On July 25, 2019, FERC issued an order directing PJM Interconnection, L.L.C. (“PJM”) “not to conduct the 2019 BRA” (Base Residual Auction) in August (“July 2019 Order”).  The 2019 BRA, which will procure capacity for the 2022-2023 Delivery Year, was already delayed from May to August while FERC considered how to apply the PJM Minimum Offer Price Rule (“MOPR”) to resources which receive out-of-market support, including Zero Emissions Credits (“ZECs”) and Renewable Energy Credits (“RECs”).  If the MOPR were applied to units receiving ZECs, RECs, or other out-of-market support, it is expected capacity market prices would be higher in some regions, and market revenues may be lower for some generators receiving ZECs or RECs or their off-takers.
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On July 18, 2019, FERC issued a final rule (“Order No. 860”) revising its data collection and reporting requirements for market-based rate (“MBR”) sellers (“MBR Sellers”).  FERC will require MBR Sellers to provide certain information about corporate relationships and affiliations through a “relational database” that FERC will implement over the next year and a half.  Among other things, FERC adopted reforms to (1) revise the scope of ownership information provided by MBR Sellers in their market-based rate filings; (2) change the information to be included in an asset appendix; (3) require MBR Sellers to submit monthly updates to their relational database; (4) require MBR Sellers to file quarterly notices of change in status, instead of 30 days after the change in status; and (5) remove the existing requirement that MBR Sellers submit corporate organization charts.  Notably, FERC declined to adopt its proposal requiring MBR Sellers to submit “Connected Entity” information.
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On July 18, 2019, FERC issued Order No. 861, modifying its regulations regarding the horizontal market power analysis required to obtain authorization to sell energy, capacity, or ancillary services at market-based rates.  FERC adopted its proposal (see December 20, 2018 edition of the WER) to relieve electric power sellers of the obligation to submit indicative screens to obtain or retain market-based rate authority in any Regional Transmission Organization (“RTO”)/Independent System Operator (“ISO”) market with FERC-approved RTO/ISO monitoring and mitigation.  Market-based rate sellers (“MBR Sellers”) must continue to submit indicative screens for authorization to make capacity sales in any RTO/ISO that lacks an RTO/ISO-administered capacity market subject to FERC-approved monitoring and mitigation—currently, the California Independent System Operator (“CAISO”) and Southwest Power Pool (“SPP”).  FERC stated its intent for the rule is to ease regulatory burdens on MBR Sellers while simultaneously preserving its authority to prevent the exercise of market power.
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On July 19, 2019, FERC largely denied four complaints filed in May and June of 2015 (“2015 Complaints”) concerning the results of the Midcontinent Independent System Operator, Inc.’s (“MISO”) 2015/16 Planning Resource Auction (“2015/16 Auction”) for Local Resource Zone 4 (“Zone 4”).  In relevant part, FERC: (1) found that the results of the 2015/16 Auction for Zone 4 were just and reasonable; and (2) denied requests to hold an evidentiary hearing to resolve issues related to the 2015/16 Auction.  Specifically, FERC found no evidence in the record indicating that certain Auction offers violated the MISO Tariff, and the resulting Zone 4 auction-clearing price was just and reasonable.
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On June 27, 2019, FERC rejected PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region that would have required demand resources to be available year-round.  PJM argued that the proposed revisions better aligned its Price Responsive Demand (“PRD”) program with the year-around availability obligation of other supply-side “Capacity Performance Resources” participating in PJM’s capacity market. On review, however, FERC agreed with concerns raised by PJM’s Independent Market Monitor (“IMM”) and other parties that, among other things, the price-responsive demand program must be more consistent with the annual peak-based billing framework for capacity procurement by Load Serving Entities (“LSEs”).  FERC also agreed that, as a result, PJM’s proposal failed to accurately reflect PRD participants’ load reduction capabilities.
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On June 20, 2019, FERC issued an Order on Voluntary Remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) directing PJM Interconnection, L.L.C. (“PJM”) to refund certain line loss over-collection amounts to certain virtual traders.  Upon re-examining its refund authority in light of recent court precedent, FERC determined that it has greater discretion to order refunds in cost allocation and rate design proceedings than it previously had determined.
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On June 12, 2019, FERC issued an order on paper hearing (“June 12 Order”) finding that Southwest Power Pool, Inc.’s (“SPP”) quick-start pricing practices are unjust and unreasonable and directing SPP to revise its Open Access Transmission Tariff (“Tariff”) to: implement quick-start pricing provisions in order to more accurately reflect the marginal cost of serving load; provide clear and transparent price signals that better reflect investment decisions; minimize production costs; and reduce uplift. Quick-start resources (also referred to as “fast-start resources”) are able to start within ten minutes or less to meet transient or unforeseen system needs. Previously, energy supply from quick-start resources had not necessarily been included in SPP’s unified pricing and dispatch run, but after the June 12 Order, quick-start resources in SPP may participate in setting market-clearing energy prices under certain circumstances.
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On May 21, 2019, FERC announced that it will convene a staff-led public meeting on July 15, 2019 to discuss ISO New England Inc.’s (“ISO-NE”) development of tariff revisions addressing the regional fuel security concerns discussed by FERC in a July 2, 2018 order.  Commissioners from FERC are invited to attend and participate in the meeting, along with their staffs.
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On May 16, 2019, FERC denied several rehearing requests and partially granted clarification of its Order No. 841 regarding the participation of electric storage resources (“ESRs”) in regional markets operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) (“Order No. 841-A”).  Most notably, FERC upheld its decision not to adopt a state opt-out of ESR participation in wholesale markets.  Commissioner McNamee issued a partial dissent discussing the need to recognize states’ interests in the impacts of Order Nos. 841 and 841-A.
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On May 16, 2019, FERC issued four orders on related complaints against the Midcontinent Independent System Operator, Inc. (“MISO”) by Tilton Energy LLC (“Tilton”), American Municipal Power, Inc. (“AMP”), and Dynegy Marketing and Trade, LLC/Illinois Power Marketing Company (“Dynegy Companies” or “Dynegy”), as well as a complaint against PJM Interconnection, L.L.C. (“PJM”) by AMP and the Northern Illinois Municipal Power Agency (“NIMPA”).  The complaints alleged that MISO’s and PJM’s assessment of congestion and other costs for resources physically located in MISO but pseudo-tied into PJM violated MISO’s and PJM’s Tariffs by imposing duplicative charges.  The complaints also alleged that MISO and PJM subjected the complainants to unjust and unreasonable duplicative congestion charges.  FERC’s orders denied arguments that MISO’s and PJM’s assessment of congestion and other charges violated their respective Tariffs, but found that MISO and PJM may have assessed duplicative congestion charges prior to FERC’s acceptance of revisions to the MISO-PJM Joint Operating Agreement (“JOA”) to address such charges beginning in July 2018.  After consolidating the proceedings, FERC’s orders established hearing and settlement procedures to determine appropriate refunds.
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