On July 18, 2019, FERC affirmed on remand its prior approval of Pacific Gas and Electric Company’s (“PG&E”) request for a return-on-equity (“ROE”) incentive adder to its transmission rates (“RTO-Participation Incentive”) for its ongoing membership in the California Independent System Operator Corporation (“CAISO”).  In its decision, which followed from a 2018 remand from the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), FERC reasserted its jurisdiction over such transmission incentive questions and determined that, absent a relevant mandate under California law requiring PG&E’s participation in CAISO, the RTO-Participation Incentive was warranted because it induces PG&E to continue its CAISO membership.
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On July 18, 2019, FERC issued Order No. 861, modifying its regulations regarding the horizontal market power analysis required to obtain authorization to sell energy, capacity, or ancillary services at market-based rates.  FERC adopted its proposal (see December 20, 2018 edition of the WER) to relieve electric power sellers of the obligation to submit indicative screens to obtain or retain market-based rate authority in any Regional Transmission Organization (“RTO”)/Independent System Operator (“ISO”) market with FERC-approved RTO/ISO monitoring and mitigation.  Market-based rate sellers (“MBR Sellers”) must continue to submit indicative screens for authorization to make capacity sales in any RTO/ISO that lacks an RTO/ISO-administered capacity market subject to FERC-approved monitoring and mitigation—currently, the California Independent System Operator (“CAISO”) and Southwest Power Pool (“SPP”).  FERC stated its intent for the rule is to ease regulatory burdens on MBR Sellers while simultaneously preserving its authority to prevent the exercise of market power.
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On June 27, 2019, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region that would have required demand resources to be available year-round.  PJM argued that the proposed revisions better aligned its Price Responsive Demand (“PRD”) program with the year-around availability obligation of other supply-side “Capacity Performance Resources” participating in PJM’s capacity market. On review, however, FERC agreed with concerns raised by PJM’s Independent Market Monitor (“IMM”) and other parties that, among other things, the price-responsive demand program must be more consistent with the annual peak-based billing framework for capacity procurement by Load Serving Entities (“LSEs”).  FERC also agreed that, as a result, PJM’s proposal failed to accurately reflect PRD participants’ load reduction capabilities.
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On May 15, 2019, with the support of various Democratic co-sponsors, Senator Jeanne Shaheen (D-NH) reintroduced the “Public Engagement at FERC Act” (S. 1477) to amend the Federal Power Act to establish an Office of Public Participation and Consumer Advocacy (“Office of PPCA” or “Office”).  The bill was first introduced by Senator Shaheen in 2017 and was created to assist residential and small commercial energy consumers in participating in FERC proceedings.
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On May 16, 2019, FERC denied several rehearing requests and partially granted clarification of its Order No. 841 regarding the participation of electric storage resources (“ESRs”) in regional markets operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) (“Order No. 841-A”).  Most notably, FERC upheld its decision not to adopt a state opt-out of ESR participation in wholesale markets.  Commissioner McNamee issued a partial dissent discussing the need to recognize states’ interests in the impacts of Order Nos. 841 and 841-A.
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As part of its overall proposal to implement carbon pricing to incorporate the social cost of carbon emissions in the wholesale power market, New York Independent System Operator, Inc. (“NYISO”) staff made a presentation at the Market Issues Working Group (“MIWG”) meeting on April 30, 2019 (“MIWG Presentation”).  The MIWG Presentation set forth NYISO’s proposed methodology to calculate the estimated impact of carbon pricing on locational-based marginal prices (“LBMP”).  Specifically, the MIWG Presentation provides additional details about how NYISO proposes to calculate the location-based marginal price-carbon (“LBMPc”), which would consider the impact of carbon pricing on LBMPs for purposes of subtracting from an energy supplier’s ultimate bid during the market settlement phase.

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On April 18, 2019, FERC granted Sunrun, Inc.’s petition for declaratory order and request for waiver of the Public Utility Regulatory Policies Act (“PURPA”) Qualified Facility (“QF”) certification requirements for certain of its residential solar photovoltaic (“PV”) systems.  Specifically, FERC granted Sunrun limited waivers of: (1) the QF certification requirement for Sunrun-financed residential rooftop solar PV systems under 20 kW where such systems, though separately interconnected, may aggregate to over 1 MW within a one-mile radius; and (2) the requirement in Item 8a of the QF self-certification Form No. 556 to identify related PV systems of 20 kW or less located within a one mile radius.  FERC’s order noted its intention to ease administrative burdens on both Sunrun and itself, and affirmed that certain certification filing exemptions available to QFs under 1 MW can persist as Sunrun expands and its financed PV systems aggregate to over 1 MW within a one-mile radius.
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On April 15, 2019, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) changes to its Variable Resource Requirement (“VRR”) demand curve as well as key cost inputs to the curve, in connection with PJM’s 2019 Base Residual Auction for the 2022/2023 Delivery Year.  While FERC concluded that PJM’s proposal would produce accurate market signals, encourage appropriate capacity investment, and achieve an adequate level of reliability, the decision sparked a dissent from Commissioner Glick, who argued that PJM failed to show that its proposed VRR curve would produce just and reasonable rates.  Commissioner Glick added that the proposal did not go far enough to correct either oversupply of generation in the capacity market or distorted price signals for Energy and Ancillary (“EAS”) services.
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On April 5, 2019, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff (“Tariff”) regarding Incremental Capacity Transfer Rights (“ICTRs”).  ICTRs are created whenever customer-funded upgrades increase transmission import capability into a Locational Deliverability Area (“LDA”) in PJM’s system.  Specifically, PJM proposed: (1) to revise the procedures to determine ICTRs; (2) to limit customers to specifying no more than three LDAs in which to determine ICTRs; and (3) to allow customers to request PJM to determine ICTRs, rather than making such determination automatic.  In accepting PJM’s proposal, FERC determined that the requested revisions balanced customer needs with the efficient processing of PJM’s interconnection queue.

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On March 29, 2019, FERC released its 2018 staff report on Critical Infrastructure Protection (“CIP”) reliability audits (“2018 CIP Report”).  The 2018 CIP Report summarizes new and previously-identified “lessons learned” from CIP audits conducted for fiscal years 2016 through 2018.  The audits evaluated whether certain users, owners, and operators of the Bulk Electric System (“BES”) – generally referred to as “registered entities” – had been complying with the FERC-approved CIP Reliability Standards during the relevant fiscal years.  FERC staff found that the audited registered entities met most of the mandatory requirements of the CIP Reliability Standards, but that there were some potential compliance infractions.  In addition, the staff summarized certain other existing practices that could improve BES security, but are not necessarily required by the CIP Reliability Standards and so therefore were only noted as recommendations in the 2018 CIP Report.
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