FERC Accepts Puget Sound Energy’s EIM Filing and Authorizes Market-Based Rate Transaction Ability

On September 30, 2016, FERC accepted the change in status filing submitted by Puget Sound Energy, Inc. (“Puget”) and certain affiliated generators. The filing informed FERC that Puget intended to join the Energy Imbalance Market (“EIM”) administered by the California Independent System Operator Corporation (“CAISO”) beginning on October 1, 2016. FERC accepted the change in status filing and authorized Puget to transact at market-based rates (“MBR”) in the EIM, based on Puget’s market power analysis submitted (and supplemented) as part of the change in status filing.

In its change in status filing, Puget argued that, unlike the other EIM participants, it has MBR authority in each of the balancing authority areas (“BAA”) within the EIM and, therefore, there are no restrictions on its MBR authority that would prevent it from selling energy throughout the EIM. In support of this argument, Puget submitted market power analyses demonstrating a lack of market power in the EIM, and the utility furthermore argued that market monitoring and mitigation measures previously approved by FERC will also help prevent EIM participants from exerting market power in areas constrained by congestion. Puget provided a supplemental market power analysis on July 27, 2016, which analyzed whether the Puget BAA constituted a submarket within the broader EIM. According to the supplemental market power analysis, energy imbalance demand will be much less than the 300 MW firm transmission Puget holds on the Bonneville Power Administration’s (“BPA”) system for EIM transactions. As Puget argued, the supplemental market power analysis results demonstrated that its BAA will not constitute an EIM submarket, and thus, Puget argued it should be permitted to transact under its existing MBR authority throughout the entire EIM footprint. Any remaining congestion concerns, Puget argued, can be addressed through CAISO’s local market power mitigation measures as well as BPA’s pro rata curtailment procedures.

In its decision, FERC agreed that Puget successfully demonstrated that it lacked market power in the 6-BAA EIM footprint and that the Puget BAA did not constitute a submarket within the EIM. The Commission was particularly persuaded by Puget’s 300 MW firm power reservation with BPA, as well as the July 27 supplemental market power analysis demonstrating that congestion levels would be minimal and manageable through BPA’s curtailment procedures. FERC accepted Puget’s filing, authorized the utility to transact in the EIM at MBR, and directed Puget to submit another change in status filing if the amount of its firm transmission reservation available for EIM transfers on BPA’s transmission system decreases.

A copy of FERC’s order can be found here.