Dissenting FERC Commissioners Blast Allowing Demands Of Retiring Exelon Unit To Set Market Policy
FERC issued an order regarding a cost-of-service agreement sought by Exelon Generation Company, LLC for Mystic 8 and 9, win which FERC accepted the filing, suspended it for a nominal period, to become effective June 1, 2022, subject to refund and subject to the outcome of the ongoing proceeding in Docket No. EL18-182-000, concerning fuel security in ISO New England, and established expedited hearing procedures.
Notably, the agreement itself does not address cost allocation for the non-market payments, and FERC expressly declined to consider cost allocation as part of the hearing process, leaving such matter to the broader fuel security proceeding in EL18-182
In a dissent, Commissioner Robert Powelson raised various objections to FERC's decision. Among other things, Powelson wrote in his dissent that, "I am troubled that the majority and ISO New England appear beholden to the timelines demanded by Exelon. While the majority is willing to waive certain tariff provisions and allow Exelon to defer its retirement decision until January 2019, it is troubling that they are unwilling to question Exelon’s December 21, 2018 ultimatum. Although the Agreement will be set for modified settlement and hearing procedures, there are decisions made in today’s order that reflect a striking level of confidence given the divisive nature of the issues, limited record, and short timeframe in which stakeholders have been on notice."
Powelson wrote in his dissent that, "Never has the Commission more clearly let one stakeholder – a single market participant – fundamentally alter the course of wholesale electricity markets as it has both in today’s order and the Waiver Order. In what has amounted to an unprecedented exercise of market power, using lack of fuel security as its threat, Exelon has, yet again, crafted a creative solution simply because they are unable to compete in the market."
Commissioner Richard Glick also dissented, stating, "[T]he Commission is not even waiting for stakeholders’ responses to the Show Cause Order it issued last week before plunging ahead with its plans to bail out Mystic and Distrigas. In setting this cost-of-service agreement for hearing, the Commission is moving forward under the assumption that ISO-NE will respond to the Show Cause Order by filing tariff provisions that will permit Mystic to recover its full cost-of-service—and maybe more. Or, regardless of what ISO-NE files, the Commission will revise ISO-NE’s tariff to produce the same result. Rather than rushing to address a cost-of-service agreement for implementing tariff provisions that ISO-NE has not yet proposed and that the Commission has (at least nominally) not yet approved or even found to be necessary, the Commission should be encouraging ISO-NE and its stakeholders to engage in a thorough process to evaluate fuel security issues and identify the most cost-effective solution(s). I agree with my colleague Commissioner Powelson that today’s order and the Show Cause Order disregard alternative options that may be considerably more cost-effective at addressing New England’s fuel security issues than paying $400 million for a temporary solution.
Glick, in his dissent, also wrote, "I agree with Commissioner Powelson that what is being proposed amounts to an unprecedented exercise of market power by Exelon that will let a single market participant fundamentally alter the course of the wholesale electricity markets. As I previously stated, I suspect that the most likely outcome of the Commission’s approach to addressing fuel security in ISO-NE will be a parade of uneconomic generators seeking cost-of-service rate treatment under the guise of fuel security. Today’s order is yet another step in the direction of addressing the fuel security issue through a series of one-off determinations regarding the need to keep particular resources, which I fear will short circuit efforts to fundamentally reform the ISO-NE markets to address the drivers of whatever fuel security problem may exist."