Below is a summary of rulings issued by FERC last week.

FERC Finalizes Hold-Harmless Rules

FERC issued a policy statement finalizing rules regarding the use of hold-harmless commitments to protect customers from rate increases resulting from utility mergers (PL15-3).

The commitments — agreements not to seek recovery of transaction-related costs in rates unless they are offset by transaction-related savings — have become a common feature of merger applications under Section 203 of the Federal Power Act, but the commission hadn’t defined the costs with specificity, leading to inconsistencies.

The commission:

• Clarified the scope and definition of the costs that should be subject to hold-harmless commitments;
• Identified the types of controls and procedures that applicants offering hold-harmless commitments must implement to track the costs involved;
• Clarified that an applicant may be able to demonstrate that the transaction will not have an adverse effect on rates without making any hold-harmless commitment; and
• Declined to adopt its proposal to no longer accept hold-harmless commitments that are limited in duration. (See FERC to Tighten Policy on Hold Harmless Merger Commitments.)

Reliability Standard Wins Preliminary OK

FERC issued a Notice of Proposed Rulemaking (NOPR) proposing to approve NERC reliability standard BAL-002-2 (Disturbance Control Standard — Contingency Reserve for Recovery from a Balancing Contingency Event). The rule requires applicable entities to balance resources and demand, and return their area control error (ACE) to defined values following a disturbance. The commission required NERC to modify the standard to address concerns over extensions or delay of the periods for ACE recovery and contingency reserve restoration. It also directed NERC to address a reliability gap regarding power losses above the most severe single contingency (RM16-7).

Constellation’s Reactive Payments Cut Due to Retirements

The commission accepted a petition from Constellation Power Source Generation to reduce its revenue requirement for reactive supply and voltage control service by almost $225,000 as a result of the retirements of Riverside Unit CT 6 (June 1, 2014), Perryman Unit CT 2 (Feb. 1, 2016) and Riverside Unit 4 (planned for June 1, 2016). The commission also ordered hearing and settlement judge procedures to determine whether the company’s reactive power rate for its remaining fleet in the Baltimore Gas and Electric zones should be reduced further (ER16-746-001, et al.). (See Impatient FERC Orders Immediate PJM Action on Reactive Power Payments to Retired Plants.)

SoCalEd Can Recover Abandoned Tx Project Costs

FERC ruled that Southern California Edison may recover abandoned plant costs for the canceled Coolwater-Lugo transmission project but set settlement and hearing judge procedures to determine how much of the $37 million claimed by the company was prudently incurred. The project was no longer needed after the retirement of NRG Energy’s 636-MW Coolwater Generating Station and three other generators. The Los Angeles Department of Water and Power and the M-S-R Public Power Agency challenged the $8.51 million in overhead costs that SoCalEd included in its claim, saying the company provided little documentation for how overhead costs were allocated to the project (ER16-1025).

Settlement on SSR Units OK’d

The commission approved an uncontested settlement reached among several Illinois companies and MISO that changes Illinois Power Holdings’ annual revenue requirement for the operation of Edwards Unit 1, a 90-MW coal-fired steam boiler in Peoria, Ill., designated as a MISO system support resource. The new annual revenue requirements will be $7 million for 2013, $11.1 million for 2014 and $6.5 million for 2015 (ER14-2619-004, et al.).

Rehearings Denied

The commission also:

• Denied rehearing but granted clarification of its October 2015 ruling in Order 816, which amended its regulations governing market-based rate authorizations (MBRA). (See FERC Refines Market-Based Rate Rules.)

The commission clarified that qualifying facilities in RTOs and ISOs are exempt from reporting requirements on long-term firm energy and capacity purchases. The commission also said that it did not intend to change the definition of long-term firm transmission reservations: those longer than 28 days. It also offered clarifications regarding the definition of a seller’s relevant geographic market and said MBRA applicants and sellers will not have to comply with the corporate organizational chart requirement until the commission issues an order at a later date (RM14-14-001).

• Denied rehearing of its October ruling exempting American Transmission Systems Inc. and Duke Energy companies in Ohio and Kentucky from certain MISO multi-value project (MVP) transmission charges. MISO and MISO’s Transmission Owners sought rehearing to assign a usage fee to ATSI and Duke for MVPs approved before the companies moved from MISO to PJM in 2011. In the rehearing denial, FERC pointed out that MISO’s MVP cost allocation on withdrawing members was instituted in 2012 and said charging the companies would violate its rule against retroactive ratemaking. The commission also rejected arguments that MISO’s Tariff at the time of ATSI’s and Duke’s exits could be interpreted to allow for MVP-related financial obligations (ER12-715-004).
• Denied El Paso Electric’s request for rehearing of a November 2015 order that required prior approval for utilities to engage in simultaneous exchange transactions involving their marketing affiliate and its affiliated transmission provider’s system (EL10-71-002).
• Denied rehearing of a September 2015 order allowing future affiliates of Kanstar Transmission to use the same formula rate and incentives approved for Kanstar (ER15-2237-002).

– Rich Heidorn Jr. and Amanda Durish Cook