FERC again turns back New Jersey Energy Associates on PJM complaint

The members of the Federal Energy Regulatory Commission on April 21 rejected a request from New Jersey Energy Associates for clarification or, in the alternative, rehearing of the commission’s September 2015 order denying NJEA’s petition for waiver of certain provisions in PJM Interconnection‘s Amended and Restated Operating Agreement and Open Access Transmission Tariff.

The waiver would have allowed NJEA to recover costs incurred to comply with scheduling instructions from PJM during the cold weather events in January 2014.

NJEA owns and operates the 290-MW South River combined cycle natural gas-fired plant located in Sayreville, New Jersey. In January 2015, NJEA filed with the commission a request to waive section 1.10.2 of Schedule 1 of the Operating Agreement and the mirror provisions of the PJM OATT, and any other provisions of the Operating Agreement and Tariff necessary, to allow for recovery of $1,334,280 of unrecovered costs during the Polar Vortex weather events in January 2014. NJEA stated that the unrecovered costs related to out-of-market scheduling instructions by PJM with regards to the South River CC.

NJEA stated that, despite assurances from PJM generation dispatchers that NJEA would be made whole for its loss, PJM later rejected NJEA’s request for cost recovery, concluding that the Tariff and Operating Agreement restrict PJM’s ability to compensate NJEA for the costs incurred to comply with PJM’s changes to its out-of-market scheduling instructions. If the commission declined to grant NJEA’s requested waivers, NJEA requested that the commission find that the South River CC was a pool-scheduled resource and as such, eligible to recover start-up costs pursuant to section 1.10.2, despite it only being a fraction of its actual unrecovered costs.

In the September 2015 order, the commission denied NJEA’s waiver request, finding that granting waiver would violate the filed rate doctrine and the rule against retroactive ratemaking. Regarding NJEA’s alternative request, the commission stated that, because the South River CC unit had been committed subsequent to Thursday’s Day-ahead Energy Market, it was a “pool scheduled resource eligible for start-up cost recovery under section 1.10.2.”

In October 2015, NJEA filed a request for clarification, and, in the alternative, rehearing of the order. 

Noted the April 21 FERC rejection: “In its original filing, NJEA made two requests. First, NJEA requested a waiver of section 1.10.2 of Schedule 1 of the Operating Agreement and the mirror provisions of the OATT to allow for recovery of $1,334,280 of unrecovered costs during the Polar Vortex weather events in January 2014. Second, NJEA requested that the Commission find that the South River CC was a pool-scheduled resource eligible to recover its start-up costs pursuant to section 1.10.2 of Schedule 1 of the Operating Agreement. As NJEA acknowledges, in its original filing, NJEA’s second request was focused on the meaning of the phrase “pool-scheduled resource,” as opposed to the level of cost recovery available under section 1.10.2(d). The September 4 Order found that the South River CC was a “pool scheduled resource eligible for start-up cost recovery under section 1.10.2” since it was committed subsequent to Thursday’s Day-ahead Energy market. The Commission made no finding as to which, if any, costs qualified for recovery under this section.

“Now, for the first time, NJEA asks the Commission to interpret the phrase “actual costs incurred” in section 1.10.2(d) in order to determine how much NJEA is eligible to recover as a pool-scheduled resource. NJEA’s request is beyond the scope of its original waiver request and inappropriately raised for the first time in a request for clarification and rehearing of the September 4 Order. Accordingly, we deny NJEA’s request for clarification and rehearing.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.