Independent entities cannot review and challenge tank congestion charges and revenue credits in the annual true-up process for the cost-of-service agreement between ISO-NE and the Mystic Generating Station, FERC ruled Friday (ER18-1639).
The commission also ruled against a request by a group of municipally owned utilities for additional audit disclosures related to the agreement, saying that ISO-NE’s existing audit procedures and disclosures are adequate.
The ruling responded to both the municipal utilities’ request for additional information and a request for rehearing by Constellation Mystic Power, which argued against FERC’s determination that “interested parties” can review and challenge the true-up. That “could be read to allow interested parties to obtain information that is commercially sensitive, and that poses a security risk,” the company said.
In contrast, the utilities argued that the significant costs of the agreement — which they estimated to be more than $400 million over the first 10 months — necessitated the disclosure of additional information to allow interested parties to challenge the credits and charges. (See Public Power Groups Seek Information on Mystic Agreement.)
Credits account for revenues that Mystic earns from sources other than the agreement, while tank congestion charges refer to any costs associated with the increased need for uneconomic self-scheduling or short-term vaporization LNG.
FERC sided with Constellation, reversing its previous determination and also agreeing that shared revenue from third-party natural gas vapor sales should not be included in the true-up process. The commission said these contested issues are inconsistent with the Mystic agreement’s true up process because “none of them are projected in advance, but rather they are each settled and audited on a monthly basis.”
The commission also denied the municipal utilities’ request for additional audit information, which is “not supported by the Mystic agreement and unnecessary, given the attention that ISO-NE, its auditors and the Market Monitor give these items on a regular basis.” The request “goes beyond the terms of the Mystic agreement, which vests ISO-NE with audit rights and requires ISO-NE to maintain the confidentiality of audit-related information.”
“Allowing all interested parties to review Mystic’s revenues and revenue credit could require disclosure of proprietary information about Mystic’s actual fuel costs,” FERC wrote. “We recognize the potential competitive harm to Mystic, Constellation LNG and the market that could ensue from the disclosure of unmasked, offer-specific, commercially sensitive information to third parties.”
FERC wrote that it is “sympathetic” to the concerns about the high costs of the Mystic agreement, but “there is no record evidence that the Mystic agreement formula rate is being improperly executed.”
“The existing cost review and audit processes, which are facilitated by ISO-NE, its auditors and the Internal Market Monitor … are sufficient to ensure that Mystic adheres to its filed rate,” FERC added.
FERC also accepted a proposal ISO-NE had filed as an intermediate solution, which stopped short of the broad disclosures requested by the public power groups but allows for releasing redacted audit reports, providing summaries of its discussions with Constellation about fuel supply decisions, and making a member of Levitan & Associates’ tank congestion audit team available for questions at several points throughout the agreement.
“We are pleased that the commission has recognized the significant information the ISO has made available regarding the ongoing auditing of Constellation’s fuel supply decision,” an ISO-NE spokesperson told RTO Insider via email. “We will continue to work with Constellation and our stakeholders on ways to provide additional information while protecting confidentiality.”
