On November 15, 2017, PJM Interconnection LLC (“PJM”) released two proposals to modify how Locational Marginal Prices (“LMPs”) are formed in its wholesale energy market and to enhance compensation for resources providing essential grid services during “shortage” periods.  The LMP proposal seeks to enhance system reliability by expanding the eligibility criteria for setting wholesale energy market prices in the PJM footprint.  Practically speaking, this proposal will allow a wider variety of energy resources, notably less economically flexible generating units such as coal and nuclear generators, to set LMPs and increase their revenue recovery prospects.  Along with the U.S. Department of Energy’s Notice of Proposed Rulemaking currently before FERC (see October 2, 2017 edition of the WER), PJM’s dual proposals represent the latest developments in an ongoing national discussion about whether, and how, organized electricity markets can play a role in ensuring fuel diversity and system reliability through pricing mechanisms. Continue Reading PJM Proposes Price Formation and Shortage Pricing Reforms to Increase Compensation to Generators Providing Reliability Services

The California Independent System Operator Corp. (“CAISO”) is moving forward on a slate of proposals which are intended to enhance grid reliability.  These proposals include addressing issues related to generation retirement, entering into a specific reliability must-run contract, modifications to incentives related to the resource adequacy program, as well as adjusting the compensation given to its Board of Governors (the “Board”).  On November 2, 2017, the Board approved the four proposals, and CAISO will file any resulting tariff related changes with FERC at a later date.   Continue Reading CAISO Board Approves Proposals to Enhance Grid Reliability

On October 20, 2017, FERC approved the California Independent System Operator Corporation’s (“CAISO”) proposal to revise tariff language as it relates to the procurement and cost allocation of black start capability.  Under the proposed changes, black start capability will be redefined as a reliability service instead of an ancillary service, with costs for black start services to be allocated to the participating transmission owner in the service area the resource is located.  The revisions will go into effect on November 1, 2017. Continue Reading FERC Approves CAISO Proposal on Generating Unit Black Start Capabilities

On October 25, 2017, FERC released a final report regarding whether its policies materially burden the development and use of domestic energy resources (“Final Report”).  While FERC concluded that most agency actions are not materially burdensome or are necessary to administer its statutory mandates, FERC recommended certain changes to licensing processes, exemption processes, and determinations on deficient applications for hydropower resources.  Continue Reading FERC Releases Final Report on Review of Agency Actions

On October 13, 2017, a group of transmission owners in the Southwest Power Pool, Inc. (“SPP”) filed a complaint with FERC under Section 206 of the Federal Power Act alleging that SPP’s Open Access Transmission Tariff (“Tariff”) is unjust and unreasonable because it lacks cost-shifting protections when new transmission owners join existing SPP transmission pricing zones.  To correct this alleged “loophole,” the complainants propose a new rate schedule for new transmission owners that are placed into existing zones. Continue Reading SPP Transmission Owners File FERC Complaint Over Alleged Cost Shifting

On October 6, 2017, FERC approved the New York Independent System Operator, Inc. (“NYISO”) and PJM Interconnection, L.L.C.’s (“PJM”; together with NYISO, “RTOs”) revisions to their Joint Operating Agreement (“JOA”), and NYISO’s revisions to its Market Administration and Control Area Services Tariff (“Tariff”), that address interchange schedule and Market-to-Market (“M2M”) coordination at the ABC and JK Interfaces on the border of northern New Jersey and southeastern New York.  Specifically, FERC found that the RTOs’ proposal to implement a wheeling arrangement over a newly formed PJM-NY AC Proxy Bus and to establish an Operational Base Flow (“OBF”) over the Interfaces was just and reasonable. Continue Reading FERC Approves Plan to Address Congestion Management Between NYISO and PJM

On October 3, 2017, FERC conditionally approved proposed revisions to the Midcontinent Independent System Operator, Inc. (“MISO”) and PJM Interconnection, L.L.C. (“PJM”) Joint Operating Agreement (“JOA”) to create a new category of small interregional transmission projects, termed target market efficiency projects (“TMEPs”), intended to address congestion along both regional transmission organizations’ (“RTOs”) seams.  FERC approved the RTOs’ proposal, but required further revisions to ensure that the RTOs’ stakeholders receive adequate information regarding how each RTO evaluates proposed TMEP projects and determines their value as a solution to identified congestion points.  In a concurrent order released the same day, FERC approved MISO’s proposed plan for the assignment of TMEP costs within its region. Continue Reading FERC Conditionally Approves New Category of Interregional Transmission Projects Between MISO and PJM

On September 27, 2017, U.S. Senators Jim Inhofe (R-Okla.) and Martin Heinrich (D-N.M.) introduced Senate Bill 1860: A bill to amend section 203 of the Federal Power Act (the “FPA”).  The legislation, dubbed “The Parity Across Reviews Act” (the “Act”), would amend section 203(a)(1)(B) to add a $10 million threshold to the requirement to seek FERC approval prior to a public utility acquiring FERC-jurisdictional facilities.  Additionally, for transactions with a value greater than $1 million, but less than the newly-proposed $10 million threshold, the Act requires FERC to promulgate a rule, within 180 days of the enactment of the Act, that would require a public utility to notify FERC within 30 days of consummating such an acquisition.  Continue Reading Senate Bill Proposed to Add Monetary Threshold to FPA Section 203 Prior Approval Requirement for Facility Acquisitions

On September 20, 2017, FERC issued two final rules and a notice of proposed rulemaking (“NOPR”) on reliability standards for the bulk power system. The final rules—Order Nos. 836 and 837—will become effective sixty days after their publication in the Federal Register.  Parties interested in filing comments on matters discussed in the NOPR must do so within sixty days of when that notice is published in the Federal Register. Continue Reading FERC Issues Final Rules and NOPR to Enhance Bulk Electric System Resilience, Reliability

On September 8, 2017, FERC rejected an unexecuted amendment to an interconnection service agreement (“Agreement”), which PJM Interconnection, LLC (“PJM”) filed on behalf of Hudson Transmission Partners, LLC (“HTP”). The amended Agreement sought to allow HTP to convert 320 MW of Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal Rights—a conversion opposed by another party to the Agreement, Public Service Electric and Gas Company (“PSEG”), due to its alleged potential impact on PJM’s pending Regional Transmission Expansion Plan (“RTEP”) cost allocation proceedings.  Along with its rejection of the amended Agreement, FERC initiated a Federal Power Act (“FPA”) section 206 proceeding into whether the Agreement, and PSEG’s withholding of consent for the conversion, unjustly and unreasonably restrict HTP’s ability to convert its Firm Transmission Withdrawal Rights. Continue Reading FERC Commences Look into Proposed Conversion of PJM Transmission Withdrawal Rights