Power & Pipes

FERC, CFTC, and State Energy Law Developments

FERC recently issued a pair of orders approving the electric storage market participation proposals of PJM Interconnection, Inc. (PJM) and Southwest Power Pool, Inc. (SPP). PJM and SPP submitted those proposals to comply with the directives of Order No. 841, FERC’s final rule addressing the participation of electric storage resources in the capacity, energy, and ancillary service markets operated by independent system operators and regional transmission organizations. The October 17 orders represent the agency’s first two approvals of Order No. 841 compliance filings, which have been under review since late last year.

FERC found that PJM and SPP generally complied with the directives in Order No. 841, and therefore largely accepted their filings. PJM and SPP will be required to submit further compliance filings within 60 days to address discrete aspects of their proposals. Among other things, FERC found that both PJM and SPP lacked the requisite level of detail on certain key components of their storage participation models (e.g., bidding parameter definitions, metering and accounting practices, simultaneous participation in retail and wholesale markets).

Within those same orders, FERC also initiated separate proceedings under Section 206 of the Federal Power Act (FPA) to address the minimum run-time requirements proposed by PJM and SPP for capacity and resource adequacy, respectively. The Section 206 proceeding specific to PJM will also address whether PJM’s application of its minimum run-time rules related to “Capacity Storage Resources” may be unjust, unreasonable, unduly discriminatory, or preferential. As part of that proceeding, FERC will evaluate PJM’s 10-hour minimum run-time requirement, which was a hotly contested aspect of PJM’s Order No. 841 proposal.

As required by law, FERC established a refund effective date for the PJM and SPP Section 206 proceedings, which marks the date from which PJM and SPP may be required to refund amounts in excess of the just and reasonable rate. For both proceedings, the refund effective date will be the date on which the FPA Section 206 notices are published in the Federal Register—the earliest date allowed by Section 206. PJM and SPP must also submit revised tariff provisions no later than 45 days after the Federal Register notices are published.