Acting Chair LaFleur: FERC to focus on infrastructure, market, reliability in 2014

Acting FERC Chair Cheryl LaFleur said on Jan. 27 that much of the commission’s focus this year will be on infrastructure, market and reliability matters.

The two biggest electric issues on the infrastructure side involve FERC Order 1000 and the return on equity (ROE) issue, she said during a media roundtable.

“ROE is a short- to medium-term priority, to start getting these cases out,” LaFleur said. “Order 1000, by its very nature, will continue over the year because we have a large number of cases from around the country.”

Natural gas and LNG infrastructure matters will also be addressed, she said.

The market work includes bilateral market regions and some of the larger gas/electric and capacity market cases, she noted.

As TransmissionHub reported, oral arguments over certain aspects of Order 1000, 1000-A and 1000-B have been set for March 20 before a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit (Docket No. 12-1232).

“I wouldn’t have voted for the order unless I thought it was right,” LaFleur said, adding, “I’m confident that the order is right, but I don’t speak for the federal court.”

Of the ROE matter, LaFleur noted that she wants a result that is just and reasonable to customers and investors, as well as sustainable under a range of market conditions.

“[S]ome of these cases have been pending for a long time,” she said. “Our action has not been as timely as we like to make it, and we have a focused effort going on with the support of all the commissioners’ offices to really take a hard look at these cases and bringing them to conclusion.”

TransmissionHub reported last December that industry expectations are high that FERC will take up the base ROE proceedings that have been pending before the commission and come to a resolution in the early part of the year.

At the U.S. House Energy & Commerce Committee hearing on Dec. 5, 2013, LaFleur said that though she was reluctant to comment on a pending proceeding, namely the Coakley vs. New England transmission owners base ROE complaint (FERC Docket Nos. EL11-66, EL11-66-001), she and her fellow commissioners were committed to giving the issue a “very high priority.”

One industry source told TransmissionHub at the time: “I take that to mean that the commission may do something in January or February. I don’t expect her to rush if the commission isn’t ready but they’ve been thinking about this for a long time, so I’m sure they’ve been thinking about what their options are and they’ll be ready to do something one way or another pretty soon.”

LaFleur also responded on Jan. 27 to questions pertaining to reliability-must-run plants in New England.

As PennWell’s GenerationHub reported, opponents of an effort by ISO New England (ISO-NE) to temporarily extend the life of the largely coal-fired Brayton Point power plant in Massachusetts continue to pile up, with parties like Public Service Enterprise Group (NYSE:PEG) (PSEG) subsidiaries filing on Jan. 22 objections at FERC.

The PSEG companies commented on a Jan. 8 complaint lodged by the New England Power Generators Association (NEPGA) against ISO-NE. In the complaint, NEPGA highlighted a “serious flaw” in the Forward Capacity Market (FCM) rules that require immediate redress in order for the results of the upcoming eighth Forward Capacity Auction (called “FCA 8”) to be just and reasonable, said the PSEG companies. ISO-NE is scheduled to hold FCA 8 on Feb. 3.

ISO-NE is planning to let Brayton Point participate in the upcoming auction under a program that favors the plant in that bidding, due to concerns about grid reliability if the plant were to shut in the near term.

GenerationHub also reported that Brayton Point Energy, the operator of the Brayton Point plant, sent a brief Jan. 27 notice to ISO-NE that it plans to retire Units 1-4 at the plant as of June 1, 2017. A copy of the notice was filed at FERC.

LaFleur noted during the roundtable that on a more general matter, FERC entertains “how to give direction to the region as to how we think fair market pricing in the capacity market should look like.”

FERC does that in two ways, she said, adding, “One is by their coming in with specific proposals and we try to rule on those with as much guidance as we can … and then secondly, we have a more of a general docket where we’re looking at how should capacity markets be designed.”

On if she anticipates FERC stepping in at some point and telling the power plant owners to not retire the plants since the ISO has determined they are needed, LaFleur noted that it is up to the ISO to tell the plant whether it can retire but FERC will determine the pricing, adding, “[T]he contract might be up to us, and so I do see the possibility for FERC action, but generally initiated by the ISO in the first instance.”

There are different ways under which a plant can declare it will retire. In one, “a plant can say, ‘I’ll retire only if I don’t get this price,’ or they can say, ‘I’m going to retire regardless.’”

The ISO can hold the plant for reliability for a period of time and under that circumstance, FERC can determine the pricing or how it works, she said.

In response to a question about the West Coast, LaFleur said, “We’re not seeking to curb new generation [or] transmission.”

In places like California, where there are competitive markets, FERC is looking to the markets to set the appropriate level of investment in generation and really looking to make sure that existing and new generation get the appropriate price signals, and that applies to baseload, variable generation, demand response and storage, for instance. The market, she added, is supposed to give the appropriate price signal of how that is needed for reliability for customers.

On the transmission side, again, FERC looks to the regions to decide what transmission is needed for reliability, to make the markets work, eliminate congestion and connect new power sources.

“[M]ore of our work is making sure that both the electric and the gas infrastructure is robust enough for what customers need,” she added. “At this point, I’m not particularly worried that we’re over-building, although I understand that perspective.”

Among other things, LaFleur also said that while she is not actively on Capitol Hill lobbying for legislation, the one thing that she has most spoken about is some cyber security legislation, adding, “I’d like to see better information sharing,” for instance.

About Corina Rivera-Linares 2807 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 13 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics and education for weekly newspapers and national magazines. She can be reached at corinar@pennwell.com.