On June 12, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rejected challenges to FERC orders modifying PJM’s financial transmission right (“FTR”) and auction revenue right (“ARR”) designs.  FERC had ordered changes to PJM’s FTR/ARR designs to address PJM’s inability to make all of the payments owed to FTR owners. Continue Reading D.C. Circuit Upholds FERC’s Changes to PJM’s FTR and ARR Designs

On June 8, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) upheld FERC’s re-examination of an order regarding the effective rate for network upgrades in an Interconnection Agreement (“IA”) with the PJM Interconnection, L.L.C. (“PJM”).  A power developer, West Deptford Energy, LLC (“West Deptford”), requested interconnection with PJM.  After the negotiations for the IA commenced, PJM’s effective rate changed, triggering a dispute between the parties as to the appropriate effective rate for the IA: the rate in effect at the start of negotiations or the rate in effect at the time the IA was completed. The D.C. Circuit agreed with FERC’s finding that the governing rate is the rate in effect at the time the IA was completed. Continue Reading D.C. Circuit Upholds FERC’s Decision Regarding the Timing of the Application of an Effective Rate

On June 5, 2018, FERC granted the PJM Interconnection, L.L.C. (“PJM”) independent market monitor’s (“IMM”) request to compel the American Electric Power Services Corporation (“AEP”) to provide certain information related to cost-based offers to the IMM.  The IMM stated in its petition that it needed the information to determine whether AEP’s total costs of variable operations and maintenance (“VOM”) included in its capacity offer raise any market power concerns in the PJM Energy Market.  FERC determined that because the IMM had broad authority under PJM’s Open Access Transmission Tariff (“Tariff”) to request such information, it would grant the IMM’s petition. Continue Reading FERC Approves PJM IMM’s Request for Access to AEP Cost Data for Market Power Analysis

On May 31, 2018, CPV Power Holdings, L.P., Calpine Corporation, and Eastern Generation, LLC (together, “Complainants”) filed a complaint against PJM Interconnection, L.L.C. (“PJM”), contending that PJM’s Open Access Transmission Tariff (“Tariff”) does not prevent the suppression of prices in PJM’s Reliability Pricing Model (“RPM”) market by resources receiving state subsidies, and that the solutions that PJM had proposed to FERC—“Capacity Repricing” and “Minimum Offer Price Rule (“MOPR”)-Ex”—are “inadequate and unjust and unreasonable.”  The Complainants argued that FERC should instead require PJM to adopt a “Clean MOPR”—meaning a MOPR “applicable to all subsidized resources and without categorical exemptions like those in PJM’s MOPR-Ex proposal.” Continue Reading Complaint Proposes “Clean MOPR” as an Alternative to PJM’s Proposals to Address State Subsidies in Capacity Markets

On May 29, 2018, the U.S. Department of Justice (“DOJ”) and FERC argued in a joint brief (“Joint Brief”) filed with the U.S. Court of Appeals for the Seventh Circuit (“Seventh Circuit”) that Illinois’ plan to provide credits to nuclear power plants does not interfere with FERC’s authority over wholesale electricity markets.  DOJ and FERC filed the Joint Brief in response to the Seventh Circuit’s request asking the agencies for their views on whether the Federal Power Act (“FPA”) preempts Illinois’ zero emission credits program (“Illinois ZEC Program”). Continue Reading FERC/DOJ Argue that Federal Power Act Does Not Preempt Illinois’ Zero Emission Credits Program

On May 24, 2018, FERC denied a complaint filed by the New Jersey Board of Public Utilities (“NJBPU”) alleging unjust and unreasonable cost allocations for the Bergen-Linden Corridor transmission project (the “Project”) within the PJM Interconnection, L.L.C. (“PJM”) footprint.  FERC rejected NJBPU’s claims that, among other alleged problems, PJM’s implementation of certain provisions in its tariff and the Joint Operating Agreement (the “JOA”) with the New York Independent System Operator, Inc. (“NYISO”) unfairly insulated New York ratepayers from costs associated with the Project, at the expense of New Jersey ratepayers and in violation of FERC’s Order No. 1000.   Continue Reading FERC Denies NJBPU Complaint Regarding Bergen-Linden Corridor Project in PJM

On May 17, 2018, FERC affirmed an Initial Decision addressing a bandwidth calculation filing applicable to a seven-month period in 2005 filed by Entergy Services, Inc. on behalf of the Entergy Operating Companies (“Operating Companies”; collectively, “Entergy”) in November 2016.  Continue Reading FERC Affirms Initial Decision Regarding Entergy’s Bandwidth Calculation Filing

On May 17, 2018, FERC issued two orders denying requests for rehearing of two orders rejecting certain Southwest Power Pool, Inc. (“SPP”) Open Access Transmission Tariff (“OATT”) proposals that, as FERC found, provided Auction Revenue Rights (“ARRs”) and Long-term Congestion Rights (“LTCRs”) on an unjust and unreasonable basis (“May 2018 Orders”).  FERC’s previous orders, both issued on October 19, 2017 (“October 2017 Orders”), found that SPP was impermissibly providing ARRs and LTCRs for network service subject to “redispatch” (or, curtailment), on the same basis as network service not subject to redispatch (see October 25, 2017 edition of the WER).  In these latest orders, FERC rejected claims that, among other things, the October 2017 Orders had violated the contract rights of eligible network customers and that they constituted unlawful retroactive agency action. Continue Reading FERC Rejects Requests for Rehearing of SPP Congestion Revenue Rights Orders

On May 8, 2018, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff (“Tariff”) and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region.  PJM stated that these revisions would reform its Incremental Auctions and its method for addressing excess capacity in the PJM region (“Incremental Auction Proposal”).  PJM specified that its current market rules do not protect against, and may in fact provide an incentive to engage in, speculative behavior, which distort price signals on the value of capacity.  FERC rejected PJM’s Incremental Auction Proposal because, according to FERC, PJM did not support its argument that speculative behavior is actually transpiring, and PJM already had procedures in place to address this activity if it is actually occurring. Continue Reading FERC Rejects PJM Tariff Proposal to Reduce Capacity Market Arbitraging

On April 30, 2018, the Commission granted the California Independent System Operator Corporation’s (“CAISO”) request for a limited waiver of a specific section of CAISO’s Tariff to allow CAISO to: (1) process out-of-time annual recertifications for certain resources as “Acquired Resources” for the 2018 resource adequacy compliance year, and (2) provide certainty to those resources that their Resource Adequacy Availability Incentive Mechanism (“RAAIM”) exemption for the 2017 resource adequacy compliance year will not be unwound. Continue Reading FERC Grants CAISO Waiver for Acquired Resources in RAAIM