UPDATE: Nov. 5, 2021: Vistra sued the Federal Energy Regulatory Commission on Thursday, seeking to overturn the agency’s September decision to approve new offer cap rules. The company and others contend the rules will prevent market participants from making bids that fully reflect their financial risks.
The generation company filed the suit in the U.S. Court of Appeals for the District of Columbia Circuit the same day FERC said requests to reconsider its decision were effectively denied because a 30-day deadline passed without the commission responding to them. FERC said it still plans to address the rehearing requests.
Vistra plans to ask the appeals court to take up the case on a fast-track review.
The company expects other parties will support the expedited review. PJM is slated to hold its next forward capacity auction on Jan. 25.
The Electric Power Supply Association (EPSA), the Pennsylvania Public Utility Commission (PAPUC), the Public Utilities Commission of Ohio (PUCO), and others argued the Federal Energy Regulatory Commission’s inaction allowing the PJM Interconnection's proposal to relax its minimum offer price rule (MOPR) to take effect last month was illegal.
FERC commissioners failed to adequately explain their positions on PJM’s "focused" MOPR and didn’t give parties enough time to respond to their explanations, according to rehearings requests filed Friday at FERC.
The rehearing filings are a required step before court appeals can be filed. If he joins FERC in time, Willie Phillips Jr., a Democrat nominated to fill the agency’s vacant seat, could weigh in on the issue when the commission responds to the rehearing requests.
PJM’s "focused" MOPR took effect in September when FERC’s four sitting commissioners deadlocked over the proposal.
The focused MOPR will allow resources like wind farms and nuclear power plants with state subsidies to take part in PJM's next capacity auctions without the threat their bids will be increased by the grid operator's current market rules. The upcoming auction is set to start on Jan. 25.
Generally, MOPRs are designed to prevent a market participant from offering artificially low bids to suppress capacity prices.
FERC Chairman Richard Glick and Commissioner Allison Clements issued a joint statement on Oct. 19, nine days before the Friday deadline for submitting rehearing requests, explaining why they supported PJM’s proposal. FERC Commissioner Mark Christie filed a statement the same day saying why he opposed the plan. FERC Commissioner James Danly filed his statement describing his stance against the proposal the day before the deadline.
The failure by the commissioners to present their positions sooner "substantially diminishes" the rehearing and appeal rights of parties, according to PAPUC and PUCO, which filed a joint rehearing request.
Issues not raised in rehearing requests are waived and cannot be raised on appeal, the state agencies noted.
PJM’s revised MOPR will undermine the grid operator’s competitive markets, making it harder for Pennsylvania and Ohio utility regulators to make sure their states have adequate power supplies, the agencies said.
EPSA, a trade group for power suppliers, argued that the statement by Glick and Clements isn’t an order and therefore FERC hasn’t explained why the PJM plan took effect, which makes the action "arbitrary and capricious."
"The one-sided approach taken by PJM and embraced by the supporting commissioners is contrary to law in that it does not reflect the statutorily and constitutionally required ‘balancing of the investor and the consumer interests,’" EPSA said.
Glick’s and Clements's claims the focused MOPR will increase competition in PJM’s capacity market are unsupported by evidence and not the result of "reasoned decisionmaking," EPSA said.
Vistra and its subsidiary Dynegy Marketing and Trade said FERC allowed without "any discussion, analysis, or explanation" a market framework that eliminates any meaningful protections to address the use of buyer-side market power by the states.
"PJM’s proposal also fails to provide a minimum degree of clarity regarding when, if ever, the MOPR will be applied to address exercises of buyer-side market power by any entity," they said.
The focused MOPR opens the door to "systematic market distortions" that erode confidence in PJM’s capacity market, according to Vistra and Dynegy.
The PJM Power Providers Group and Old Dominion Electric Cooperative also asked FERC to reconsider its action.
Parties must file rehearing requests to be eligible to ask an appeals court to review an agency decision.