On January 24, 2020, FERC issued its rehearing order on several different issues regarding the recovery of costs associated with the abandoned Potomac-Appalachian Transmission Highline Project (“PATH”). Previously, in January 2017, FERC reduced PATH’s return on equity (“ROE”) during its abandonment phase from 10.4 to 8.11 percent, and denied PATH’s recovery of expenditures related to certain public relations activities. On rehearing, FERC:

  1. Upheld its prior determination that the project’s abandonment significantly reduced its risk profile;
  2. Declined to address PATH’s arguments that FERC erred in reducing its ROE to 8.11 percent, and instead established a paper hearing addressing whether and how FERC’s proposed revised base ROE methodology should apply; and
  3. Reversed its prior denial for PATH to recover expenditures related to public information campaigns about the benefits and licensing of the project.
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On January 14, 2019, FERC issued a letter order accepting, as of October 15, 2019, Midcontinent Independent System Operator’s (“MISO”) proposal to implement a “Fast First” Automatic Generation Control (“AGC”) framework that, as MISO argues, would deploy fast-ramping generation resources more efficiently.  MISO explained that the Fast First AGC framework would better utilize and incentivize fast-ramping resources, including energy storage resources (“ESRs”), for frequency regulation.  MISO stated that, with increased supply-side volatility on its system due to integration of intermittent renewable resources, new AGC signals were needed for better system control and to better utilize the fast response rate of fast-ramping resources.
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On December 30, 2019, FERC accepted, subject to further compliance, revisions to PJM Interconnection, L.L.C.’s (“PJM”) Price Responsive Demand (“PRD”) program to align the program’s rules and requirements with those applicable to supply-side “Capacity Performance Resources” participating in PJM’s capacity market. PJM previously submitted PRD revisions in February 2019, but FERC rejected PJM’s filing in a June 2019 order, on the basis that PJM’s proposed method for calculating the Nominal PRD Value—i.e., the MW amount to be curtailed—was inconsistent with the manner in which PJM calculated a Load Serving Entity’s (“LSE”) capacity supply obligation (see July 18, 2019 edition of the WER). FERC’s December 30 order accepted PJM’s proposal to maintain the existing Nominal PRD Value calculation based on a LSE’s capacity obligation, which is itself derived from the LSE’s annual coincident peak demand. In response to a protest from PJM’s Independent Market Monitor (“IMM”), FERC also required PJM to clarify on compliance that an LSE is not eligible to receive certain bonus payments for load reductions during system emergencies when the prevailing LMP has not reached the applicable trigger price.
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On December 12, 2019, the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) issued an opinion affirming in part and reversing in part a bankruptcy court’s assertion of exclusive and unlimited jurisdiction over certain of FirstEnergy Solutions’ (“FES”) power purchase agreements that FERC had previously approved under the Federal Power Act (“FPA”) and that FES sought to reject in bankruptcy. While the Sixth Circuit agreed that the bankruptcy court has jurisdiction to decide whether FES may reject the contracts, it rejected the bankruptcy court’s decision to enjoin FERC from taking any action relating to the contracts, and permitting FES to reject the contracts. Characterizing the bankruptcy court’s decision as “a rash and unnecessary overreach,” the Sixth Circuit held that the injunction issued against FERC was overly broad, and the bankruptcy court’s standard for deciding whether to permit FES to reject the contracts too limited. The Sixth Circuit also rejected the bankruptcy court’s sole application of the business judgment rule to decide whether to permit FES to reject the contracts at issue. Rather, the Sixth Circuit held that the court should have also taken public interest considerations into account, and should have invited FERC to participate and provide an opinion in accordance with the FPA. Judge Richard Allen Griffin penned separate opinion dissenting in part, in which he concluded that the bankruptcy court exceeded its jurisdiction and infringed on FERC’s exclusive jurisdiction to decide whether to modify or abrogate a filed rate.
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On November 18, 2019, Anbaric Development Partners, LLC (“Anbaric”) filed a complaint against PJM Interconnection, L.L.C. (“PJM”) alleging that PJM’s transmission interconnection procedures deny meaningful open access interconnection service to merchant transmission projects designed to connect remote generation resources, including offshore wind generation, to the PJM transmission system (“Transmission Platform Projects”). Anbaric requested that FERC: find that the PJM Tariff is unjust, unreasonable and unduly discriminatory or preferential because it does not provide Transmission Platform Projects the opportunity to obtain material interconnection rights; direct that Transmission Platform Projects be given the opportunity to obtain material interconnection rights; and order PJM to modify its Tariff to include a new category of Transmission Platform Projects to connect remote renewable generation facilities to the PJM Transmission System. Anbaric also requested that any order from FERC apply to all of Anbaric’s projects with positions in PJM’s interconnection queue as of the date of its complaint.
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On November 22, 2019, FERC issued three separate orders accepting, subject to further compliance, California Independent System Operator Corporation’s (“CAISO”), the Midcontinent Independent System Operator, Inc.’s (“MISO”), and ISO New England, Inc.’s (“ISO-NE”) proposals to comply with FERC Order Nos. 841 and 841-A—addressing energy storage resources’ (“ESR”) participation in Regional Transmission Organization/Independent System Operator (“RTO/ISO”)-operated markets (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). The November 22 orders, which follow FERC’s previous acceptance of PJM Interconnection, L.L.C.’s and Southwest Power Pool, Inc.’s storage participation proposals (see October 24, 2019 edition of the WER), found that the RTOs/ISOs generally complied with the requirements of Order No. 841. FERC ordered certain modifications to each RTO’s/ISO’s proposals, addressing metering and accounting practices, ESR bidding parameters, minimum size requirements, and transmission service charges, in addition to other issues. Commissioner McNamee issued separate opinions concurring with all three orders.
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On November 14, 2019, the Senate Committee on Energy and Natural Resources (“Committee”) held a hearing to consider the nomination of Dan Brouillette as Secretary of Energy. Mr. Brouillette is currently DOE’s Deputy Secretary, and has been nominated by President Trump to replace outgoing Secretary Rick Perry.
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On November 1, 2019 FERC approved a Stipulation and Consent Agreement between its Office of Enforcement (“OE”), the regional reliability entity Texas Reliability Entity, Inc. (“Texas RE”), the North American Electric Reliability Corporation (“NERC”), and Calpine Corporation (“Calpine”), related to Calpine’s alleged violations of NERC reliability standards governing maintenance and testing of batteries and other protection systems, as well as provisions of the California Independent System Operator Corporation (“CAISO”) Tariff requiring entities to report planned and unplanned generator outages. As part of the settlement, Calpine neither admitted nor denied the alleged violations, but agreed to pay civil penalties of $375,000 to Texas RE and $25,000 to the United States Treasury, and to undergo compliance monitoring.
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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.
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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.
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