FERC Won’t Revisit Cost-Based Energy Offer Cap Ruling
FERC last week denied a request by PJM’s Independent Market Monitor to clarify or rehear a March order in which the commission found fault with the RTO’s use of the cost-based energy offer cap as the sole measure of short-run marginal cost in calculating capacity market caps (EL14-94, ER16-1291).
At the same time, it accepted PJM’s compliance filing in response to the March ruling. (See FERC Rejects PJM’s Method for Capacity Offer Caps.)
In its request, Monitoring Analytics generally supported FERC’s order but called flawed the use of market-based offers as the measure of short-run marginal costs when they are higher than cost-based offers.
“The Market Monitor contends that the extent to which a market-based offer exceeds a cost-based offer constitutes a markup, and markup is not part of a competitive offer,” the commission said.
“We continue to find that, with limited exceptions, PJM should use, for the purpose of calculating a unit-specific capacity market offer cap, a resource’s non-zero market-based offer to reflect its marginal costs,” FERC ruled. “Simply because a market-based offer exceeds a cost-based offer does not necessarily establish that the market-based offer fails to reflect a resource’s marginal costs.”
The March ruling stemmed from a 2014 FirstEnergy petition that said PJM’s Market Monitor was violating the Tariff by calculating marginal costs using the lower of the market-based offer and cost-based offer.
FERC Denies Rehearing on Order Requiring DR in Capacity Auctions
FERC denied Talen Energy’s request for rehearing of a July 22 order that required PJM to include demand response in its transition auctions for Capacity Performance (ER15-623, EL15-80).
That ruling caused the RTO to delay the transition auctions. (See FERC Orders PJM to Include DR, EE in Transition Auctions.)
The commission also accepted a compliance filing by PJM in response to the July 22 order.
Talen had sought to apply a ruling by the D.C. Circuit Court of Appeals that voided FERC’s jurisdiction over DR in energy markets. However, the Supreme Court later reversed that ruling. (See Supreme Court Upholds FERC Jurisdiction over DR.)
“Accordingly, we dismiss Talen’s rehearing request as moot,” FERC said.
FERC also dismissed an objection by the Advanced Energy Management Alliance Coalition regarding the method PJM proposed to measure and verify DR participation in the transition auctions, saying it was an unrelated issue.
Commissioner Tony Clark concurred in a separate statement.
“I write separately to note my policy and procedural disagreements with the underlying order as fully explained in my separate statement of July 22, 2015,” he said.
Clark dissented from that order, saying it was improper procedurally because the commission had previously approved “unambiguous” Tariff language barring DR and energy efficiency from the auctions.
— Suzanne Herel