FERC to act on winter storm penalties, investor policies at busy open meeting

The Federal Energy Regulatory Commission has put together a busy agenda for its final monthly meeting of the year, with action teed up on more than a dozen complaints tied to a severe December 2022 winter storm and a range of other long-pending matters.

FERC's Dec. 19 open monthly meeting is also expected to be Republican Commissioner James Danly's last at the agency, paving the way for a 2-1 Democratic majority as the commission heads into the new year.

On the power side, noteworthy agenda items include action on a broad settlement agreement (ER23-2975) proposed by PJM Interconnection LLC in September. The deal would resolve 15 complaints filed by power plant owners whose units failed to perform as expected during a widespread cold event over the Christmas 2022 holiday weekend.

Following the storm, PJM said it expected to assess more than $1.8 billion in penalties to generators that failed to meet their performance obligations under PJM's capacity market rules. As proposed, the settlement agreement would reduce total assessed charges by 31.7% for the settling parties.

In administrative matters, FERC has noticed a joint study (AD24-5) with North American Electric Reliability Corp. on the availability of blackstart generators in Texas. FERC and NERC staff flagged the performance of blackstart resources, which are designed to start without the aid of external power sources, in a separate report on the December 2022 storm released in November.

Administrative items also include a new docket on blanket authorizations for investors that acquire shares of public utilities under Section 203 of the Federal Power Act. Consumer watchdog group Public Citizen has repeatedly urged FERC to take a closer look at whether utility investments by private equity interests raise market power concerns. Republican attorneys general also argued in May that institutions such as Vanguard Group Inc. should be considered active, rather than passive, investors under Section 203 due to their climate policies.

"This appears to be a generic inquiry into FERC's current approach to overseeing the accumulation of 'passive' positions by large investment houses in utility sector shares," ClearView Energy Partners LLC said in a Dec. 13 note to clients.

The research firm noted Commissioners Allison Clements and Mark Christie have both issued separate concurrences on the issue, with Christie arguing that "at its broadest, economywide level, this is an issue that merits the attention of Congress itself."

"The news here, in our view, is that FERC is initiating the generic formal inquiry that both a Republican and Democrat commissioner have argued is needed," ClearView said.

FERC is also set to act on rehearing requests filed by Solar Energy Industries Association, or SEIA, in response to the commission's approval of a Midcontinent ISO proposal (ER23-1195) to prohibit some wind and solar resources from providing ancillary services in the 15-state region.

In approving MISO's plan, FERC rejected a related complaint (EL23-28) filed by SEIA arguing that MISO has failed to show that it lacks the technical capability to incorporate wind and solar resources into its ancillary service market. SEIA and other clean energy groups are separately arguing on rehearing that hybrid resources with a storage component should not be prohibited from providing ramp-up services in MISO.

In other matters, FERC is poised to issue an order addressing a long-running dispute (ER21-2818) over the exit fee United Power Inc. must pay to withdraw from Colorado-based Tri-State Generation and Transmission Association Inc.

United Power, Tri-State's largest member, has committed to leaving the wholesale co-op by May 1, 2024, to pursue cleaner sources of power. But the rural electric co-op is still facing uncertainty over "the magnitude" of Tri-State's exit fee, it said in an August filing with FERC.

Gas project work

On the natural gas side, FERC Chairman Willie Phillips has scheduled a vote on the highly contested request (CP19-14) that FERC extend the construction deadline for the MVP Southgate gas pipeline project by three years.

The 73-mile, 375 MMcf/d project, which would extend off the mainline Mountain Valley pipeline and run from southern Virginia into North Carolina, had been in limbo when litigation delays bogged down construction of the mainline for several years.

FERC has received thousands of comments opposing the project submitted by the public, community leaders, grassroots organizations, North Carolina and Virginia state officials, and members of Congress. Conversely, pipeline worker unions, industrial groups and North Carolina's Chamber of Commerce wrote to support the extension. A key legal issue raised in comments is whether the commission's environmental analysis has been rendered stale since FERC issued a certificate for the project in 2020.

Separately, Mountain Valley looks likely to get a vote on its proposal (CP16-10) to raise initial rates for the mainline project to reflect increased construction costs. The company Dec. 6 told FERC that the timing of the revised tariff could affect the project's targeted first-quarter 2024 start.

And ANR Pipeline Co.'s 150 MMcf/d Wisconsin Reliability Project (CP23-15) is finally up for a vote after FERC issued its environmental assessment in July. The project involves installing new compressor units, replacing about 48 miles of pipeline, and expanding six metering stations.

Left off the agenda is authorization of Venture Global's CP2 LNG project (CP22-21) in Louisiana, with a capacity of 20 million mt/year. Offtake customers, including Japan's JERA Co. Inc. and Germany's EnBW Energie Baden-Württemberg AG, recently urged FERC to advance the project for the sake of their countries' supply security.

S&P Global Commodity Insights reporter Zack Hale produces content for distribution on S&P Capital IQ Pro. S&P Global Commodity Insights is a division of S&P Global Inc.