IN THE UNITED STATES COURT OF APPEALS
` FOR THE DISTRICT OF COLUMBIA CIRCUIT
`
`Enerwise Global Technologies, Inc.,
`
`
`Petitioner
`
`v.
`
`Federal Energy Regulatory
`Commission,
`
`Respondent.
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`)
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`Case No.
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`
`
`PETITION FOR REVIEW OF
`ENERWISE GLOBAL TECHNOLOGIES, INC.
`
`Pursuant to Section 313(b) of the Federal Power Act, 16 U.S.C. § 825l(b), Rule
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`
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`
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`
`
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`15(a) of the Federal Rules of Appellate Procedure, and Circuit Rule 15 of the United
`
`States Court of Appeals for the District of Columbia Circuit, Enerwise Global
`
`Technologies, Inc. d/b/a CPower (“CPower”) hereby petitions this Court for judicial
`
`review of the following orders issued by the Federal Energy Regulatory Commission:
`
`1. Calpine Corp., et al. v. PJM Interconnection, L.L.C., “Order
`Rejecting Proposed Tariff Revisions, Granting in Part and
`Denying in Part Complaint, and Instituting Proceeding Under
`Section 206 of the Federal Power Act,” 163 FERC ¶ 61,236 (June
`29, 2018).
`
`
`2. Calpine Corp., et al. v. PJM Interconnection, L.L.C., “Order
`Establishing Just and Reasonable Rate,” 169 FERC ¶ 61,239
`(December 19, 2019).
`
`
`

`

`
`
`3. Calpine Corp., et al. v. PJM Interconnection, L.L.C., “Order on
`Rehearing and Clarification,” 171 FERC ¶ 61,034 (April 16,
`2020).
`
`4. Calpine Corp., et al. v. PJM Interconnection, L.L.C., “Order on
`Rehearing and Clarification,” 171 FERC ¶ 61,035 (April 16,
`2020).
`
`
`Copies of these Commission’s orders are attached hereto. Also attached to this
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`petition are: (1) the corporate disclosure statement required by Rule 26.1 of the Federal
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`Rules of Appellate Procedure and (2) a Certificate of Service, with the list of parties to
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`the underlying proceeding.
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`
`
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`
`
`Respectfully submitted,
`
`
`Howard L. Nelson
`Howard L. Nelson
`Greenberg Traurig LLP
`2101 L Street, NW
`Suite 1000
`Washington, DC 20037
`(202) 331-3163
`nelsonh@gtlaw.com
`
`Counsel for
`Enerwise Global Technologies,
`Inc., d/b/a CPower
`
`
`
`
`
`Dated: June 12, 2020
`
`- 2 -
`
`

`

`IN THE UNITED STATES COURT OF APPEALS
`FOR THE DISTRICT OF COLUMBIA CIRCUIT
`
`Enerwise Global Technologies, Inc.,
`
`Petitioner
`
`v.
`
`Federal Energy Regulatory
`Commission,
`
`Respondent.
`
`
`
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`Case No.
`
`
`
`CORPORATE DISCLOSURE STATEMENT
`
`Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and Circuit
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`Rule 26.1, Enerwise Global Technologies, Inc. d/b/a CPower (“CPower”) states as
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`follows:
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`CPower is a leading provider of demand response and energy efficiency
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`products
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`in Commission-jurisdictional electricity markets,
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`including PJM
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`Interconnection LLC. Parent companies of CPower and publicly-held companies that
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`have a 10% or greater ownership interest in CPower include:
`
`LS Power Equity Partners IV, LP
`CCS Class A Member, LLC
`CCS Power Holdings, LLC
`CCS Power Finance Co, LLC
`
`
`
`

`

`Respectfully submitted,
`
`Howard L. Nelson
`Howard L. Nelson
`Greenberg Traurig LLP
`2101 L Street, NW
`Suite 1000
`Washington, DC 20037
`(202) 331-3163
`nelsonh@gtlaw.com
`
`Counsel for Enerwise Global
`Technologies, Inc., d/b/a CPower
`
`Dated: June 12, 2020
`
`

`

`IN THE UNITED STATES COURT OF APPEALS
`FOR THE DISTRICT OF COLUMBIA CIRCUIT
`
`Enerwise Global Technologies, Inc.,
`
`Petitioner
`
`v.
`
`Federal Energy Regulatory
`Commission,
`
`Respondent.
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
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`)
`)
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`Case No.
`
`CERTIFICATE OF SERVICE
`
`Pursuant to Rule 15(c) of the Federal Rules of Appellate Procedure, I hereby
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`certify that I have this 12th day of June 2020, served copies of the foregoing Petition
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`for Review and Corporate Disclosure Statement via the Federal Energy Regulatory
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`Commission’s eFiling system in the proceedings below and by first class mail, postage
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`prepaid to:
`
`Ms. Kimberly D. Bose, Secretary
`Federal Energy Regulatory Commission
`888 First Street, N.E.
`Washington, D.C. 20426
`
`Robert Solomon, Solicitor
`Federal Energy Regulatory Commission
`888 First Street, N.E.
`Washington, D.C. 20426
`
`and by e-mail on all parties on the Commission’s service list in the underlying
`
`

`

`proceeding Docket Nos. EL16-49-000, ER18-1314, and EL18-178-000, attached
`
`hereto.
`
`A file-stamped copy of this Petition for Review will be served on the
`
`respondent, pursuant to 18 C.F.R. § 385.2012, at the following address:
`
`Kimberly D. Bose
`Secretary
`Federal Energy Regulatory Commission
`888 First Street, NE
`Washington, DC 20426
`
`Respectfully submitted,
`
`Howard L. Nelson
`Howard L. Nelson
`Greenberg Traurig LLP
`2101 L Street, NW
`Suite 1000
`Washington, DC 20037
`(202) 331-3163
`nelsonh@gtlaw.com
`
`Counsel for Enerwise Global
`Technologies, Inc., d/b/a CPower
`
`

`

`Attachment 1
`Attachment 1
`
`

`

`Calpine Corp., et al. v. PJM Interconnection, L.L.C., “Order Rejecting
`Proposed Tariff Revisions, Granting in Part and Denying in Part Complaint,
`and Instituting Proceeding Under Section 206 of the Federal Power Act,” 163
`FERC ¶ 61,236 (June 29, 2018)
`
`

`

`163 FERC ¶ 61,236
`UNITED STATES OF AMERICA
`FEDERAL ENERGY REGULATORY COMMISSION
`
`
`Before Commissioners: Kevin J. McIntyre, Chairman;
` Cheryl A. LaFleur, Neil Chatterjee,
` Robert F. Powelson, and Richard Glick.
`
`Calpine Corporation, Dynegy Inc., Eastern
`Generation, LLC, Homer City Generation,
`L.P., NRG Power Marketing LLC, GenOn
`Energy Management, LLC, Carroll County
`Energy LLC, C.P. Crane LLC, Essential
`Power, LLC, Essential Power OPP, LLC,
`Essential Power Rock Springs, LLC,
`Lakewood Cogeneration, L.P., GDF SUEZ
`Energy Marketing NA, Inc., Oregon Clean
`Energy, LLC and Panda Power Generation
`Infrastructure Fund, LLC
`
` v.
`
`
`PJM Interconnection, L.L.C.
`
`PJM Interconnection, L.L.C.
`
`
`PJM Interconnection, L.L.C.
`
` Docket Nos. EL16-49-000
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`ER18-1314-000
`ER18-1314-001
`
`EL18-178-000
`(Consolidated)
`
`ORDER REJECTING PROPOSED TARIFF REVISIONS, GRANTING IN PART AND
`DENYING IN PART COMPLAINT, AND INSTITUTING PROCEEDING UNDER
`SECTION 206 OF THE FEDERAL POWER ACT
`
`(Issued June 29, 2018)
`
`
`
`
`
`I. Background ................................................................................................................ 9.
`A. PJM’s MOPR ....................................................................................................... 9.
`B. Calpine’s Complaint ........................................................................................... 15.
`C. Related Proceedings ............................................................................................ 16.
`D. PJM’s Filing ....................................................................................................... 20.
`
`Paragraph Numbers
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 2 -
`
`
`II. Notice of Filings and Responsive Pleadings ............................................................ 25.
`III. Procedural Matters ................................................................................................. 30.
`IV. Section 205 Review ............................................................................................... 32.
`A. PJM’s Submission of Two Options ..................................................................... 33.
`B. Capacity Repricing ............................................................................................. 34.
`1. PJM’s Proposal ............................................................................................... 35.
`2. Comments and Protests ................................................................................... 43.
`3. Answers .......................................................................................................... 55.
`4. Commission Determination ............................................................................. 63.
`C. MOPR-Ex ........................................................................................................... 73.
`1. PJM’s MOPR-Ex Proposal .............................................................................. 74.
`2. Comments and Protests ................................................................................... 80.
`3. Answers .......................................................................................................... 92.
`4. Commission Determination ........................................................................... 100.
`V. Section 206 Action................................................................................................ 108.
`A. Docket No. EL16-49-000 ................................................................................. 109.
`1. Calpine’s Position ......................................................................................... 110.
`2. PJM’s Position .............................................................................................. 117.
`3. Intervenor Arguments .................................................................................. 118.
`B. Docket Nos. ER18-1314-000, et al. ................................................................. 128.
`1. PJM’s Position .............................................................................................. 129.
`2. Intervenors’ Positions .................................................................................... 136.
`C. Commission Determination .............................................................................. 150.
`1. PJM’s Existing Tariff ................................................................................... 151.
`2. Replacement Rate ......................................................................................... 158.
`
`
`
`
`
`
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 3 -
`
`
`
`Over the last few years, the integrity and effectiveness of the capacity market
`
`administered by PJM Interconnection, L.L.C. (PJM) have become untenably threatened
`by out-of-market payments provided or required by certain states for the purpose of
`supporting the entry or continued operation of preferred generation resources that may
`not otherwise be able to succeed in a competitive wholesale capacity market.1 The
`amount and type of generation resources receiving such out-of-market support has
`increased substantially. What started as limited support primarily for relatively small
`renewable resources has evolved into support for thousands of megawatts (MWs) of
`resources ranging from small solar and wind facilities to large nuclear plants. As existing
`state programs providing out-of-market payments continue to grow, more states in the
`PJM region are considering providing more support to even more resources, based on an
`ever-widening scope of justifications.
`
`These subsidies enable subsidized resources to have a suppressive effect on the
`
`price of capacity procured by PJM through its capacity market, called the Reliability
`Pricing Model (RPM). Out-of-market payments, whether made or directed by a state,
`allow the supported resources to reduce the price of their offers into capacity auctions
`below the price at which they otherwise would offer absent the payments, causing lower
`auction clearing prices. As the auction price is suppressed in this market, more
`generation resources lose needed revenues, increasing pressure on states to provide out-
`of-market support to yet more generation resources that states prefer, for policy reasons,
`to enter the market or remain in operation. With each such subsidy, the market becomes
`less grounded in fundamental principles of supply and demand.
`
`This order addresses two proceedings initiated in response to increasing out-of-
`
`market support. The first is a complaint against PJM pursuant to section 206 of the
`
`
`
`
`1 Out-of-market payments include, for example, the zero-emissions credits (ZEC)
`programs and Renewable Portfolio Standards (RPS) programs on which we base our
`determination in this order that PJM’s Open Access Transmission Tariff (OATT or
`Tariff) is unjust, unreasonable, and unduly discriminatory or preferential. As explained
`below (see infra section V.C), we seek comment on the appropriate definition of out-of-
`market payments for purposes of the replacement rate. We emphasize that we cannot,
`and need not, address at this time all of the possible ways a state might provide out-of-
`market support for its preferred generation resources. We need only address the forms of
`state support that we find, in this proceeding, render the current Tariff unjust and
`unreasonable—i.e., out-of-market revenue that a state either provides, or requires to be
`provided, to a supplier that participates in the PJM wholesale capacity market.
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 4 -
`
`
`Federal Power Act (FPA),2 filed by Calpine Corporation, joined by additional generation
`entities (collectively, Calpine), in Docket No. EL16-49-000 (Calpine Complaint). The
`crux of the Calpine Complaint is that PJM’s Tariff and more specifically, the Tariff’s
`Minimum Offer Price Rule (MOPR), is unjust and unreasonable because it does not
`address the impact of subsidized existing resources on the capacity market. Calpine
`proposes interim Tariff revisions for immediate implementation that would extend the
`MOPR to a limited set of existing resources, and it asks the Commission to direct PJM to
`conduct a stakeholder process to develop and submit a long-term solution.
`
`The second proceeding addressed in this order is PJM’s recent filing of proposed
`
`revisions to its Tariff, pursuant to section 205 of the FPA,3 in Docket Nos. ER18-1314-
`000, et al. PJM’s filing consists of two alternate proposals designed to address the price
`suppressing effects of state out-of-market support for certain resources.4 PJM’s first,
`preferred approach is comprised of a two-stage annual auction, with capacity
`commitments first determined in stage one of the auction and the clearing price set
`separately in stage two (Capacity Repricing). PJM’s second, alternative approach, to be
`considered only in the event the Commission determines that Capacity Repricing is
`unjust and unreasonable, revises PJM’s MOPR to mitigate capacity offers from both new
`and existing resources, subject to certain proposed exemptions (MOPR-Ex).
`
` We find, based on the record before us, that it has become necessary to address the
`price suppressive impact of resources receiving out-of-market support. PJM’s existing
`MOPR does not do so, because it applies only to new, natural gas-fired resources. The
`rationale for that narrow MOPR was that, given the short development time required to
`bring such resources on-line, they could be used to suppress capacity prices, and indeed
`certain states had proposed making out-of-market payments to facilitate the entry of new
`natural gas-fired resources.5 Although the role of the MOPR, in PJM, originally was
`
`
`
`
`2 16 U.S.C. § 824e (2012).
`
`3 16 U.S.C. § 824d (2012).
`
`4 PJM asserts that, after a lengthy stakeholder process, neither alternative could
`gain the two-thirds affirmative sector vote needed for endorsement under PJM’s rules.
`See Filing at 17.
`
`5 See PJM Interconnection, L.L.C., 135 FERC ¶ 61,022, at PP 2, 141, 153 (2011)
`(2011 PJM MOPR Order).
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 5 -
`
`
`limited to deterring the exercise of buyer-side market power,6 its role subsequently
`expanded to address the capacity market impacts of out-of-market state revenues.7
`However, because the current MOPR applies only to new natural gas-fired resources,8 it
`fails to mitigate price distortions caused by out-of-market support granted to other types
`of new entrants or to existing capacity resources of any type.
`
`Based on the combined records of the Calpine Complaint proceeding and the PJM
`
`section 205 filing, we find PJM’s Tariff is unjust and unreasonable. We therefore grant
`the Calpine Complaint, in part, and sua sponte initiate an FPA section 206 proceeding in
`Docket No. EL18-178-000.9
`
`
`
`
`6 See PJM Interconnection, L.L.C., 117 FERC ¶ 61,331, at P 103 (2006) (2006
`PJM MOPR Order).
`
`7 2011 PJM MOPR Order, 135 FERC ¶ 61,022 at PP 139-43.
`
`8 Id. P 153; PJM Tariff, Attach. DD, § 5.14(h)(1).
`
`9 The Commission frequently consolidates the record in related proceedings under
`FPA sections 205 and 206. Prior MOPR reform proceedings have followed this pattern.
`See 2011 PJM MOPR Order, 135 FERC ¶ 61,022, order on reh’g, 137 FERC ¶ 61,145
`(2011) (2011 PJM MOPR Rehearing Order), aff’d sub nom. New Jersey Bd. of Pub. Utils.
`v. FERC, 744 F.3d 74 (3rd Cir. 2014) (NJBPU); ISO New England, Inc., 131 FERC ¶
`61,065 (2010), order on reh’g and clarification, 132 FERC ¶ 61,122 (2010), order on
`paper hearing, 135 FERC ¶ 61,029 (2011) (2011 ISO-NE MOPR Order), reh’g denied,
`138 FERC ¶ 61,027 (2012), aff’d sub nom. New Eng. Power Generators Ass’n v. FERC,
`757 F.3d 283 (D.C. Cir. 2014) (NEPGA). Consolidation is particularly appropriate when
`a rate proposal under FPA section 205 fails to remedy the harm identified under FPA
`section 206. See, e.g., Monongahela Power Co., 162 FERC ¶ 61,129, at P 71 (2018)
`(Monongahela). A rate proposal proceeding may also be transformed into Commission-
`initiated complaint proceeding when the record indicates that is necessary or appropriate.
`See, e.g., Western Resources, Inc. v. FERC, 9 F.3d 1568, 1579 (D.C. Cir. 1993) (Western
`Resources); Pub. Serv. Comm’n of State of N.Y. v. FERC, 866 F.2d 487, 491 (D.C. Cir.
`1989) (PSCNY). And the Commission may find that its acceptance of a rate proposal
`under FPA section 205 alters circumstances such that it becomes necessary to change
`other related rate or tariff provisions under FPA section 206. See Advanced Energy
`Management Alliance v. FERC, 860 F.3d 656, 664 (D.C. Cir. 2017) (AEMA).
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 6 -
`
`
`
`Although we agree with Calpine and PJM that changes to the PJM Tariff are
`
`required, we do not accept the changes that have been proposed by either Calpine or
`PJM. Consequently, we deny the proposed remedy in the Calpine Complaint. We also
`reject both of PJM’s proposals because we find that they have not been shown to be just
`and reasonable, and not unduly discriminatory or preferential. However, we are unable to
`determine, based on the record of either proceeding, the just and reasonable rate to
`replace the rate in PJM’s Tariff.
`
`As a result, we are consolidating our newly-established proceeding in Docket No.
`
`EL18-178-000 (into which the record of Docket Nos. ER18-1314-000, et al. is
`incorporated) with the Calpine Complaint in Docket No. EL16-49-000. We are setting
`those consolidated proceedings for a paper hearing to address a proposed alternative
`approach in which PJM would modify two existing aspects of the Tariff. Specifically,
`this approach would (i) modify PJM’s MOPR such that it would apply to new and
`existing resources that receive out-of-market payments, regardless of resource type, but
`would include few to no exemptions; and (ii) in order to accommodate state policy
`decisions and allow resources that receive out-of-market support to remain online,
`establish an option in the Tariff that would allow, on a resource-specific basis, resources
`receiving out-of-market support to choose to be removed from the PJM capacity market,
`along with a commensurate amount of load, for some period of time. That option, which
`is similar in concept to the Fixed Resource Requirement (FRR) that currently exists in the
`Tariff, is referred to in this order as the FRR Alternative. Unlike the existing FRR
`construct, the FRR Alternative would apply only to resources receiving out-of-market
`support. Both aspects of the proposed replacement rate are more fully explained below.10
`
`
`
`
`10 Under PJM’s existing rules, the FRR option is available to a load-serving entity,
`at its election, to satisfy its obligation to provide unforced capacity outside of PJM’s
`capacity auction. See Reliability Assurance Agreement Among Load Serving Entities in
`the PJM Region at Schedule 8.1. In this proceeding, the Commission does not propose to
`eliminate or change the existing FRR option, but instead to add a new resource-specific
`option with distinct characteristics. However, if changes to the existing FRR option are
`necessary, we encourage PJM and its stakeholders to consider and discuss any potential
`changes.
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`
`I.
`
`Background
`
`- 7 -
`
`PJM’s MOPR
`
`A.
`PJM established its MOPR in 2006 to address concerns that certain resources may
`
`have the ability to suppress market clearing prices by offering supply at less than a
`competitive level.11 PJM’s MOPR is designed to protect against this ability by setting a
`minimum offer level to operate as a price floor. PJM’s MOPR requires that all new, non-
`exempted natural gas-fired resources offer at or above that floor, equal to the Net Cost of
`New Entry (Net CONE) for the applicable asset class (by generator type and location). A
`seller, however, may seek a unit-specific review of its sell offer to justify an offer price
`below the default offer floor.
`
`The existing review procedures require the seller to submit a written request for
`
`review to both PJM and PJM’s Independent Market Monitor (Market Monitor) to
`demonstrate why the unit is able to offer below the default minimum price. Specifically,
`the resource must submit documentation on its fixed development, construction,
`operation, and maintenance costs.12
`
`Prior to 2011, PJM’s Tariff excluded from the MOPR new entry sponsored by a
`
`state, under certain conditions (State Mandate Exemption), namely, “any Planned
`Generation Capacity Resource being developed in response to a state regulatory or
`legislative mandate to resolve a projected capacity shortfall in the Delivery Year affecting
`that state, as determined pursuant to a state evidentiary proceeding that includes due
`notice, PJM participation, and an opportunity to be heard.” In a filing submitted by PJM,
`in Docket No. ER11-2875-000, PJM proposed to replace its State Mandate Exemption
`with a new requirement providing that a request for a MOPR exception, based on state
`policy grounds, must be approved by the Commission pursuant to a section 206
`authorization, subject to a showing that the relevant sell offer was “based on new entry
`
`
`
`
`11 See 2006 PJM MOPR Order, 117 FERC ¶ 61,331 at P 103; see also PJM
`Interconnection, L.L.C., 123 FERC ¶ 61,037 (2008); PJM Interconnection, L.L.C., 126
`FERC ¶ 61,275 (2009); 2011 PJM MOPR Order, 135 FERC ¶ 61,022; 2011 PJM MOPR
`Rehearing Order, 137 FERC ¶ 61,145; PJM Interconnection, L.L.C., 143 FERC ¶ 61,090
`(2013) (2013 PJM MOPR Order), order on reh’g & compliance, 153 FERC ¶ 61,066
`(2015), vacated & remanded sub nom. NRG Power Mktg., LLC v. FERC, 862 F.3d 108
`(D.C. Cir. 2017) (NRG).
`
`12 See PJM Tariff, Attach. DD, § 5.14(h)(5).
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 8 -
`
`
`that is pursuant to a state-mandated requirement that furthers a specific legitimate state
`objective and that the Sell Offer would not lead to artificially depressed capacity prices or
`directly and adversely impact [the Commission’s] ability to set just and reasonable rates
`for capacity sales in the PJM Region or any affected Locational Deliverability Area.”
`
`In the 2011 PJM MOPR Order, the Commission accepted PJM’s proposal to
`
`eliminate its State Mandate Exemption, but rejected PJM’s proposed replacement
`mechanism as duplicative of an aggrieved entity’s right to seek section 206 relief.13 On
`rehearing, in response to petitioners’ arguments that the Commission had erred in
`approving the elimination of the State Mandate Exemption, the Commission found that
`PJM’s MOPR “does not interfere with states or localities that, for policy reasons, seek to
`provide assistance for new capacity entry if they believe such expenditures are
`appropriate for their state.”14 The Commission added that its objective was “to ensure the
`reasonableness of the wholesale interstate prices determined in the markets PJM
`administers.”15
`
`The 2011 PJM MOPR Order also required PJM to propose Tariff revisions that
`
`would allow PJM’s Market Monitor and PJM to review unit-specific cost justifications
`for sell offers that would otherwise be mitigated by PJM’s MOPR.16 On compliance, the
`Commission accepted PJM’s unit-specific review procedures, finding that PJM’s
`proposal appropriately addresses concerns from load-serving entities developing
`resources through arrangements outside of PJM’s capacity market.17
`
`In 2013, to address the effects of new, state-supported natural gas-fired entrants on
`
`its capacity market, PJM submitted proposed Tariff revisions to replace the unit-specific
`review with two categorical exemptions, namely, a competitive entry exemption and self-
`
`
`
`13 See 2011 PJM MOPR Order, 135 FERC ¶ 61,022 at P 139.
`
`14 See 2011 PJM MOPR Rehearing Order, 137 FERC ¶ 61,145 at P 89.
`
`15 Id. It is worth mentioning that the Commission, in the 2011 PJM MOPR Order,
`contemplated that the existing FRR construct in the PJM Tariff provided a mechanism for
`“states seeking full independence in resource procurement choices” to “implement a form
`of capacity procurement that complements the RPM or . . . opt out of the RPM.” See
`2011 PJM MOPR Order, 135 FERC ¶ 61,022 at n.76 and P 193.
`
`16 See 2011 PJM MOPR Order, 135 FERC ¶ 61,022 at P 121.
`
`17 See 2011 PJM MOPR Rehearing Order, 137 FERC ¶ 61,145 at P 242.
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 9 -
`
`
`supply exemption. While the Commission initially accepted those exemptions, subject to
`the condition that PJM retain the unit-specific review process, the United States Court of
`Appeals for the District of Columbia Circuit found, in July 2017, that the Commission
`exceeded its FPA section 205 authority in modifying PJM’s proposal.18 Accordingly, the
`Court vacated and remanded the relevant Commission orders. On remand, the
`Commission rejected PJM’s competitive entry exemption and self-supply exemption,
`effective December 8, 2017.19 At present, unit-specific review is the only way for a new
`natural gas-fired resource subject to PJM’s MOPR to obtain an exemption from that rule.
`B.
`In March 2016, Calpine filed its complaint, asserting that PJM’s MOPR is unjust
`
`and unreasonable because it allows for the artificial suppression of prices in PJM’s
`capacity market, as caused by below-cost offers from existing resources whose continued
`operation is being subsidized by state-approved out-of-market payments.20 Calpine cites
`the out-of-market payments requested by certain resources, pursuant to Ohio
`authorizations that, as explained below, have since been withdrawn by the entities
`seeking these out-of-market payments. Calpine also cites the Illinois ZECs program,21 as
`evidence of a state subsidy that will have a price suppressing effect on PJM’s capacity
`
`Calpine’s Complaint
`
`
`
`
`18 NRG, 862 F.3d at 117.
`
`19 See PJM Interconnection, L.L.C., 161 FERC ¶ 61,252 (2017) (NRG Remand
`Order) and PJM Interconnection, L.L.C., Docket No. ER13-535-006 (Feb. 23, 2018)
`(delegated letter order accepting compliance filing).
`
`20 Calpine Complaint at 2. Calpine also proposed interim Tariff revisions
`governing PJM’s procurements for the 2019-20 and 2020-21 delivery years.
`
`21 See Illinois 99th Gen. Assemb. S.B. 2814 (Dec. 7, 2016). Calpine argues that,
`under this legislation, out-of-market state revenues will be provided to certain existing
`nuclear-powered generation units that would otherwise exit PJM’s capacity market.
`Calpine explains that, under this law, the Illinois Power Agency is directed to procure, on
`behalf of the state’s load-serving entities, contracts for ZECs with 10-year terms
`commencing June 1, 2017. Calpine states that the new law defines a ZEC as a credit that
`represents the environmental attributes of one MW hour of energy produced from a zero
`emissions facility, as defined to include those facilities that are: (1) fueled by nuclear
`power; and (2) interconnected with PJM or the Midcontinent Independent System
`Operator, Inc. (MISO). Calpine Amended Complaint at 6-9.
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 10 -
`
`
`market, absent the MOPR revision it seeks.22 As a remedy, Calpine proposes interim
`Tariff revisions for immediate implementation that would extend the MOPR to a limited
`set of existing resources. As a long-term remedy, Calpine urges the Commission to
`require PJM to propose Tariff revisions addressing this matter.
`
`Related Proceedings
`
`C.
`In May 2017, Commission staff convened a technical conference, in Docket No.
`
`AD17-11-000, to explore the impact of out-of-market support for specific resources or
`resource types in the regional markets operated by ISO New England Inc. (ISO-NE), the
`New York Independent System Operator, Inc. (NYISO), and PJM. Following the
`discussion at the technical conference, staff’s notice requesting comments outlined five
`potential paths forward: (1) a limited, or no MOPR approach; (2) an approach that would
`accommodate resources receiving out-of-market support; (3) retention of the status quo;
`(4) an approach that would balance state policy goals and the needs of a centralized
`capacity market; and (5) an extension of the MOPR to apply to both new and existing
`resources. PJM, in its comments, stated that it had convened a stakeholder proceeding to
`consider these matters, as a preliminary step to an FPA section 205 filing.
`
` On March 9, 2018, the Commission issued an order accepting ISO-NE’s proposal
`to modify its wholesale capacity market to better accommodate state actions to procure
`certain resources outside of ISO-NE’s wholesale electric markets – a mechanism known
`as Competitive Auctions with Sponsored Policy Resources (CASPR).23 In that order, the
`Commission outlined a series of first principles for capacity markets.24
`
` On May 31, 2018, following PJM’s submission of its FPA section 205 filing in
`Docket Nos. ER18-1314-000, et al., CPV Power Holdings, L.P., Calpine, and Eastern
`Generation, LLC (Eastern Generation) (collectively, CPV), filed a complaint against PJM
`
`
`
`22 Calpine Amended Complaint at 10-11.
`
`23 ISO New England Inc., 162 FERC ¶ 61,205 (2018) (CASPR Order).
`
`24 Id. at P 21 (“A capacity market should facilitate robust competition for capacity
`supply obligations, provide price signals that guide the orderly entry and exit of capacity
`resources, result in the selection of the least-cost set of resources that possess the
`attributes sought by the markets, provide price transparency, shift risk as appropriate
`from customers to private capital, and mitigate market power. Ultimately, the purpose of
`basing capacity market constructs on these principles is to produce a level of investor
`confidence that is sufficient to ensure resource adequacy at just and reasonable rates.”).
`
`(continued ...)
`
`
`

`

`Docket No. EL16-49-000, et al.
`
`- 11 -
`
`
`in Docket No. EL18-169-000. CPV seeks Commission action under section 206, and a
`directive requiring PJM to adopt a “clean” MOPR, without exclusions or exemptions,
`applicable to both new and existing resources.25
`
` CPV argues that state subsidies represent an imminent threat to PJM’s capacity
`market.26 CPV further asserts that a “clean” MOPR is required to effectively address the
`impact of these subsidies and that PJM’s proposed self-supply, public entity, and RPS
`exemptions would prevent MOPR-Ex from adequately addressing the problem.27 CPV
`also proposes to eliminate the competitive exemption proposed in MOPR-Ex, because, it
`claims, only unsubsidized resources, which would not be subject to MOPR-Ex, would be
`eligible for the exemption.28 Finally, CPV urges the Commission to require PJM to
`modify the definition of Material Subsidy, as defined below, to cover not only state
`subsidies, but also federal subsidies or other support granted after the date of the
`complaint.29 The CPV complaint remains pending.
`D.
`
`PJM’s Filing
`
`PJM pr