On March 20, 2020, FERC issued an order accepting PJM Interconnection, L.L.C.’s (“PJM”) proposal as part of its Regional Transmission Expansion Plan (“RTEP”) to allow project developers to submit binding cost commitments on a voluntary basis, and to undertake a comparative review and analysis of these commitments in selecting transmission projects. FERC accepted PJM’s proposal over the objections of certain PJM transmission owners, and concluded that the proposal would assist PJM in selecting the most efficient and cost-effective transmission solutions in its RTEP while providing greater transparency into PJM’s evaluation process.
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On March 20, 2020, FERC denied rehearing of a February 2018 order accepting the Midcontinent Independent System Operator, Inc.’s (“MISO”) resource adequacy Tariff provisions (see March 5, 2018 edition of the WER). FERC noted that many of the arguments raised on rehearing sought to impose on MISO the rules and requirements used in the centralized capacity markets in the eastern Regional Transmission Organizations/Independent System Operators (“RTOs/ISOs”). FERC rejected those arguments, concluding that unlike the centralized capacity constructs used in the eastern RTOs/ISOs, MISO’s capacity auction is not, and never has been, the primary mechanism for Load-Serving Entities (“LSEs”) to procure capacity.
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I. Summary of NOPR

On March 19, 2020, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its electric transmission incentive policy under Federal Power Act (FPA) Section 219[1] “to stimulate the development of transmission infrastructure needed to support the nation’s evolving generation resource mix, technological innovation

On Thursday, March 19, in lieu of its monthly Commission meeting, FERC issued a Notice regarding its response to the Novel Coronavirus Disease (“COVID-19”) and the President’s March 13 declaration of a National Emergency.  Chairman Neil Chatterjee delivered comments about the Notice and the Commission’s operations in the coming weeks and months.
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On March 10, 2020, FERC accepted and suspended Midcontinent Independent System Operator, Inc.’s (“MISO”) proposal to allow for the selection of a storage facility as a transmission-only asset (“SATOA”) in the MISO Transmission Expansion Plan (“MTEP”). FERC found that MISO failed to demonstrate that the proposal was just and reasonable and not unduly discriminatory, and directed staff to convene a technical conference to explore issues including:

  1. Evaluation and selection criteria for a SATOA in the MTEP;
  2. Permitted market activities for SATOAs and potential wholesale market impacts;
  3. How MISO’s current formula rate structure accommodates cost recovery for SATOAs;
  4. A SATOA’s potential impact on MISO’s generator interconnection queue; and
  5. Operating guidelines that will apply to a SATOA.


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On February 27, 2020, FERC granted Southwest Power Pool, Inc.’s (“SPP”) request to further delay implementation of reforms designed to facilitate energy storage resource (“ESR”) participation in SPP’s markets. SPP requested the deferral in December 2019, explaining that it would not be able to implement its ESR participation model as scheduled due to ongoing delays in the development of a new market and transmission settlement system and software changes associated with FERC’s Order No. 841 reforms. FERC accepted SPP’s deferral request and ordered a new, August 5, 2021 effective date for SPP’s underlying Order No. 841 tariff changes. Commissioner Bernard McNamee issued a separate opinion concurring with FERC’s order.
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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”).
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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.
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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.
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On January 30, 2020, FERC granted in part and denied in part a declaratory order petition filed by PennEast Pipeline Company (“PennEast”) requesting that the Commission interpret the scope of a natural gas pipeline company’s eminent domain authority under the Natural Gas Act (“NGA”). FERC’s order follows a September 2019 decision by the United States Court of Appeals for the Third Circuit (“Third Circuit”), In re PennEast Pipeline Company, LLC (see September 18, 2019 edition of the WER). FERC’s January 30 declaratory order agreed with PennEast that Congress intended the NGA to be a vehicle for granting condemnation authority, and therefore intended to delegate the federal government’s own exemption from state sovereign immunity under the Eleventh Amendment to a natural gas company that holds a valid, FERC-issued Certificate of Public Convenience and Necessity (“CPCN”). However, FERC refrained from deciding whether that delegation of power is constitutional. The order was issued on a 2-1 vote, with Commissioner Richard Glick dissenting on both procedural and substantive grounds.
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