• FERC Issues Order on Duquesne's Revised Transfer Plan from PJM to Midwest ISO
  • September 18, 2008
  • Law Firm: Troutman Sanders LLP - Atlanta Office
  • On Wednesday, FERC issued an order addressing the revised proposal by Duquesne Light Company (“Duquesne”) and the Midwest ISO to transfer Duquesne’s membership in the PJM Interconnection, L.L.C. (“PJM”) regional transmission organization (“RTO”) to the Midwest ISO RTO, effective October 1, 2008.

    On November 8, 2007, Duquesne submitted a petition requesting permission to withdraw from PJM and join the Midwest ISO effective May 31, 2008, arguing that PJM’s Reliability Pricing Model (“RPM”) was inflating Duquesne’s capacity costs.  On January 17, 2008, the Commission issued an order conditionally approving Duquesne’s initial RTO withdrawal proposal, which conditioned approval on Duquesne’s first meeting its capacity obligations in PJM (see January 18, 2008 edition of WER).

    In the order, the Commission agrees that Duquesne will be permitted to withdraw from PJM and join the Midwest ISO.  The Commission notes, however, that the integration plan fails to provide sufficient notice of Duquesne’s firm intent to withdraw from PJM and join the Midwest ISO and will, therefore, require that Duquesne provide 60 days notice of its withdrawal date. 

    Intervenors objected to the plan arguing that the Duquesne/Midwest ISO integration plan fails to sufficiently address market participants’ existing and interim period rights to hedge costs attributable to transmission congestion, including costs associated with Auction Revenue Rights and seasonal Fixed Transmission Rights.  In its order, the Commission agreed with intervenors and directed PJM and the Midwest ISO to address the problem with respect to each RTO’s tariff.  The Commission also determined that to the extent PJM and the Midwest ISO cannot mitigate unreasonable impacts with partial-year Auction Revenue Rights and seasonal Fixed Transmission Rights, Duquesne should indemnify affected customers. 

    Because issues related to Duquesne and the Midwest ISO’s resource adequacy obligations are pending consideration in various other Commission proceedings, the Commission chose not to address the issue in its current order.  The Commission also passed, for the same reason, on addressing Duquesne’s request for clarification that it will be permitted to sell any PJM Reliability Pricing Model capacity not required to satisfy its resource obligations in the Midwest ISO.