By Rich Heidorn Jr.

FERC last week ordered RTOs and ISOs to file reports detailing their current practices and planned changes on five price formation issues, saying it needed more information before taking substantive action.

The order (AD14-14) continues an initiative the commission began in 2014 with the first of three workshops. (See FERC to Tackle RTO Uplift, Price Formation.)

In September, the commission issued a Notice of Proposed Rulemaking that would require RTOs and ISOs to align their settlement and dispatch intervals, saying it was the first of a number of proposals on which the commission plans to act. (See NOPR Requires RTOs Switch to 5-Minute Settlements.)

FERC said last week that the RTO/ISO reports, due in 75 days, will help it identify best practices and inform its future actions. It asked for information on:

• pricing of fast-start resources;
• commitments to manage multiple contingencies;
• look-ahead modeling;
• uplift allocation; and
• transparency.

“Identifying best practices for these five areas should provide incentives to maintain reliability, to facilitate accurate and transparent pricing, to reduce uplift, and for market participants to operate consistent with dispatch signals,” the commission wrote. “We have selected these areas because the discussion at the price formation workshops and the comments received after the workshops suggest that a number of RTOs and ISOs have sufficient experience with these areas such that we may be able to discern best practices and understand unintended consequences.

“The commission seeks this information not only to answer technical questions regarding how each RTO/ISO addresses these topics, but also to understand the reasons why each RTO/ISO has made its set of policy choices,” it added.

Commissioner Cheryl LaFleur said the issue is one of the commission’s most important initiatives, particularly because of the shift from coal to lower carbon resources. “I know there’s been a lot of anticipation and even impatience for action in this area,” she said. “This is the second in a series of orders; I don’t believe it will be the last.”

Commissioner Tony Clark said the energy markets “are our best performing and most mature markets.”

“So it seems to me that this is an appropriate manner in which to deal with this … so that we take it one bite at a time and we don’t have secondary unintended effects [that might occur] if we were to act all at once.”

Commissioner Colette Honorable noted that some have complained that work on price formation issues has “stalled” in RTO stakeholder processes.

“While we are working, I want to gently ask that [stakeholders] continue working, too, and that if you identify market flaws and other issues that need to be addressed, please continue to demonstrate your leadership.”