On December 21, 2017, FERC opened investigations into the pricing of fast-start resources in three regional power markets: the New York Independent System Operator, Inc. ("NYISO"), PJM Interconnection, L.L.C. ("PJM"), and Southwest Power Pool, Inc. ("SPP").
Fast-start resources are often committed in real-time, very close to when needed because they are, by definition, able to start quickly. However, without a fast-start pricing methodology, some fast-start resources are ineligible to set prices, often due to inflexible operating limits. In order to address this policy concern, FERC issued a Notice of Proposed Rulemaking ("NOPR") in December 2016 (see December 19, 2016 edition of the WER). In the NOPR, FERC preliminarily found that the fast-start pricing practices, or lack thereof, of some existing Regional Transmission Organizations ("RTOs") and Independent System Operators ("ISOs"), specifically NYISO, PJM, and SPP, were potentially yielding unjust and unreasonable rates. As a result, FERC proposed to establish certain requirements for pricing fast-start resources and the subsequent adoption of these requirements by each RTO/ISO. Nevertheless, based on the more than thirty comments received by the Commission, FERC proposed on December 21, 2017 during the Commission open meeting to withdraw the NOPR and terminate the rulemaking proceeding. Upon receiving affirmative votes from all five commissioners, the NOPR was withdrawn.
FERC instead, however, issued three separate orders, pursuant to section 206 of the Federal Power Act, which initiated investigations into the fast-start pricing practices of three specific RTOs/ISOs–NYISO, PJM, and SPP. In particular, each order examines whether each RTO and ISO should revise its tariff to include: (1) fast-start resources' commitment costs in fast-start pricing; and (2) the relaxation of fast-start resources' economic minimum operating limits by up to 100 percent for purposes of setting prices. In the Commission open meeting, Commissioner Cheryl LaFleur remarked that the remaining RTOs/ISOs are not left "off the hook." Instead, as Commissioner LaFleur noted, ISO New England Inc. and the Midcontinent Independent System Operator, Inc. have both implemented amenable fast-start pricing practices in the eyes of the Commission. Additionally, Commissioner LaFleur stated that the Commission was persuaded by what the California Independent System Operator Corporation ("CAISO") has filed in its docket relative to fast-start pricing practices and that a reform in CAISO would provide "limited benefit for them relative to their other priorities that are going on right now." Thus, the focus remains on NYISO, PJM, and SPP for the time being.
Interventions are due within 21 days of the December 21, 2017 order. Interested parties may file initial briefs no later than 45 days after publication in the Federal Register, with reply briefs due 30 days thereafter.
For a copy of the FERC press release regarding these investigations, and the investigation orders themselves, see here.
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