumption. Accordingly, SPS is relieved of its obligation to enter into new contracts to purchase QF electric energy. FERC granted the application effective September 5, 2019. Continue Reading FERC Grants SPS’s Application to Terminate PURPA’s Mandatory Purchase Obligation

On February 3, 2020, FERC denied a waiver request filed by Genbright LLC (“Genbright”) seeking a one-time limited waiver of Market Rule 1 in the ISO New England Inc. (“ISO-NE”) Transmission, Markets and Services Tariff (“Tariff”) to allow fourteen distributed energy resource projects (the “DER Projects”) to participate in the fourteenth ISO-NE Forward Capacity Auction (“FCA 14”).  According to Genbright, the DER Projects did not qualify to participate in this year’s capacity auction because Genbright sought interconnection under a state-administered interconnection process rather than the FERC jurisdictional interconnection options specified in the ISO-NE Tariff, and Genbright argued that the interconnected utility should have alerted Genbright of the FERC-jurisdictional status of its interconnections.  In denying the request, FERC found that granting waiver would inappropriately allow Genbright to avoid ISO-NE’s complex interconnection study process. Continue Reading FERC Denies DER Projects’ Waiver Request to Participate in ISO-NE’s Capacity Auction

On January 31, 2020, FERC rejected Southwest Power Pool, Inc.’s (“SPP”) proposed Tariff revisions to eliminate SPP’s current policy of offering transmission revenue credits as reimbursement for certain transmission network upgrades, and to instead provide term- and value-limited transmission congestion rights for all such upgrades. Under SPP’s proposal, a party that funds certain network upgrades would receive incremental transmission congestion rights for a limited term of up to twenty years or until the party that sponsored the upgrade recovered their costs, with interest. FERC held that this cap on recovery would disincentivize construction of merchant transmission projects, and rejected SPP’s proposal without prejudice to SPP submitting a revised proposal that does not impose a cap on the term and value of the incremental transmission congestion rights. Continue Reading FERC Rejects Without Prejudice SPP Proposal to Eliminate Transmission Revenue Credits and Cap Transmission Congestion Rights