FERC on Aug. 12 established settlement judge procedures in response to a waiver request from a generator seeking to exit ISO-NE’s inventoried energy program (IEP) and refund the net revenues received from the program (ER24-1407).
The IEP compensates generators for maintaining fuel inventories in the winter and applies to the winters of 2023/24 and 2024/25.
In March, Canal Marketing asked FERC to allow the company to withdraw from the program for the 2023/24 winter period and return the net revenues, plus interest, that it received from its participation in the program.
The company operates a 333-MW gas and oil generator that has been out of service because of a mechanical issue since early 2023. Canal said it initially anticipated the generator would return to service in time for most of the 2023/24 winter, but delays extended the outage through the entire winter.
Canal alerted ISO-NE of the delay in December 2023 and determined the RTO’s tariff does not include provisions that enable “the return of net revenues by a market participant in this particular situation or for a participant to withdraw from the program once its election submission has been accepted by ISO-NE.”
In its request to FERC, Canal said granting the waiver “would not harm any third parties” and that the returned revenues would be “allocated to the market participants that are responsible for the costs of the program.”
Following the request, ISO-NE offered its support for the proposal to return the net revenues. The RTO’s Internal Market Monitor also supported the return of revenues in comments to FERC, while emphasizing the importance of sticking to a “narrow remedy” to the issue.
“Any remedy should be narrowly tailored to preserve the incentives and the design of the program,” the IMM wrote. The market monitor cautioned that any solution must not enable IEP participants in the upcoming winter period to retroactively exit the program if they experience net losses.
“This could create a ‘heads I win, tails you lose’ situation for the upcoming 2024-2025 winter program: a participant that erroneously (or even wrongfully) qualifies for the IEP, could wait-and-see the outcome, and then at the end of the program file for a waiver and return of money if it is in its favor, or not,” the IMM added.
In response comments filed with FERC, Canal disagreed with the IMM’s concerns about broader implications of a waiver, arguing the company communicated to ISO-NE its intention to withdraw from the program and return its net revenues in mid-December 2023, and that it took time to determine the best course of action to remedy the issue.
FERC ordered settlement judge procedures “to permit the parties to seek a settlement to resolve whether and how Canal Marketing should return to ISO-NE the revenues or net revenues.”
The Commission added that “with regard to the IMM’s concerns about future erroneous qualifications for, and late withdrawals from, the IEP, we note that we are establishing settlement judge procedures here based on the unique circumstances and the various arguments raised by parties to this proceeding.”
