FERC Denies NJBPU Complaint Regarding Bergen-Linden Corridor Project in PJM

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 (“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

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FERC Rejects Requests for Rehearing of SPP Congestion Revenue Rights Orders

On May 17, 2018, FERC issued two orders denying requests for rehearing regarding dual rejections of 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. FERC’s previous orders, both issued on October 19, 2017, 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, FERC’s October 19, 2017 orders had violated the contract rights of eligible network customers and that they constituted unlawful retroactive agency action. Continue reading

A Divided FERC Approves ISO-NE’s Capacity Market Changes to Accommodate State Subsidized Resources

On March 9, 2018, a divided FERC approved the Competitive Auctions with Sponsored Policy Resources (“CASPR”) proposal submitted by the ISO New England Inc. (“ISO-NE”). Developed through an extensive stakeholder process that began in 2016, CASPR was promoted by ISO-NE as a mechanism to integrate out-of-market state resource policies that might otherwise suppress capacity market prices in ISO-NE’s capacity market. A divided FERC approved the proposal as a just and reasonable accommodation of state policies, with Commissioner Powelson dissenting, arguing that the proposal dilutes market signals and “threatens the viability” of ISO-NE’s capacity market. Commissioners LaFleur and Glick concurred with the outcome, but criticized the order’s guidance on adapting markets to state energy policies, and reliance on minimum offer pricing rules (“MOPRs”) as the “standard solution” to achieve that end. Continue reading

D.C. Circuit Affirms FERC Refund Denial in Louisiana PSC Cost Allocation Challenge

In a decision issued on March 6, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or the court) upheld a series of FERC orders declining to direct Entergy Services Inc. (“Entergy”) to pay refunds for previously misallocated capacity costs. The D.C. Circuit found that FERC adequately explained its reasoning and clarified that—contrary to previous assertions—the Commission has no general policy of ordering refunds in cases involving flawed rate design, and that it had adequately explained that such a refund order would be inequitable in this instance. Continue reading

FERC Accepts CAISO EIM System Functionality Enhancement Proposal

On February 14, 2018, FERC accepted a suite of system functionality enhancements to the Energy Imbalance Market (“EIM”) proposed by the California Independent System Operator Corporation (“CAISO”).  The enhancements, which became effective the following day, included automated matching of import/export schedule changes between resources inside and outside the EIM, as well as allowing EIM entities to use CAISO’s settlement process to address base energy transfer differences.  As CAISO explained in its proposal, the requested enhancements will improve the EIM overall, as well as facilitate the entrance of Powerex Corp. and Idaho Power Company into the market on April 4, 2018. Continue reading

D.C. Circuit Denies Rehearing after Vacating Pipeline Certificate; Developers Seek Emergency Relief from FERC

On January 31, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied requests for an en banc rehearing of an August 2017 decision (Sierra Club v. FERC) vacating FERC’s approval of the Southeast Market Pipelines Project (“SMP Project”), a natural gas pipeline currently under construction in the southeastern United States. In its August decision, the D.C. Circuit held that FERC failed to analyze the greenhouse gas emissions that would result from the SMP Project, as required by the National Environmental Policy Act (“NEPA”). On February 2, 2018, the developers for the SMP Project filed a request at FERC for expedited reissued construction approval certificates, or in the alternative, temporary emergency certificates, arguing that halting work on the SMP Project will cause “irreparable harm.” Continue reading

D.C. Circuit Upholds PJM Capacity Market CONE

On January 26, 2018 the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rejected a challenge to FERC’s approval of tariff revisions from the PJM Interconnection, L.L.C. (“PJM”) regarding the so-called cost-of-new-entry (“CONE”), or the anticipated revenues required to recover costs in PJM’s wholesale capacity market. A coalition of generators challenged PJM’s CONE as too low, which they argued undercut their own recovery in the capacity market. In a brief opinion, the D.C. Circuit held that petitioners’ claims failed to overcome the deferential standard of review applied to factual challenges to agency orders. Continue reading

New York ZEC Challenges Move Forward at the State Level

On January 22, 2018, a New York state trial court largely rejected motions to dismiss various challenges to the state’s zero emission credit (“ZEC”) program established in 2016 by the New York Public Service Commission (“NYPSC”). The ZEC program, which is also being challenged in federal court, provides subsidies to financially struggling in-state nuclear energy generators. Although the court allowed five of the six claims against the program to proceed to trial, the court dismissed 56 of the 61 petitioners for failing to timely raise their challenges. Continue reading

FERC Rejects Allegheny’s Proposal to Transfer Power Plant to Regulated Affiliate

On January 12, 2018, FERC denied authorization to transfer a 1,159 MW coal-fired generation facility (“Pleasants Facility”) owned by Allegheny Energy Supply Company, LLC (“AE Supply”) to its affiliate, Monongahela Power Company (“Mon Power”).  After considering the applicable tests for affiliate transfers under the Federal Power Act (“FPA”), FERC determined that the parties’ proposed transaction was not in the public interest because it presented potential concerns of captive ratepayers cross-subsidizing non-regulated entities and because certain solicitation criteria were not met. The denial is without prejudice, so Mon Power and AE Supply may resubmit an application that corrects the shortcomings identified by FERC. Continue reading

FERC Clarifies Impacts from Lost Capacity Market Rights in NYISO

On October 25, 2017, FERC issued an order explaining the market consequences when a resource loses certain participation rights in the New York Intendent System Operator, Inc. (“NYISO”) Installed Capacity (“ICAP”) market.  The order on clarification, which was requested by NRG Power Marketing LLC and GenON Energy Management, LLC (collectively, “NRG”), followed a January 27, 2017 decision in which FERC largely accepted NYISO’s proposed revisions to its Market Administration and Control Area Services Tariff (“Tariff”) to correct a pricing inefficiency in its ICAP market design.  As FERC clarified in this most recent order, when a capacity resource loses its ability to participate in NYISO’s ICAP market, certain benefits or discounts tied to that participation ability—here, a so-called “Locality Exchange Factor”—fall away. Continue reading