Electricity Markets

FERC Chairman details big-ticket items teed up for action by Commission

Neil Chatterjee, Chairman of the Federal Energy Regulatory Commission, on Feb. 11 said the agency has “a pretty full plate” this year with several “big-ticket items” teed up for action in 2020 including reform of the Public Utility Regulatory Policies Act (PURPA), cyber security and further steps related to electric transmission policy.

He made his comments during a Q&A session with reporters at the National Association of Regulatory Utility Commissioners' Winter Policy Summit in Washington, D.C.

“We’ve got a number of big-ticket items” that are pending at FERC, Chatterjee said in response to a reporter’s question.

Without making predictions on timing, the FERC Chairman specifically mentioned the PURPA Notice of Proposed Rulemaking (NOPR) proceeding. The next step in the regulatory process would be FERC’s issuance of a final rule.

In December, the American Public Power Association and the Large Public Power Council said in response to the NOPR that the development of competitive power markets and the dramatic growth of a renewable power sector now largely independent of the boost once provided by PURPA justify significant changes in PURPA regulations.

Meanwhile, Chatterjee said that he would like to move forward with a rule that would remove barriers to participation by aggregated distributed energy resources in markets. Such a rule “could be similarly as impactful as what we did” in FERC’s Order No. 841, he said.

Order No. 841 removed barriers to the participation of electric storage resources in the capacity, energy and ancillary services markets operated by regional transmission organizations and independent system operators.

Last July, the American Public Power Association joined other power industry groups in filing a petition for review of Order No. 841 with the U.S. Court of Appeals for the DC Circuit, followed by the filing of an initial brief with the Court in October. The Association and others argued in the brief that the relevant state or local regulator should be allowed to broadly prohibit distributed electric storage resources from participating in wholesale markets, which is not permitted in the Order.  Similarly, the Association has stated to FERC that any order on distributed energy resource participation in the wholesale markets should allow the relevant electric retail regulatory authority to determine if distributed energy resources located behind the meter or on the distribution system may participate in RTO/ISO DER aggregation programs.

Cybersecurity “will continue to be a focus of the Commission,” Chatterjee went on to tell reporters. FERC has scheduled a technical conference for late June that will focus on reliability-related issues for the bulk power system, including cybersecurity.

Also pending at FERC is the Commission’s electric transmission incentives notice of inquiry (NOI) proceeding (PL19-3). Along with this proceeding, Chatterjee said that “We’ve still got to come to a resolution on rehearing on our order on base ROEs.”

He said that “addressing transmission policy and getting it right is a focus of mine and will be something that the Commission will tackle this year.”

FERC last year issued two NOIs, the first in which it sought comments on possible changes to its electric transmission incentives policy, and one in which FERC said it was examining whether, and if so how, to revise its policies on determining the allowed return on equity used in setting rates charged by utilities it regulates (Docket Nos. PL19-3, PL19-4).

In August, the Association joined more than 40 entities in a letter sent to FERC commissioners that said that  against the backdrop of increasing transmission costs, FERC should strive to ensure that those costs remain at a reasonable level for consumers as it weighs possible changes to its transmission incentives and return on equity ROE policies.

With respect to the Commission’s resilience docket, Chatterjee said that defining resilience and how to address it “is one that I want a consensus outcome on and I want to work with my colleagues to achieve that consensus outcome.” Resilience is “still a priority, it’s still a focus,” he said.

FERC quorum

Meanwhile, a reporter asked Chatterjee if he had any concerns about the prospect of a loss of a quorum at FERC.

Commissioner Bernard McNamee recently said that he will not seek another term at the Commission but said he would stay longer at the agency if needed. His current term expires at the end of June.

In November, the Senate Energy and Natural Resources Committee approved the nomination of James Danly to be a member of the Federal Energy Regulatory Commission by a vote of 12-8. Danly is currently the general counsel at FERC.

Danly, a Republican, would serve the remainder of the term left by the passing of FERC Chairman Kevin McIntyre in early 2019. Because his nomination was not voted upon by the full Senate last year, the White House was required to resubmit Danly’s nomination and did so on Feb.12.

Chatterjee said that McNamee has committed to not leaving FERC without a quorum. “I think he is still enjoying the work at the Commission,” he said, adding that he thinks McNamee wants to weigh in on the long list of items FERC is expected to act on this year.

“I am not anticipating a loss of quorum at any point,” Chatterjee went on to say. He also said he is optimistic that Danly’s “paperwork issues will be resolved in short order and hopeful for the Senate confirmation process.”

PJM MOPR order

Several reporters asked the FERC Chairman about FERC’s December order in which it directed the PJM Interconnection to implement a sweeping expansion of its current minimum offer price rule (MOPR).

“This is a really complicated challenge that we had to face,” Chatterjee said with respect to the PJM decision. “We’ve had numerous comments filed on rehearing – some very critical of the order, some very supportive of the order.”

The American Public Power Association, American Municipal Power and the Public Power Association of New Jersey said in seeking rehearing of the decision that FERC’s PJM MOPR order will expose public power utilities and their customers to the risk of having to pay twice for new capacity resources, without providing them any effective way to mitigate that risk.

Lawmakers urge PJM to delay auctions

In a Feb. 6 letter to Manu Asthana, President and CEO of PJM, a large group of Senators and Representatives urged PJM to delay PJM’s annual capacity auctions to 2021.

“Like you, we are extremely concerned by the Federal Energy Regulatory Commission (FERC)’s unprecedented expansion of the Minimum Offer Price Rule (MOPR) and how this rash decision will impact PJM’s Capacity Market,” the lawmakers wrote.

“Specifically, we believe this decision will have crippling impacts on your consumers and our constituents, including dramatic increases in rates and threatening a burgeoning clean energy market. Giving states in your network a year to understand how this decision will impact them will help mitigate any disruption to the capacity market. It will also give FERC time to respond to your recent request that they reconsider parts of their decision,” they wrote.