Commissioner Richard Glick Dissent Regarding ISO New England Inc., New England Power Pool Participants Committee

Commissioner Richard Glick Statement
February 14, 2020
Docket No. ER20-645-000

Dissent Regarding ISO New England Inc., New England Power Pool Participants Committee

I dissent from today’s order because ISO New England Inc. has met its burden to show that removing the Fuel Security Reliability Retention Mechanism (Fuel Security RMR) from its Tariff for FCA 15 is just and reasonable. Frankly, this should be an easy case. Consistent with the Commission’s well-established preference for market-based approaches,1 ISO New England seeks to remove the Fuel Security RMR to pave the way for its transition to a market-based approach to ensuring fuel security. The ISO explains that retaining the Fuel Security RMR for the fifteenth Forward Capacity Auction (FCA 15) could hinder its efforts to make that transition without doing anything to enhance reliability. That ought to be more-than-sufficient to find the filing just and reasonable.

This proceeding has its roots in ISO New England’s 2018 filing to waive certain portions of its Tariff so that it could retain Units 8 and 9 at Exelon Corporation’s Mystic Generating Station (Mystic) to address a potential reliability issue identified in a series of fuel security studies conducted by the ISO.2 Those studies, which were and remain highly contested, concluded that the retirement of Mystic Units 8 and 9 and—critically—the Everett LNG import facility which supplies gas to those units, could, under conservative assumptions, cause a reliability problem in the delivery years associated with the thirteenth and fourteenth Forward Capacity Auctions (FCA 13 and FCA 14, respectively).3 The Commission rejected the waiver request and instituted a proceeding under section 206 of the Federal Power Act (FPA)4 , requiring ISO New England to propose a short-term approach to addressing fuel security or explain why such an approach is unnecessary. In response, ISO New England proposed the Fuel Security RMR, which permits it to retain a resource needed for fuel security through a cost-of-service contract.5 The ISO proposed that the Fuel Security RMR would apply to FCA 13, FCA 14, and FCA 15, sunsetting automatically thereafter. The Commission accepted the proposal, although it underscored the importance of moving to a market-based approach as rapidly as possible.6

I dissented from the Commission’s decision to initiate the section 206 proceeding. ISO New England’s fuel security studies did not show that, under any plausible set of assumptions, the retirement of Mystic Units 8 and 9 could lead to a reliability violation.7 Instead, the most they suggested was that the Everett LNG import facility may be necessary to ensure reliability under certain scenarios.8 I concluded, however, that the FPA does not give the Commission the authority to bail out a non-jurisdictional LNG import facility and that the Commission could not use its jurisdiction over Mystic to achieve that result.9 Nevertheless, I voted to approve the Fuel Security RMR, reasoning that it was a just and reasonable proposal, even if it was not necessary for the ISO’s Tariff to be just and reasonable in the first place.10

That brings us to today’s order. Pursuant to section 205 of the FPA,11 ISO New England has—with the unanimous support of its stakeholders12 —proposed to remove the Fuel Security RMR prior to FCA 15. ISO New England explains that it will shortly be filing with the Commission a market-based approach to addressing fuel security that it will have four years to implement before the FCA 15 delivery year (i.e., 2024-2025), which would seem to provide plenty of time to tweak or revise the proposal in the event the Commission does not approve it outright.13 The ISO also contends that retaining the Fuel Security RMR for FCA 15 could hinder its ability to successfully transition to a market-based approach to fuel security.14

In addition, ISO New England explains that the Fuel Security RMR is not needed to maintain fuel security in the FCA 15 delivery year. The studies regarding Mystic on which both ISO New England and the Commission relied to justify the Fuel Security RMR did not show any fuel security need in 2024-2025.15 Furthermore, to the extent such a need should arise, the ISO explains that it has a variety of different options for addressing such a need over the course of the next four years.16 Those options include, but are not limited to, the ISO’s various operational procedures and programs for procuring resources on a short-term basis.17 In addition, the ISO has the Inventoried Energy program, which was approved by operation of law last year and addresses the same underlying concerns that ISO New England and the Commission relied on to justify the Fuel Security RMR in the first place.18 That is sufficient to satisfy ISO New England’s section 205 burden.

As noted, I did not believe that the Fuel Security RMR was necessary in the first place. And, for all the reasons identified by ISO New England, I certainly do not believe it is needed now. Moreover, as I have observed in an analogous context, over-reliance on programs like the Fuel Security RMR, can be more than “a pair of training wheels” to use while developing new market mechanisms; they can be an excuse “to stay off the bike entirely.”19 Instead of searching for reasons to retain out-of-market mechanisms, the Commission should be encouraging ISO New England to move with all deliberate haste towards a market-based approach to fuel security.

Nevertheless, the Commission rejects ISO New England’s proposal on the erroneous bases that the proposal is premature and that the Fuel Security RMR is still needed to address fuel security. Let’s begin with the purported need for the Fuel Security RMR.20 The only evidence on which the Commission relied in commencing the FPA section 206 investigation was ISO New England’s fuel security studies.21 In commencing that investigation and in subsequently accepting the Fuel Security RMR, the Commission expressly deferred to the ISO’s assessment of the potential risk to reliability.22 Now, when ISO New England tells us that that reliability risk has subsided for the FCA 15 delivery year, the Commission refuses to extend the same deference. Accordingly, the Commission lacks a reasoned basis for rejecting ISO New England’s filing, especially in light of the bevy of different options that ISO New England has identified to address any unanticipated fuel security concern that may arise between now and the FCA 15 delivery year.

In addition, the Commission never actually made a finding that ISO New England’s pre-existing Tariff was unjust and unreasonable. The most the Commission has ever held was that the Tariff may be unjust and unreasonable, as today’s order appears to recognize.23 But that preliminary finding in the July 2 Order, which took place before the hearing required by FPA section 206(a), does not support the conclusion that removing the Fuel Security RMR is unjust and unreasonable.24 Indeed, suggesting that the Commission’s preliminary determination in the July 2 Order requires the outcome in today’s order is the same as saying that because you were once charged with a crime, we can assume you were guilty. But the FPA does not work that way anymore than does the criminal justice system. That means, however, that the Commission cannot rely conclusively on its prior orders to reject this filing without violating the FPA and basic principles of reasoned decisionmaking.

Finally, the Commission also claims that the fact that ISO New England originally proposed a three-year period for the Fuel Security RMR supports its finding today.25 Not so. ISO New England filed the proposal before us pursuant to FPA section 205, which envisions a range of just and reasonable rates.26 Section 205 allows a public utility to revise its filed rate—even a filed rate accepted in a compliance filing in a section 206 proceeding—just by showing that its proposal is just and reasonable.27 Accordingly, the fact that ISO New England originally proposed—and the Commission accepted—a longer term for the Fuel Security RMR is beside the point.

The Commission’s determination that ISO New England’s filing is premature is misguided for largely the same reasons. The Commission is saying essentially that the ISO cannot withdraw the Fuel Security RMR without filing its long-term market based solution. But, as noted, the Commission has no basis to support that conclusion. It has not made an actual section 206 finding—as opposed to a preliminary one—that the Tariff is unjust and unreasonable without something akin to the Fuel Security RMR. And ISO New England has explained that there is no fuel security concern for the FCA 15 delivery year and that, in the event one arises, it has ample tools to address that concern without the Fuel Security RMR. As a result, the Commission has no reasoned basis to find that ISO New England’s filing is not just and reasonable.

For these reasons, I respectfully dissent.
 

• 11 ISO New England Inc., 164 FERC ¶ 61,003, at P 53 (2018) (July 2 Order) (“We reaffirm our support for market solutions as the most efficient means to provide reliable electric service to New England consumers at just and reasonable rates.”).
• 22 Id. PP 4-5.
• 33 Order, 170 FERC ¶ 61,084 at P 2. .
• 44 16 U.S.C. § 824e (2018).
• 55 ISO New England Inc., 165 FERC ¶ 61,202, at P 5 (2018) (December 3 Order).
• 66 Id. P 96.
• 77 See July 2 Order, 164 FERC ¶ 61,003 (Glick, Comm’r, dissenting in part at 1-2); Constellation Mystic Power, LLC, 165 FERC ¶ 61,267 (2018) (December 19 Order) (Glick, Comm’r, dissenting at5-6 & n.23) (discussing evidence regarding the relative reliability contribution of Mystic versus the Everett facility).
• 88 See, e.g., December 19 Order, 165 FERC ¶ 61,267 (Glick, Comm’r, dissenting at5-6 & n.23) (discussing evidence regarding the relative reliability contribution of Mystic versus the Everett facility).
• 99 Id. (Glick, Comm’r, dissenting at3-6).
• 1010 December 3 Order, 165 FERC ¶ 61,202 (Glick, Comm’r, concurring at 1-3).
• 1111 16 U.S.C. § 824d.
• 1212 NEPOOL Answer at 4. All voting stakeholders supported to the proposal. Only Exelon abstained. Id.
• 1313 ISO New England Transmittal at 2, 6; ISO-NE Answer at 8.
• 1414 ISO New England Transmittalat 8; ISO-NE Answer at 6-8.
• 1515 NEPOOL Answer at 3-4.
• 1616 ISO New England Transmittal at 7-8; ISO New England Answer at 3.
• 1717 ISO New England Transmittal at 7-8.
• 1818 Id. at 7.
• 1919 Cal. Indep. Sys. Operator Corp., 168 FERC ¶ 61,199 (2019) (Glick, Comm’r, dissenting in part at P 10).
• 2020 As noted, see supra P 3, I do not believe that the Fuel Security RMR was needed in the first place, meaning that I see no barrier to removing it here. Nevertheless, as explained below, even assuming that the Commission was correct that these tariff provisions were needed to address the potential reliability violations identified in ISO New England’s fuel security studies, the record does not indicate that they are still needed today.
• 2121 E.g., July 2 Order, 164 FERC ¶ 61,003 at PP 49-52; see also NEPOOL Answer at 3-4.
• 2222 July 2 Order, 164 FERC ¶ 61,003 at PP 49-52.
• 2323 ISO New England Inc., 170 FERC ¶ 61,099, at P 18 (2020) (Order) (noting “the Commission’s previous finding that the Tariff may be unjust and unreasonable . . . .” (emphasis added)). .
• 2424 See 16 U.S.C. § 824e(a) (requiring that the Commission hold a hearing prior to finding any rate unjust and unreasonable or unduly discriminatory or preferential)
• 2525 Order, 170 FERC ¶ 61,099 at P 21.
• 2626 Emera Maine v. FERC, 854 F.3d 9, 23 (D.C. Cir. 2017).
• 2727 See PJM Interconnection, L.L.C., 117 FERC ¶ 61331, at P 85 n.73 (2006) (noting that the Commission will accept a rate proposed by a public utility in a compliance filing if it is just and reasonable because the utility can always file to change its proposal under section 205); ANR Pipeline Co., 110 FERC ¶ 61,069 at P 49 (2005) (similar); see also Emera Maine,854 F.3d at 24 (“In contrast to section 206, section 205 ‘is intended for the benefit of the utility.’”(quoting intended City of Winnfield, La. v. FERC, 744 F.2d 871, 875 (D.C. Cir. 1984))).