By Suzanne Herel
The Federal Energy Regulatory Commission on Thursday rejected the Illinois Municipal Electric Agency’s request for an extended waiver that would allow it to use capacity resources outside of the Commonwealth Edison Locational Deliverability Area to meet its internal resource requirement in serving its Naperville, Ill., load. (ER14-1681-001).
Last May, FERC 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 June, IMEA asked FERC to clarify that the waiver extended beyond the one delivery year to the “term of the life of IMEA’s resource investments and commitments or at a minimum for the five-year minimum term of the [Fixed Resource Requirement] Alternative.”
Without a waiver, IMEA said it will be subject to unnecessary financial risks in any delivery year for which PJM uses a separate VRR curve, estimating the annual penalty charges at $100 million.
In its Jan. 22 order, FERC said it approved the one-year waiver because the short notice of PJM’s announcement to establish the separate VRR curve left IMEA little time to prepare to meet the internal resource requirement. “For subsequent delivery years, IMEA has sufficient time to prepare for the requirements of the FRR Alternative,” the commission said.
While IMEA contended that a longer waiver would have no adverse effects, FERC said it could expose customers in the ComEd LDA to higher prices because the aggregate internal resource requirement would need to be increased in future delivery years.
If IMEA decides not to continue under the FRR Alternative, FERC said, it could seek early termination from that status for the Naperville load and instead participate in PJM’s capacity auctions.
FERC’s ruling does not bode well for the waiver request IMEA filed earlier this month for this May’s Base Residual Auction (ER15-834).
But it may get some relief from PJM.
In December, stakeholders agreed to a problem statement proposed by Vice President of Market Operations Stu Bresler to review modeling practices that he said may be shortchanging loads with transmission agreements that pre-date the RTO’s capacity market. (See PJM MIC OKs Capacity Transfer Rights Query.)
Members approved a related issue charge earlier this month, agreeing to consider adding a mechanism in the capacity market similar to one used to allocate auction revenue rights to historical transmission paths in the energy market.