On November 13, 2013, the Federal Energy Regulatory Commission (“FERC”) issued an order instituting a proceeding pursuant to Section 206 of the Federal Power Act to determine whether Idaho Power Company’s (“Idaho Power”) market-based rate authority in its home balancing authority area remains just and reasonable. The order responded to Idaho Power’s June 28, 2013 triennial market power analysis for the Northwest region. That submittal indicated that Idaho Power failed FERC’s market share indicative screen when the additional 300 MW of capacity associated with Idaho Power’s recently constructed Langley Gulch power plant was taken into account. In its filing, Idaho Power noted that when preparing its triennial update this summer, it realized that in the summer of 2012, it had not filed a notice of change in status within 30 days of when the Langley Gulch power plant came on-line as required by FERC’s regulations. FERC permits sellers that fail the indicative screens to rebut the presumption of market power associated with failure of the screens through the submission of a delivered price test (“DPT”) analysis. However, Idaho Power explained in its filing that it did not have time to prepare a DPT analysis prior to the June 30, 2013 due date for its triennial filing. Idaho Power submitted the DPT analysis on November 7, 2013. (more…)
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FERC institutes proceeding to determine whether Idaho Power Company can continue to sell at market-based ratesFriday, November 15, 2013 9:54 am by Stephen Hug
Customers Seek to Lower Returns for MISO Transmission Owners and also Challenge Capital Structure and Incentive AddersThursday, November 14, 2013 5:50 pm by Kaleb Lockwood
Adding to a recent spate of complaints filed at FERC seeking to reduce the return on equity (“ROE”) of various transmission owners, on November 12, 2013, several groups composed of large industrial and commercial Midcontinent Independent System Operator (“MISO”) transmission customers together filed a complaint against MISO transmission owners asking for a reduction in the MISO transmission owners’ ROE. With one exception, all MISO transmission owners currently have a base ROE of 12.38%. The complaint seeks to lower the transmission owners’ base ROE over 300 basis points below the current base ROE, to 9.15%.
The law is well settled that in regulated industries, ROEs must be set at levels sufficient to attract capital investment. Transmission owners have responded to the recent complaints seeking ROE reductions by expressing concerns that lower ROEs will result in lower levels of investment in transmission, contrary to FERC’s policy initiatives intended to encourage and sustain transmission investment. (more…)
In a 149 page opinion, the US District Court for the District of Maryland yesterday ruled in PPL EnergyPlus, LLC et al. v. Nazarian that the State of Maryland’s actions to secure the development of new power plants by setting the price to be received by a new plant in the PJM market for the next 20 years intruded on the federal government’s role to set wholesale prices and thus violates the Supremacy Clause of the US Constitution due to field preemption. This case is critically important to incumbent generators because successful state actions to suppress wholesale prices in organized markets by mandating the execution of contracts for new generation at non-market prices would undermine the ability to make merchant investments based upon expectations of future supply and demand dynamics. A similar case is pending in the US District Court for the State of New Jersey based on that state’s law requiring utilities to purchase supply from “new generators” at an established price.
In addressing the competing claims between the plaintiffs and defendant as to the authority of the federal government versus the states, the court explained as follows:
While Maryland may retain traditional state authority to regulate the development, location, and type of power plants within its borders, the scope of Maryland’s power is necessarily limited by FERC’s exclusive authority to set wholesale energy and capacity prices under, inter alia, the Supremacy Clause and the field preemption doctrine. Based on this principle, Maryland cannot secure the development of a new power plant by regulating in such a manner as to intrude into the federal field of wholesale electric energy and capacity price-setting. Furthermore, Maryland’s stated purpose to use the Generation Order to secure the existence of sufficient and reliable electric energy for Maryland residents does not permit invasion into a federally-occupied field. Where a state action falls within a field Congress intended the federal government alone to occupy, the good intention and importance of the state’s objectives are immaterial to the field preemption analysis. (more…)
Jessica Miller and Sandy Rizzo
On May 17, 2013, the Federal Energy Regulatory Commission found that its generic findings in its regional transmission planning order, Order No. 1000, were sufficient to overcome the Mobile-Sierra prohibition against the alteration of contract terms unless they seriously harm the public interest. ISO New England Inc., 143 FERC ¶ 61,150 (2013). This conclusion may signal a weakening, under certain circumstances, of the previously high standard for overcoming the Mobile-Sierra presumption of justness and reasonableness. The apparent departure from Commission precedent was significant enough to prompt two Commissioners—Moeller and Clark—to submit separate dissents on that sole issue. (more…)
On June 4, 2013, the Federal Energy Regulatory Commission (“FERC”) posed data requests to each of the country’s Independent System Operators and Regional Transmission Organizations as part of its efforts to explore improvements to the coordination of the natural gas and electric markets. As natural gas has become the fuel of choice for more and more electric generating facilities, concerns have arisen regarding the reliability impacts of insufficient infrastructure to deliver needed gas supplies and other impediments to the seamless coordination of these markets. Over the past year, FERC staff has held a series of technical conferences to consider these issues. In April, FERC accepted a proposal by ISO New England Inc. (“ISO-NE”) to align the deadlines for the participation and commitment of resources in ISO-NE’s day-ahead electric market with the trading patterns in natural gas markets. (more…)
ISO New England Inc. (ISO-NE) last week notified the Federal Energy Regulatory Commission (FERC) that its new day-ahead energy market schedule will become effective on May 23, 2013.
In late April, FERC issued an order accepting modifications to ISO-NE’s market rules to provide for earlier clearing of the day-ahead energy market and earlier completion of the initial Reserve Adequacy Analysis (RAA) process, which is ISO-NE’s analytical process to ensure adequate resources are committed for reliability purposes. These timeline changes are intended to better coordinate the gas and electricity markets. FERC approved the changes to take effect on or after May 1, 2013, with ISO-NE to provide two weeks’ notice of the actual effective date. (more…)