On December 30, 2019, FERC accepted tariff revisions by the California Independent System Operator Corporation (“CAISO”) to apply three previously accepted-interim provisions designed to address the Aliso Canyon natural gas storage facility’s (“Aliso Canyon”) continued operational limitations and impacts on CAISO’s system.

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On December 2, 2019, FERC staff (“Staff”) issued its annual report (“Report”) on demand response and advanced metering, a high-level review of demand response potential in the retail and wholesale markets. In the Report, Staff highlights that: (i) advanced meters account for more than half of all meters in operation in the United States, (ii) multiple states have received approval for, or proposed, advanced meter deployment programs, (iii) many state regulators appear to support advanced meter investments, and (iv) from 2017 to 2018, there was an almost 8% increase in the overall demand response participation in wholesale markets.
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On November 21, 2019, FERC announced that public utilities with transmission formula rates must revise those rates to account for changes in accumulated deferred income taxes (“ADIT”) resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”). Utilities with transmission formula rates under an Open Access Transmission Tariff, a transmission owner tariff, or a rate schedule must:

  • include a mechanism to deduct any excess ADIT from, or add any deficient ADIT to, their rate base in order to ensure rate base neutrality (the “Rate Base Adjustment Mechanism”);
  • return to, or recover from, customers any excess or deficient ADIT through an adjustment to the formula rate’s income tax allowance (“Income Tax Allowance Adjustment Mechanism”); and
  • incorporate a new permanent worksheet into the formula rate to annually track ADIT amounts.

FERC declined to adopt any compliance requirements for transmission stated rates, finding that the utility’s next rate case would be the most appropriate place to address excess or deficient ADIT resulting from the TCJA. Compliance filings are due the later of: (1) 30 days from the effective date of the final rule; or (2) the utility’s next informational filing following the final rule. 
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On October 30, 2019, the House Committee on Energy & Commerce held a hearing in furtherance of its development of comprehensive climate legislation focused on reaching a 100 percent clean energy economy by 2050.  John Bear, the Chief Executive Officer of the Midcontinent Independent System Operator, Inc. (“MISO”) testified at the hearing while Southwest Power Pool, Inc. (“SPP”) and PJM Interconnection, L.L.C. (“PJM”) provided input in response to an earlier request from the Committee. The three Regional Transmission Organizations (“RTOs”) generally reported increases in both renewable and distributed generation in their regions over the past several years, highlighting the operational and reliability challenges that can come along with the growing prevalence of both. The RTOs also recognized the widely divergent state decarbonization policies and the associated impacts to the regional wholesale markets.
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On October 17, 2019, FERC denied rehearing of its order denying a complaint filed by CXA La Paloma, LLC (“La Paloma”), which argued that the California Independent System Operator Corporation’s (“CAISO”) resource adequacy regime had become unjust and unreasonable. Stakeholders asserted, among other things, that FERC ignored certain evidence suggesting inadequate capacity prices would lead to near-term reliability problems; FERC disagreed, restating the evidence and arguments initially presented in the complaint, and explaining that based on the evidence presented it did not find CAISO’s resource adequacy regime unjust and unreasonable. In its order denying rehearing, FERC weighed in (again) on low capacity prices and reliability concerns in California, as well as the scope of its section 206 authority.     
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On October 2, 2019, revisions to the Southwest Power Pool, Inc. (“SPP”) Membership Agreement went into effect without an order, as FERC lacked a quorum to rule on SPP’s proposal due to Commissioner Richard Glick’s ongoing recusal in certain proceedings at FERC (see October 3, 2019 edition of the WER). SPP’s filing on August 2, 2019 proposed new definitions for the terms Load Serving Entity (“LSE”) and non-LSE to its Membership Agreement. A joint statement from Chairman Neil Chatterjee and Bernard McNamee indicated that they would have accepted the revisions as requested.   

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On September 25, 2019, FERC issued a notice stating that the results of the ISO New England, Inc. (“ISO-NE”) thirteenth Forward Capacity Auction (“FCA”) went into effect as of June 28, 2019 by operation of law—i .e., without FERC action. FCA 13 went into effect by operation of law due to a lack of quorum in the proceeding in which ISO-NE submitted the auction results and requested FERC approval of the auction as being conducted in accordance with ISO-NE’s Tariff and producing just and reasonable rates. Under Section 205 of the Federal Power Act, FERC has 60 days to act on a proposed rate filing; if FERC takes no action in that 60-day period—a very rare occurrence—then the rate becomes effective automatically. On September 27, 2019, Commissioner Richard Glick issued a statement indicating that he did not participate in the proceeding due to an ethics pledge that precludes him from working on any matters in which his former employer, Avangrid Inc., or any of its affiliates or subsidiaries is a party until November 29, 2019. Commissioner Glick explained that he could not participate because Vineyard Wind LLC, a joint venture between Avangrid Renewables, LLC and Copenhagen Infrastructure Partners, was a party to the proceeding.
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On September 19, 2019, FERC granted in part and denied in part a complaint by EDF Renewable Energy, Inc. (“EDF”) which alleged that the Midcontinent Independent System Operator, Inc. (“MISO”), Southwest Power Pool, Inc. (“SPP”), and PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariffs (“Tariffs”), the MISO-SPP Joint Operating Agreement (“JOA”), and the MISO-PJM JOA are unjust and unreasonable because they lack sufficient detail and transparency regarding the process each Regional Transmission Organization (“RTO”) uses to coordinate with Affected Systems, i.e., other transmission systems that may be affected by a proposed generator interconnection.  FERC’s order comes after an April 2018 technical conference that explored the issues raised in EDF’s complaint as well as broader Affected Systems issues (see February 13, 2018 edition of the WER).  FERC’s September 19 order agreed that the lack of transparency in Affected System coordination creates cost uncertainty that presents a significant obstacle to the development of new generation resources, and required MISO, SPP, and PJM to memorialize their current Affected System study coordination processes in their Tariffs and JOAs.  FERC also required the RTOs to add to their Tariffs and JOAs clear references to further Affected System coordination details in business practices and other coordination documents.  However, FERC declined to initiate a generic proceeding on the Affected Systems coordination issues raised in the technical conference in regions beyond those identified in the complaint.
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Summary of NOPR

On September 19, 2019, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its regulations implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) in light of changes in the energy industry since 1978.[1]
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On August 30, 2019, FERC instituted a section 206 proceeding to require PJM Interconnection, L.L.C. (“PJM”) to revise its Amended and Restated Operating Agreement (the “PJM Operating Agreement”) in light of a recent reversal from the U.S. Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”).  In the new section 206 proceeding, FERC is requiring PJM to revise the PJM Operating Agreement to include projects needed solely to address Form No. 715 local planning criteria in PJM’s competitive proposal process, or to show cause why such revisions are not required.  In a concurrent order on remand, FERC also rejected revisions to the PJM Transmission Owner Tariff that had previously been amended to clarify that 100 percent of the costs for projects that are included in the PJM Regional Transmission Expansion Plan (“RTEP”) solely to address individual transmission owner Form No. 715 local planning criteria should be allocated to the transmission owner’s transmission zone.  FERC expects to issue a final order on the section 206 proceeding within 180 days.
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