We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
On June 5, 2018, FERC granted the PJM Interconnection, L.L.C.
("PJM") independent market monitor's
("IMM") request to compel the American Electric Power
Services Corporation ("AEP") to provide certain
information related to cost-based offers to the IMM. The IMM stated
in its petition that it needed the information to determine whether
AEP's total costs of variable operations and maintenance
("VOM") included in its capacity offer raise any market
power concerns in the PJM Energy Market. FERC determined that
because the IMM had broad authority under PJM's Open Access
Transmission Tariff ("Tariff") to request such
information, it would grant the IMM's petition.
Attachment M to PJM's Tariff sets forth the IMM's
authority to request certain information from electric utilities.
It provides that the IMM can "review all proposed sell offers
for a determination of whether they raise market power
concerns" and "determine whether the level of offer or
cost inputs raise market power concerns." The IMM formally
requested data from AEP on October 28, 2016. Specifically, the IMM
requested the total costs of VOM used in the development of the AEP
Ceredo units' cost-based offers for September 1, 2016,
including identification of costs by category. The IMM stated in
its petition that a competitive offer level is the marginal cost of
operating a generating unit and offers that exceed that level raise
market power concerns. On November 22, 2016, the IMM filed the
petition with FERC requesting an order directing AEP to respond
with the requested data.
On December 9, 2016, AEP filed an answer, comments, and a motion
to dismiss the IMM's petition to compel it to submit
information on its VOM for the Ceredo unit. On August 31, 2017,
FERC issued a letter order, directing the IMM to: (1) explain
whether and why the requested data is necessary to ensure correct
application of PJM's current Cost Development Guidelines, or
otherwise probe the IMM's market power concerns with respect to
the Ceredo units' September 1, 2016 offer; (2) clarify whether
any of the units at issue were mitigated on September 1, 2016; and
(3) state whether the Hourly Offers Order (FERC proceeding that
required PJM to revise its Tariff provisions governing market
participants' Fuel Cost Policies) has any impact on the
IMM's need for the requested data. On September 29, 2017, the
IMM supplemented its petition to provide responses to the three
questions.
In response to FERC's first question, the IMM stated that it
cannot carry out its responsibility to "validate the VOM costs
used by AEP in the calculation of its cost-based offers" if
such information is not provided, and its request is
"routine." In response to the second question, the IMM
argued that "AEP performs VOM calculations yearly, and those
calculations are "issues for all 2016 VOM and therefore issues
with cost-based offers on all days of the year." In answering
FERC's third question of whether the Hourly Offers proceeding
alters the IMM's need for the information, the IMM responded
that "the Hourly Offers Order neither affected its need for
data nor altered the IMM's responsibilities under Attachment M
to review market behavior."
In the order granting the IMM's request, FERC concluded that
the IMM's request for cost information was within the scope of
its authority under Attachment M to the PJM Tariff. FERC stated
that under Attachment M, the IMM is allowed to "petition the
Commission for an order that the information is necessary and
direct[] its production." In addition, FERC found that
Attachment M stipulates that the IMM "may review upon its own
initiative at any time, the incremental costs...of a generating
unit in order to ensure that the Market Seller has correctly
applied the Cost Development Guidelines and that the level of the
Offer Price Cap is otherwise acceptable." FERC also reasoned
that because the IMM retains its ongoing authority and
responsibility set forth in Attachment M, it could request from AEP
the total costs of VOM used in the Ceredo units' cost-based
offer for September 1, 2016. FERC directed AEP to provide this
information to the IMM within 15 days from the date of its June 5,
2018 order.
FERC's order addressing the IMM's request can be found
here.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
This is the inaugural issue of WilmerHale's 10-in-10 Hot Topics in Energy Series. Over the next 10 weeks, our attorneys will share insights on current and emerging issues affecting the US energy sector.
This quarterly newsletter provides updates on litigation, regulatory, legislative, and other notable developments involving chemicals of concern to business. Our present focus is on substances
On Monday, January 28, 2019, the Department of the Treasury's Office of Foreign Assets Control (OFAC) announced sanctions against Petróleos de Venezuela S.A.
Emerging Trends Series: Offshore Wind (Video)
