Page 1585 – RTO Insider

April 15, 2015

Cornucopia of Capacity at MISO Auction, but Famine Could Follow as Coal Plants Retire

By Chris O’Malley

MISO completed its third annual Planning Resource Auction on Tuesday, with prices falling in most zones, while the Illinois zone saw a large jump that will boost revenues for Dynegy’s coal fleet and Exelon’s Clinton nuclear plant.

With 136,359 MW committed, MISO said it has adequate capacity for the 2015/16 planning year beginning June 1 but acknowledged that the 2016/17 period could see capacity shortfalls amid the ongoing retirement of coal-fired generation.

Most of that — 122,965 MW — was generation resources. The remainder consists of 5,938 MW of demand resources, 3,986 MW of behind-the-meter generation and 3,469 MW of external resources.

The auction resulted in a slight increase in Zone 1, big drops in Zones 2-3 and 5-9 and a nine-fold increase in Zone 4:

Zones 1-3 and 5-7, consisting of MISO North/Central but excluding Illinois, cleared at $3.48/MW-day. That compares with $3.29 in Zone 1 and $16.75 in Zones 2-3 and 5-7 in 2014/15.
Zone 4, comprising much of Illinois, cleared at $150/MW-day, compared with $16.75 a year earlier.
Zones 8-9, comprising MISO South, cleared at $3.29/MW-day, compared with $16.44 a year earlier.

“While Dynegy is clearly the largest beneficiary of the MISO capacity auctions results, Exelon also gains via ownership of its Clinton nuclear asset,” UBS analyst Julien Dumoulin-Smith said in a report last week.

Dynegy said in a press release that its 4 GW coal-fired Illinois Power Holdings fleet cleared 1,864 MW at $150/MW-day, including 1,709 MW to cover retail load obligations. Its separate 2,980-MW “coal segment” also cleared 398 MW at that price.

Exelon spokesman Paul Elsberg confirmed that the Clinton plant cleared the auction but said the increase was insufficient to make the plant profitable. Exelon has been pushing legislation that would charge Illinois electricity users a fee to ensure the continued operation of Clinton and two other unprofitable nuclear generators. (See Exelon-Backed Bill Proposes Surcharge to Fund Illinois Nukes.)

“The auction results reduce Clinton’s economic losses, but the plant remains uneconomic and may prematurely shut down absent Illinois legislative changes to outdated policies that do not allow nuclear energy to compete on a level playing field with other zero-carbon resources,” Elsberg said in a statement.

“The wholesale price increases from the auction are small compared to the price spikes that would occur if Clinton is forced out of the market. According to the Illinois Commerce Commission and grid operators, closing the Clinton plant alone would cause wholesale energy prices to rise by $240 million to $340 million annually.”

Clinton would earn $58 million in capacity revenue if it bid and cleared all of its 1,065 MW capacity. Elsberg declined to say how much capacity Clinton cleared.

MISO said market participants lowered offers in most zones as a result of small changes in the balance of resources and load and an increase in Fixed Resource Adequacy Plans (FRAPs).

Zone 4’s $150 clearing price resulted from less self-scheduling and the submission of “more economic, price-sensitive offers,” MISO said.

Although total offers exceeded the zone’s local clearing requirement of 8,852 MW by 2,300 MW, only 838 MW was offered through FRAPs, 9% of the LCR.

In contrast, FRAPs represented more than 90% of LCRs in Zones 1 (Minnesota, North Dakota and western Wisconsin) and 2 (eastern Wisconsin, and Upper Michigan).

Richard Doying, MISO’s executive vice president of operations and corporate services, said the voluntary auction’s “certainty and transparency” is “vital given the challenges we face with potential capacity shortfalls starting in the 2016/17 planning year.”

MISO is facing a reduction in coal-fired capacity due to retirements of aging coal plants squeezed by the Environmental Protection Agency’s tightening Mercury and Air Toxics Standards and low-cost gas-fired generation.

Coal-fired generation in MISO is expected to decrease from 46% of total installed capacity in 2013 to 36% in 2020, according to a whitepaper MISO released in March. EPA’s proposed Clean Power Plan, which would require a 30% reduction in CO₂ emissions from existing generators, is expected to further thin coal fleets.

Late last month MISO underscored the problems that coal plant retirements will cause in its 15-state region. Launching its first in a series of stakeholder workshops during the next 18 months dedicated to improving resource adequacy, MISO said its planning reserve margin requirement — peak demand plus the planning reserve margin — could dip below its target as early as 2016.

As the reserve margin declines, MISO may have to dispatch seldom-used capacity. That could include greater use of load-modifying resources, such as factories that can reduce usage by adjusting production schedules and commercial buildings that reduce air conditioning.

MISO has not called on those resources since 2006.

April 14, 2015

MISO Staff Hold Firm in Support of Entergy Out-of-Cycle Request

By Chris O’Malley

Responding to a new round of objections by the transmission developer and independent power producer sectors, MISO management has reiterated its recommendation that $200 million in proposed out-of-cycle projects by Entergy be approved by the RTO.

“We continue to recommend approval by the board at the April meeting” of the six out-of-cycle projects, Jeffrey Webb, senior director of expansion planning, told the System Planning Committee of the Board of Directors on April 7.

The largest and most controversial of the out-of-cycle projects is $187 million in transmission improvements Entergy said are necessary to support a wave of new industrial development in the Lake Charles, La., region.

The committee took up the issue in March but stopped short of endorsing the Entergy projects despite a request to do so by Entergy Louisiana CEO Phillip May. (See MISO Board Questions Execs on Entergy Out-of-Cycle Requests.)

The full board has been invited to take part when the matter is discussed again by the committee on April 21. That is two days before the April 23 board meeting, when a final vote is expected.

MISO staff provided point-by-point rebuttals to written objections that dissenting sectors recently filed with the Planning Advisory Committee. The objections repeated complaints made earlier, challenging the certainty of Entergy’s load projections and questioning whether the projects were larger than needed to meet base reliability needs. They also alleged MISO failed to follow its Business Practices Manual, limiting opportunity for thorough stakeholder review.

In regard to the assertion that Entergy hasn’t provided sufficient evidence of underlying load projections, MISO staff insisted that nothing in the Tariff requires a load-serving entity to provide “verification and additional supporting documentation” for load projections.

MISO said Entergy’s growth projections are consistent with “widely publicized” projections of significant new industrial developments.

MISO’s Legal Obligations

System Planning Committee members inquired about MISO’s legal obligations in vetting out-of-cycle project requests. General Counsel Steve Kozey said MISO generally must make a good faith effort, but it is neither MISO’s nor the board’s role to litigate to a third party’s satisfaction.

Committee member Eugene Zeltmann pointed to comments filed by the Transmission Developer sector that suggested some transmission equipment included in the current out-of-cycle request was also part of a 2014 request, suggesting that it may be double-counted.

MISO staff replied that MISO staff did not double count that equipment and that it was distinct from earlier out-of-cycle projects.

Committee Chairman Michael Evans asked Webb to respond to concerns by some stakeholders that MISO did not provide adequate time for stakeholders to comment on the out-of-cycle requests.

Webb said an out-of-cycle request by its nature is necessarily “a compressed” time period but that staff abided by procedures.

Stakeholders Split

A stakeholder opposing the Entergy’s out-of-cycle requests was equally resolute.

“We continue to disagree with MISO staff,” said George Dawe of Duke-American Transmission Co., who represents the Competitive Transmission Developer sector.

He added that the process followed by the RTO “has called into question MISO’s credibility.”

But Lin Franks, senior strategist at Indianapolis Power & Light, countered that what Entergy has proposed is indeed a reliability project and that she doubted that board members wanted to be accused of causing delays leading to reliability problems.

“This is a reliability issue and not an economic one,” she said.

April 14, 2015

FERC Considering NIPSCO Proposals on PJM-MISO Seam

On Feb. 12, the Federal Energy Regulatory Commission asked for comments on the pros and cons of six potential rule changes intended to push PJM and MISO to create cross-border transmission projects (EL13-88). The changes were proposed by Northern Indiana Public Service Co. (NIPSCO) in December 2013.

The commission asked commenters to opine on the costs and technical feasibility of implementing requirements that MISO and PJM:

Run their cross-border transmission planning process concurrently with the RTOs’ regional transmission planning cycles, rather than after them.
Develop a single model that uses the same assumptions in the cross-border transmission planning process. Until the joint model is developed, the RTOs would be required to ensure consistency between their planning analyses and apply their reliability criteria and modeling assumptions consistently.
Use a common set of criteria in evaluating cross-border market efficiency projects.
Consider all known benefits, including avoidance of future market-to-market (M2M) payments made to reallocate short-term transmission capacity in real-time operations, when evaluating cross-border market efficiency projects.
Establish a process for joint planning and cost allocation of lower-voltage and lower-cost cross-border upgrades.
Amend their Joint Operating Agreement to improve the processes for new generator interconnections and generation retirements.

The commission also asked for comments on whether persistent M2M payments indicate the need for new transmission and on NIPSCO’s and others’ estimates of M2M payments. FERC also asked for examples of projects considered but not developed under the cross-border transmission planning process and the reasons why they were not completed.

April 14, 2015June 15, 2023

ISO-NE Proposes New Capacity Zones for FCA 10

By William Opalka

ISO-NE has proposed two new capacity zones for Forward Capacity Auction 10 next year (ER15-1462).

The petition filed with the Federal Energy Regulatory Commission on April 6 reflects where the RTO expects transmission constraints to be most severe in the 2019-2020 delivery year. ISO-NE requested that FERC approve the proposed zones by May 29, before the June 1 deadline for qualifying existing capacity and submission of de-list bids.

One new potential zone is Southeastern New England (SENE), a combination of the existing Northeastern Massachusetts/Boston zone with Southeastern Massachusetts/Rhode Island. The other new zone, Northern New England (NNE), is a combination of the existing Maine, New Hampshire and Vermont load zones.

ISO-NE said these are “potential” new capacity zones. “At this phase of the zonal development process, the appropriate boundaries are simply being defined so that if these capacity zones are needed, they can be modeled in the auction,” said Alan McBride, director of transmission strategy and services.

No changes are proposed with the current West-Central Massachusetts or Connecticut zones.

SENE is proposed as an import-constrained capacity zone, while NNE is proposed to be export-constrained.

For FCA 9 the zones were: NEMA/Boston, SEMA/RI, Connecticut and Rest-of-Pool, which includes West-Central Massachusetts, Vermont, Maine and New Hampshire.

The RTO conducts an annual assessment of transmission transfer capability to identify system weaknesses as part of its New England Regional System Plan. Modeling showed the effects of recent and pending plant closures, including the Vermont Yankee nuclear plant last year and the 2017 planned mothballing of the 1,535-MW Brayton Point generation station in Massachusetts.

Transmission upgrades planned for eastern Massachusetts will allow power to move more freely within the proposed zone, but constraints were found where the new, larger zone connects to the others. “These constraints are such that new, qualified resources located in either zone would be helpful in addressing the overall constraints. That is, new resources in SEMA/RI would be helpful in unloading the constraints,” according to the filing.

In FCA 9, SEMA/RI did not have enough capacity resources bid into the auction. (See Prices up One-Third in ISO-NE Capacity Auction.)

In NNE, power flow studies indicate an existing transmission interface is located along the southern borders of New Hampshire and Vermont and the northern border of Massachusetts. Without Vermont Yankee and Brayton Point, “the North-South flows are now forecast to be more concentrated along the lines connecting southeastern New Hampshire with eastern Massachusetts,” the RTO said.

The Connecticut zone was unchanged due to new resources that entered the zone in FCA 9. (See Exelon, LS Power Join CPV in Adding New England Capacity.)

April 14, 2015

Appeals Court Ratifies New York Capacity Zone

By William Opalka

A federal appeals court has rejected challenges to the Lower Hudson Valley Capacity Zone in New York (14-1786).

Utility companies and the New York Public Service Commission had appealed an August 2013 order by the Federal Energy Regulatory Commission creating the zone, saying it would lead to a windfall for power generators. (See New Yorkers Upset over NYISO Capacity Zone.)

A three-judge panel of the U.S. Second Circuit Court of Appeals ruled in favor of FERC on April 2 in a 61-page opinion.

“We conclude that FERC articulated sound economic principles supporting the creation of the Lower Hudson Valley Zone and satisfactorily explained how those principles justified its conclusion,” the court said.

The options for the losing parties are to ask for an en banc rehearing before the entire court or to directly petition the U.S. Supreme Court.

“We are disappointed, as the capacity zone has unfairly and artificially raised energy prices for homes and businesses in our service territory. We are reviewing the court’s decision, however our legal options are very limited as there are no reasonable or promising actions available to us,” said Central Hudson Gas & Electric spokesman John Maserjian.

Central Hudson says monthly bills have increased by 6% for residential customers and 10% for large industrials.

NYISO, in response to previous FERC orders, created the zone in the counties north of New York City in August 2013. The lawsuit challenging was filed after additional charges in the zone went into effect May 1, 2014.

NYISO and FERC maintained that generation resources were needed because price signals were insufficient to encourage power plant developers to site facilities there and that transmission constraints threatened reliability.

“We are not persuaded that there is anything unreasonable in FERC’s conclusion that higher prices were necessary to ensure reliability by generating accurate price signals in the long run,” the court wrote.

FERC said the congestion issue has been discussed since 2006 without a solution. Consumers have been shielded from higher prices since that time, it noted.

The companies and the PSC had argued that proposed transmission projects would relieve the constraints. (See Tx Plan to Open NY Choke Points Without New ROWs.) Another project would create a corridor from the Canadian border to New York City, making renewable energy generation from upstate more readily available.

The court sided with FERC’s contention that the projects have not yet been certified and that FERC “rationally explained its decision to act according to existing market conditions rather than speculative future conditions.”

April 14, 2015

Stakeholders Skeptical of PJM Proposal for ‘Historic’ Capacity Transfer Rights

By Suzanne Herel

VALLEY FORGE, Pa. — Stakeholders last week continued their debate over PJM’s proposal to create “historic” capacity transfer rights for some load-serving entities, with the Independent Market Monitor cautioning the Market Implementation Committee that the new Tariff language would constitute a “fundamental change.”

The proposal resulted from a problem statement approved by the MIC in December to review modeling practices that the RTO said may be shortchanging loads with transmission agreements that pre-date the RTO’s capacity market.

The changes would allow market participants to use generation resources outside of their locational deliverability areas (LDA) to meet their internal resource requirements if that external capacity agreement was in place before June 1, 2007, when PJM implemented its Reliability Pricing Model. Previously, there was no locational differentiation made among capacity resources.

The proposal would address the situation faced by the Illinois Municipal Electric Agency, which last year won a federal waiver to allow it to use capacity resources outside of the Commonwealth Edison LDA to meet its internal resource requirement in serving its Naperville, Ill., load.

The Federal Energy Regulatory Commission granted IMEA a waiver for the 2017/18 delivery year after the ComEd LDA last year was modeled for the first time with a separate variable resource requirement curve (ER14-1681).

In January, however, the commission rejected IMEA’s request to continue use of the waiver for future delivery years, saying it had enough time to prepare to meet its internal resource requirement (ER14-1681-001). The commission also rejected a specific waiver request for the 2018/2019 delivery year (ER15-834). (See Illinois Regulators, IMM Line Up Against IMEA Capacity Waiver Request.)

PJM estimates 1,037 MW of historic external resources would qualify under its proposal: 122 MW in the DOM zone, 533 in COMED, 261 in AEP and 121 in DAY.

“This isn’t a piddling amount of megawatts,” GT Power Group’s Dave Pratzon said.

One stakeholder, who declined to be identified by name, said the rule change would be fair if it protects the property rights of load-serving entities that had funded transmission upgrades that increased the capacity emergency transfer limit (CETL) into their region.

But he said it may be “inequitable” if it also covers those whose only claim is a firm transmission reservation that predates RPM. Others observed the change would give such LSEs a preference over their neighbors for available transmission capacity.

Pratzon said he was concerned that PJM would be unable to set a “bright line” to distinguish between entities that have legitimate claims from those that don’t.

“It does seem to be creating a preferential set of rights for a certain group of people. I wouldn’t want us to set something up where in effect we’re giving people a second bite of the apple for certain decisions they made in RPM that they wish they hadn’t made,” he said. “I want to make sure we’re not putting ourselves on a slippery slope to other requests for special treatment.”

Mark Hanson, an economic analyst for the Illinois Commerce Commission, said the proposal goes too far. “It seems like maybe [entities such as IMEA have] gone from being too much at risk to being immunized from risk,” he said.

Market Monitor Joe Bowring said the change “represents a very substantial, fundamental change to the way [capacity transfer rights] are allocated within LDAs.”

Stu Bresler, PJM vice president of market operations, said the proposal would apply to a “well-defined subset” of LSEs. “It could never grow. We’d never have a new one,” he said.

Bresler said PJM will provide additional information on its proposal at next month’s MIC meeting.

April 14, 2015

Union: Void ISO-NE Capacity Auction Results

By William Opalka

The union representing workers at the Brayton Point Power Station say the plant’s pending closure caused massive price spikes in recent capacity auctions and that the results of the ISO-NE Forward Capacity Auction 9 should be voided (EL15-1137).

Utility Workers Union of America Local 464 filed a protest Monday with the Federal Energy Regulatory Commission seeking to cancel the auction that was held in February for the 2018-2019 capacity commitment period. Comments on the ninth auction were due Monday. (See ISO-NE Files Capacity Auction Results; Comments due April 13.)

They charge that the plant’s former owner, Energy Capital Partners, removed the 1,510-MW plant in Somerset, Mass., from FCA 8 and FCA 9 to inflate prices offered for other generation plants that it owned. ECP in 2013 said the plant would close in 2017.

“Energy Capital Partners intentionally raised the prices to be paid by purchasers of capacity market-wide in the FCA 8 auction by approximately $1.6 billion to $2.4 billion — an approximately 200% increase over prices in the prior annual capacity auction — and increased market-wide capacity prices by an additional approximately $1 billion in the FCA9 auction,” the protest states.

Results at FCA 9 came in at just about $4 billion, $1 billion higher than FCA 8 from February 2014. FCA 8 saw prices triple, to just over $3 billion from the previous year’s results of about $1 billion.

UWUA says the “illegal” actions by ECP were a violation of the ISO-NE Tariff. Retirements of generation plants that result in higher prices and profits for the owners’ other plants are only allowed if the closed plant was uneconomic on its own. Brayton Point’s sale to Dynegy was announced in 2014 as part of multi-state acquisition of four other plants totaling 1,902 MW. (See Dynegy Becomes New England Player Overnight.)

Dynegy reiterated its intention to close Brayton Point immediately after the sale was announced. The union cited a presentation to investors made last summer by Dynegy that said Brayton Point would have operating profits of $105 million in 2015.

The union made a similar protest a year ago when FERC began its review of FCA 8. The results became effective as an operation of law when the commission was deadlocked 2-2. (See FERC Commissioners at Odds over ISO-NE Capacity Auction.)

An amended complaint filed by the union in February did not prompt any further commission action (ER14-1409).

FERC last month approved the transfer, saying it had not found credible evidence of the exercise of market power and had already rejected the union’s claims. (See Dynegy Wins FERC OK for $6.25B Duke, Energy Capital Partners Generation Deals.)

April 14, 2015June 15, 2023

Federal Briefs

The U.S. Supreme Court will consider the Federal Energy Regulatory Commission’s appeal of a ruling voiding its authority over demand response in its conference April 24. At least four of the nine justices must agree to hear the case (14-840) for it to proceed.

FERC filed a petition for a writ of certiorari in January, contending that the D.C. Circuit Court of Appeals erred in its 2014 ruling (Electric Power Supply Association v. Federal Energy Regulatory Commission) that FERC lacked authority under the Federal Power Act to regulate energy market payments to DR providers.

The ruling, which voided FERC Order 745, was limited to the energy markets. But some stakeholders say the ruling also invalidates the commission’s regulation of DR in capacity markets. On March 31, FERC rejected as premature PJM’s proposed contingency plan for including demand response in its May Base Residual Auctions in the event the D.C. Circuit’s ruling is allowed to stand. (See FERC: PJM Demand Response Stop-gap Measure ‘Premature’.)

More: 14-840

Wisconsin Energy Takeover of Integrys Gets OK from FERC

The Federal Energy Regulatory Commission on April 7 approved Wisconsin Energy Corp.’s $9.1 billion acquisition of Integrys Energy Group.

Wisconsin Energy is the parent of electric utility We Energies. Integrys owns the Green Bay-based electric-natural gas utility Wisconsin Public Service Corp., along with Peoples Gas.

FERC dismissed concerns raised by a consortium of municipal electric utilities that contend that the merged companies would have undue influence over American Transmission Co., noting the new Wisconsin-based utility giant plans to limit voting rights in ATC.

The deal still requires the approval of four states: Wisconsin, Michigan, Minnesota and Illinois.

More: Milwaukee Journal Sentinel

Feds Consider Rules that Would Protect Bats, Hobble Wind Farms

The U.S. Fish and Wildlife Service is studying whether it needs to modify some rules protecting the Northern long-eared bat in a move that could affect wind farms. The agency announced that it would list the species as threatened.

The designation could result in regulations increasing the wind speed at which turbines are allowed to start producing energy on the theory that fewer bats will be flying when wind speeds are high. The agency is taking comments on the proposed rule changes and is expected to finalize the rules by the end of the year.

More: Midwest Energy News

NRC Approves Use of Hotter Fuel Rods at FirstEnergy’s Perry Plant

A new type of fuel rod that has thinner metal walls encasing enriched uranium has been approved for use at FirstEnergy’s Perry nuclear generating station. The Nuclear Regulatory Commission has approved the use of the fuel rods, which should result in an increase of energy production while allowing use of less enriched uranium.

FirstEnergy is replacing about a third of the 748 fuel rod assemblies during the current refueling outage. Opponents to the plan say that the thinner fuel rod walls could present a problem moving the fuel rods in the decades to come after the rods are exhausted. NRC is currently testing the rods for long-term storage issues.

More: The Cleveland Plain Dealer

Group Says RGGI Could be Way to Meet Emissions Mandates

A New England nonprofit energy policy group has released a report that says joining the Regional Greenhouse Gas Initiative could provide a solution for Virginia to meet upcoming federal emission reduction mandates. The Acadia Center said that by joining the nine states already participating in RGGI, Virginia could have a “plug-and-play” way of satisfying the requirements of the Environmental Protection Agency’s Clean Power Plan.

“Virginia could build on this existing foundation by adopting the RGGI model rule, which would allow the commonwealth to participate in the market while preserving authority and enforcement at the state level,” according to the report.

“RGGI has been successful in the states that currently participate. It is helping to reduce carbon emissions, while offering a demonstrated record of advancing economic development, and saving consumers money on energy,” said Daniel L. Sosland, Acadia Center president.

It isn’t clear how much support such a move would have in Virginia. A bill calling for Virginia to join the RGGI never got past committee earlier this year in Virginia’s Republican-controlled legislature.

Nine states currently participate in the RGGI: New York, Maryland, Massachusetts, Maine, Delaware, New Hampshire, Rhode Island, Connecticut and Vermont. New Jersey was a member, but Gov. Chris Christie pulled the state out two years ago.

More: Acadia Center

PPL Gets Approval for Transfer of Nuclear Asset to Talen

The Nuclear Regulatory Commission has approved the transfer of PPL’s Susquehanna Steam Electric Station nuclear plant operating licenses to a new merchant generation company, Talen Energy. PPL is spinning off most of its generation, which will be combined with assets owned by Riverstone Holdings, to form Talen. The new company will be an unregulated, competitive generation supplier. Allegheny Electric Coop. has a minority ownership share of the two-unit plant.

The Federal Energy Regulatory Commission and the state Public Utility Commission have approved various filings relating to the Talen spinoff. Final approval is still needed from the U.S. Department of Justice under the Hart-Scott-Rodino Antitrust Improvements act. PPL still says it expects to close the transaction by the end of June.

More: PPL

Compiled by Ted Caddell

April 14, 2015June 15, 2023

UTC Trader: Firm was Ruined by ‘Unfair’ FERC Prosecution

By Ted Caddell

A Florida power trader under investigation for market manipulation over up-to-congestion trades says the transactions were lawful and that an “unfair” investigation by the Federal Energy Regulatory Commission has ruined his business. He asked for a review of his case by the full commission (IN15-5).

According to FERC’s Office of Enforcement, Stephen Tsingas and his firm, City Power Marketing, made $1.2 million in July 2010 through “fraudulent” and risk-free round-trip UTC trades placed solely to collect line-loss rebates. The allegation is almost identical to what FERC made in the pending case against Rich and Kevin Gates and their Powhatan Energy Fund.

Tsingas’ April 7 filing is in response to the demand by FERC Enforcement that it show why he and City Power shouldn’t return the profits and pay $15 million in fines.

Tsingas’ defense is similar to that of the Gates brothers: He argues that when the trades were undertaken there was no direct prohibition of them. When PJM’s Independent Market Monitor raised objections to the transactions, Tsingas says, he and City Power discontinued them.

Tsingas also denied an allegation that he concealed documents during the investigation. Tsingas and his attorneys say a series of instant messages that FERC purports to show collusion are taken out of context.

Tsingas’ legal team — which includes Todd Mullins, a former branch chief in the Office of Enforcement’s Division of Investigations — says the investigation effectively put City Power out of business.

“Staff’s investigation of this handful of trades has destroyed CPM,” they wrote. “Once a company with eight employees and gross revenues exceeding $8 million annually, CPM now only has one employee — Mr. Tsingas.

“The stress of an investigation that has lasted almost five years, along with the enormous expenses incurred as a result, have ruined the company even before any tribunal — judicial or administrative — has had the opportunity to determine the merits of staff’s accusations.”

The crux of the defense is that to be prosecuted for manipulation, there must be a showing of “fraud or deceit.” Tsingas claims that when the trades were undertaken there had not yet been a determination that the trades were anything but legal transactions that may have taken advantage of a market weakness.

“There was no false information injected into the marketplace,” Tsingas’ lawyers wrote. “There was no artificial price formation. There was no violation of the [commission’s] Anti-Manipulation Rule. CPM traders were simply responding to the predictable incentives created by the market.

“The commission cannot and should not turn into a violation every case in which [a] participant trades in a manner consistent with the rules as then written and involving no falsity just because the trader may have had a motive for the trade that was not what the commission … had in mind,” they argued.

April 14, 2015

FERC Requests More Info on NYISO Voltage Compensation Change

By William Opalka

The Federal Energy Regulatory Commission says a filing made by NYISO to calculate payments for voltage support services (VSS) is deficient (ER15-1042).

The commission Friday requested more information before it can consider amendments to NYISO’s Market Administration and Control Area Services Tariff.

NYISO proposed paying VSS providers $2,592/MVAr for both leading and lagging capability, with annual increases based on the consumer price index (CPI). MVAr is the unit of measurement for reactive power capability. (See NYISO Rejects Protests on Voltage Compensation.)

FERC asked NYISO for more explanation of the methodology and assumptions used to determine the proposed rate. It also ordered the ISO to provide documentation demonstrating that the proposed amendments maintain the approximate total dollar value of the current VSS program in the near term.

The Independent Power Producers of New York and Dynegy Marketing and Trade filed separate protests asking FERC to order the ISO to increase the compensation rate to reflect inflation since the existing rate was set in 2002.