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FERC fails to act on raft of power measures during last meeting under Trump


Essential Energy Insights - February 2021


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FERC fails to act on raft of power measures during last meeting under Trump

The Federal Energy Regulatory Commission on Jan. 19 failed to act on a number of key power-related matters during an unusual monthly open meeting that saw multiple items unexpectedly dropped from the agency's agenda.

FERC's last meeting of the Trump era, held under the leadership of recently installed Republican Chairman James Danly, was originally slated to feature a major final rule (RM20-10) overhauling the commission's incentives policy for transmission projects as well as several orders addressing the impact of states' clean energy policies on wholesale power markets.

While those measures stalled in uncharacteristic fashion, Danly — who has declined to engage with the press after abruptly displacing former Chairman Neil Chatterjee following the Nov. 3, 2020, presidential election hinted that he plans to stay on at the commission after President-elect Joe Biden names a new Democratic chair.

Multiple orders dropped

FERC was set to act on a minimum offer price rule, or MOPR, complaint (EL21-7) filed against the New York ISO by a pair of natural gas-fired power plant operators who claimed the state's climate policies are artificially suppressing the grid operator's capacity market prices.

However, the transmission incentives and NYISO items, along with a third item dealing with a tariff filing (ER20-3040) submitted by American Electric Power Co. Inc. subsidiary Southwestern Electric Power Co., were all struck from FERC's agenda. Meanwhile, an order related to a contentious MOPR proceeding (EL16-49, EL18-178) for the PJM Interconnection also failed to win enough votes among the full slate of five sitting commissioners to pass.

"At the risk of understatement, it is unusual that we would find what FERC did not do to be as potentially, or even more, newsworthy than the action it takes at an open meeting," ClearView Energy Partners said in a research note to clients.

FERC staff later noted that decisions to strike agenda items are made at the discretion of the chairman between when the meeting's Sunshine Act notice is posted and the start of the meeting.

Republican Commissioner Neil Chatterjee, who notably championed a contentious MOPR order for the 13-state PJM region, said he was glad that the NYISO complaint was dropped from the Jan. 19 meeting agenda.

"As I've made clear over the past few years, I have concerns about the potential market-distorting effects of state policies that favor certain resources in a way that causes price-suppression in capacity markets," Chatterjee said. "But that doesn't mean the commission should require every [grid operator] with a capacity market to implement a minimum offer rule substantially similar to the MOPR we required in PJM."

In explaining his reasoning, Chatterjee noted that the NYISO covers a single state and holds monthly capacity auctions. The NYISO also plans to soon submit proposed rules to embed a price on carbon emissions within its market, a move in line with FERC's recent proposed policy statement on carbon pricing.

In contrast, the PJM footprint comprises all or part of 13 states and the District of Columbia and the grid operator holds annual capacity auctions three years in advance of commitment periods. PJM is also studying the impact of carbon pricing on its market as opposed to actively developing its own carbon pricing rules.

Chatterjee noted the NYISO is already working on a comprehensive review project "to address the influx of renewable resources required by state law while ensuring that rates remain just unreasonable."

"In situations like these, I would not support triggering a difficult and time-consuming new process that ultimately could prove counterproductive," Chatterjee explained.

PJM order fails to win majority support

In another unusual development, an agenda item dealing with how PJM implements FERC's MOPR order (EL16-49) failed to win enough votes to pass. Traditionally, agenda items have mostly only been noticed when FERC chairs are confident that the items have enough support for a desired outcome.

In this case, a draft order failed to attract support from a majority of commissioners due to concerns about whether resources participating in state default service auctions will be subject to market mitigation under PJM's expanded MOPR.

Democratic Commissioner Richard Glick and other parties had previously argued that a conspicuous footnote in a FERC order responding to a PJMs compliance filing could be read to implicate virtually all resources participating in those types of auctions.

Chatterjee said he would have supported an order that "eliminated this confusion" by vacating the footnote, but "no such order was included on today's agenda," causing the measure to fail.

However, Chatterjee, whose term expires at the end of June, added that he is hopeful the commission revisits the issue "in the near future." PJM is aiming to hold a long-delayed capacity auction in May.

Danly hints at future plans, Chatterjee praises Biden

With a term expiring in 2023, Danly has declined to publicly clarify whether he plans to stay on at FERC after a widely expected demotion under Biden. However, Danly hinted that he intends to stay with the commission in comments made during the Jan. 19 meeting on a notice of inquiry (RM21-9) concerning financial assurance measures for hydroelectric projects.

"I have every expectation that I'm going to be working enthusiastically with my colleagues over the next few years" on the rulemaking effort, Danly said.

Danly did not respond to follow-up requests for comment regarding his future plans, while FERC's press office pointed to Danly's remarks during the Jan. 19 meeting as evidence of intent.

Meanwhile, Chatterjee, who has also hinted at a desire to continue serving at FERC, offered words of praise for Biden following the deadly riot at the U.S. Capitol on Jan. 6.

"I'm looking forward to tomorrow's presidential inauguration and the promise and opportunity it brings for a return to the highest standards of leadership and decency expected of the office," said Chatterjee, a former aide to Senate Majority Leader Mitch McConnell, R-Ky. "President-elect Biden is a person of enormous compassion and it will be steadying to have his presence in the White House."