United States: FERC Waives ISO-NE Deadline For Seller In Forward Capacity Auction

On September 1, 2015, the Commission granted Northeast Energy Associates' ("NEA") request for a one-time waiver of the timing requirements of section III. of ISO New England Inc.'s ("ISO-NE") Transmission, Markets and Services Tariff ("Tariff"). The waiver allows consideration of NEA's New Capacity Show of Interest Form ("Show of Interest Form") for a 25 MW incremental increase of capacity at NEA's Bellingham Energy Center ("Bellingham"), even though NEA submitted the requisite interconnection deposit the morning after the deadline set forth in the rules governing ISO-NE's Forward Capacity Market ("FCM").

ISO-NE implements the FCM, through which capacity resources compete to provide capacity to New England on a three-year-forward basis, using an annual Forward Capacity Auction ("FCA"). NEA's request for waiver pertained to FCA 10.

Bellingham is interconnected to the ISO-NE network pursuant to a grandfathered agreement. Under this agreement, Bellingham's capacity interconnection rights are defined by the grandfathered resource's previous summer output. Bellingham is attempting to participate in the FCA as a new generating capacity resource, but the incremental amount of capacity offered by Bellingham would cause it to exceed its capacity network resource capability. Under ISO-NE's Tariff, Bellingham is therefore required to submit a Show of Interest Form that includes an interconnection request and an accompanying deposit during a specific submission window in order to qualify for participation in the FCA. The window for these submissions for FCA 10 opened on February 17, 2015, and closed on March 3, 2015.

NEA submitted its interconnection request by the March 3, 2015 deadline, but erroneously omitted the $50,000 interconnection deposit. NEA stated that this omission was an administrative error that was discovered on March 3, 2015 after the Federal Reserve's wire deadline had elapsed. NEA added that ISO-NE received the interconnection deposit at 8:47 am on March 4, 2015.

ISO-NE requested that the Commission deny NEA's request for waiver on grounds that NEA failed to satisfy the Commission's evaluation criteria for granting waivers. ISO-NE cited to Commission precedent holding that administrative oversight is not a sufficient reason to waive a clearly communicated FCM deadline. ISO-NE further argued that granting the request for waiver would result in favorable treatment of NEA compared to other market participants who failed to submit a valid interconnection request in FCA 10 and those that abided by the Tariff requirements and deadlines.

The Commission found good cause to grant NEA's request for waiver based on satisfaction of four conditions. First, the Commission found that the underlying error was made in good faith as evidenced by NEA submitting its interconnection deposit as soon as possible after it discovered the omission and NEA's compliance with all other requirements for its Show of Interest Form. Second, the Commission found the request for waiver is limited in scope, because it allows a one-time, finite waiver of a procedural deadline under the narrow circumstances of this case, where NEA timely submitted an Interconnection Request, promptly discovered the omission of the associated deposit, and remedied that administrative error early on the next business day following the deadline. Third, the Commission found granting the waiver remedies a concrete problem by allowing Bellingham's full capacity to qualify for participation in FCA 10. Finally, the Commission found that granting the request for waiver will not lead to undesirable consequences as NEA's delay in submitting its interconnection deposit did not delay the qualification process, and the request for waiver will be granted well before ISO-NE's deadline to notify resource owners of their qualification results.

In a dissenting opinion, Commissioner Philip Moeller cited Commission precedent clearly establishing that administrative oversight is not a sufficient basis to justify waiving an express deadline. Moreover, Commissioner Moeller noted that in rejecting similar waiver requests, the Commission has repeatedly stated that it is important to abide by the FCM rules, including deadlines, in order to enable ISO-NE to effectively administer the FCM. Commissioner Moeller asserted that the Commission has properly recognized that granting waivers such as that requested by NEA would result in unduly favorable treatment as compared to (1) market participants who abided by ISO-NE's Tariff requirements and deadlines and (2) market participants who similarly missed relevant deadlines but failed to receive tariff waivers. Finally, Commissioner Moeller concluded that "[b]y granting NEA's request for tariff waiver, notwithstanding Commission precedent to the contrary and ISO-NE's well-founded opposition, I fear that today's order will encourage market participants to submit more requests for tariff waivers. Such requests will present the Commission with an enormous challenge to ensure that all market participants are treated similarly after missing an FCM or other deadline."

A copy of the order is available here.

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