Commissioner Richard Glick
December 3, 2018
Docket Nos. ER18-2364-000, EL18-182-000
I join today’s order in full. I write separately to explain my support for today’s order in light of my dissents from the Commission’s previous orders in the New England fuel security saga and to identify steps that I believe ISO-NE should take to address fuel security consistent with the FPA.
I continue to believe that the Commission did not meet its burden to show that ISO-NE’s tariff is unjust and unreasonable.1
As I explained in my dissent from the July 2nd show cause order, the Commission needlessly rushed to judgment, effectively finding ISO-NE’s tariff unjust and unreasonable because it did not provide the ISO with the ability to prop up an uneconomic generator that might conceivably be needed for fuel security several years in the future.2
I continue to believe that that order was a serious misstep, both because the Commission lacked a record to support its action and because, in rushing to bail out the Mystic facility, the Commission prematurely cut off a debate that might have led to more durable solution to New England’s fuel security concerns, which the record indicates are limited to only the most extreme winter conditions.
Nevertheless, there can be more than one just and reasonable rate, meaning that my belief that the existing tariff is just and reasonable does not preclude me from finding that the proposed replacement tariff is itself just and reasonable.3
I agree that, for the reasons explained in today’s order, ISO-NE’s filing proposes a just and reasonable interim method for addressing potential fuel security concerns, with “interim” being the key word. ISO-NE has shown that a time-limited methodology for preserving certain resources that may be needed to provide fuel security is just and reasonable while it develops a more robust approach to addressing regional fuel security. New England’s potential fuel security issues do not appear to be present in any other region, especially with regard to its reliance on natural gas, limited options for fuel delivery, and the consequences of load shedding in its particularly cold winters. Accordingly, the fact that an interim measure of this sort is just and reasonable in New England does not necessarily indicate that even the exact same proposal would be just and reasonable in other regions of the country.
ISO-NE’s ultimate approach to fuel security will need to be more sophisticated than the interim approach we approve today. As Potomac Economics explained in its comments, ISO-NE’s apparent need to retain units for fuel-security is the result of a market failure. Units truly needed for fuel-security would be economic if they were fully compensated for the services they provide.4
The solution to that failure must be to reform the markets so that the services they procure reflect the region’s needs. Fuel security is best understood as a service that, to the extent it is needed at all, should be procured through the ISO’s markets, with open and vigorous competition among all resources capable of providing that service. Individual, ad hoc contracts with particular resources whose retirement might, under the most conservative assumptions, create a fuel security concern is no way to address a region’s long-term fuel security.
In addition, to the extent that ISO-NE continues to use studies along the lines of its Operational Fuel Security Assessment, ISO-NE should work with its member states to reconsider its approach to resources procured pursuant to state public policies. As NEPOOL explains in its comments, states have met the overwhelming majority of their renewable portfolio standard targets and current prices for renewable energy credits suggest that that will continue in the years ahead.5
State public policies, including renewable portfolio standards, are likely to drive much of the new entry in New England over the next several years with resources that will reduce the region’s reliance on natural gas supplies—the primary driver of the ISO’s fuel security concerns. Those public policies are binding law and it is not sustainable to systematically undervalue the contributions that those laws will make to fuel security.
Finally, although today’s order addresses only the specific proposal before us, I want to reiterate the importance of taking a holistic approach to fuel security. Any market-based solution to pricing a resource’s fuel-secure attributes must also be incorporated into the evaluation of electric transmission needs. Developing new transmission facilities may ultimately prove the most cost-effective approach to addressing fuel security, making it unjust and unreasonable to pursue a generation-only fuel security solution. And while certain approaches to addressing peak demand for natural gas—such as gas demand response—may require action under state law, I urge all the relevant stakeholders to examine these options to the fullest extent possible, rather than relying solely on solutions subject to the Commission’s jurisdiction.
For these reasons, I respectfully concur.
- 11 Emera Maine v. FERC, 854 F.3d 9, 23 (D.C. Cir. 2017) (explaining that the FPA creates a “‘broad’ range of potentially just and reasonable” rates and that the Commission may revise an existing rate only if it is outside that range); see also Ala. Power Co. v. FERC, 993 F.2d 1557, 1571 (D.C. Cir. 1993) (“[T]he proponent of a rate change under § 206, here FERC, has the burden of proving that the existing rate is unlawful.”).
- 22 ISO New England Inc., 164 FERC ¶ 61,003, at 1 (2018) (Glick, Comm’r, dissenting).
- 33 See Blumenthal v. FERC, 552 F.3d 875, 883 (D.C. Cir. 2009) (“The Supreme Court has repeatedly rejected the argument “that there is only one just and reasonable rate possible.”); Petal Gas Storage, L.L.C. v. FERC, 496 F.3d 695, 703 (D.C. Cir. 2007) (“FERC is not required to choose the best solution, only a reasonable one.”).
- 44 Potomac Economics Comments at 2.
- 55 NEPOOL Protest at 31-34.