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New England Generators Seek FERC Clarification On Refund Of Peak Energy Rent Adjustments

February 17,2017

The New England Power Generators Association (NEPGA) has sought clarification, or to the extent necessary rehearing, of a recent FERC order which found that ISO New England's Peak Energy Rent (PER) mechanism, which is a form of capacity market revenue clawback paid to load, is no longer just and reasonable and which ordered immediate changes to the PER strike price, with a refund effective date of September 30, 2016

As noted by, FERC had previously ordered that the PER adjustment shall be terminated effective June 1, 2019, but generators sought in a complaint to terminate the provision prior to such date, in the middle of the current delivery year -- a complaint which FERC granted (see background here)

Retail suppliers have objected to the mid-course and immediate change to the PER adjustment, given that such actions upset the reasonable expectations of load serving entities give the previously adopted changes in the PER adjustment and its phase-out for 2019

The Retail Energy Supply Association had previously noted that, "LSEs, such as RESA members, include the [PER] credits, which ... are known, and use the credits to reduce the overall rates paid for services. LSEs, such as RESA members, often offer fixed price contracts to customers, which can be either customers purchasing services as part of a state retail access program or customers served via the local utility provider of last resort solicitations. The PER credits to load are relied upon in pricing the services in these often long-term arrangements. Thus, in either case, a sudden change in or elimination of the credit will have devastating effects on LSEs with these fixed price contracts serving customers or POLR load pursuant to utility solicitations."

FERC dismissed such concerns in granting the generators' complaint

In seeking clarification of FERC's order establishing refunds, NEPGA said that FERC's January 19 Order suggests that the Commission is deferring calculation of refunds until the just and reasonable PER Strike Price upon which those refunds will be based has been established. The January 19 Order does not set forth how or when those refunds are to be calculated, NEPGA noted

"NEPGA therefore seeks clarification that the Commission will direct the ISO to refund to capacity suppliers the difference between: (i) the PER Adjustment payments charged to capacity suppliers after the refund effective date, and (ii) the PER Adjustment payments that would have been charged to capacity suppliers if the PER Adjustment were calculated using a just and reasonable PER Strike Price. More specifically, NEPGA seeks clarification that the refund methodology will require the ISO to apply the revised, just and reasonable PER Strike Price to the inputs used to calculate the monthly PER payments for invoices issued after the refund effective date (until June 1, 2019, when the PER Adjustment will be removed from the Tariff altogether)," NEPGA said

"Any other refund calculation methodology would be inconsistent with the Commission’s determination in this proceeding to grant relief from unjust and unreasonable PER Adjustment payments, and would deny capacity suppliers the refund protections of FPA Section 206(b)," NEPGA claimed

See NEPGA's comments for more details

Pricing   ISO New England   Capacity Market   ISO-NE   New England   Wholesale   FERC  

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