Energy Legal Blog

FERC Authorizes NYISO to Halt Circuitous Scheduling Around Lake Erie

On August 21, FERC issued an order accepting the New York ISO's (NYISO) emergency revisions to its tariff to prohibit certain scheduling practices around Lake Erie.  In its order, FERC approved the NYISO's use of temporary action to reduce unscheduled power flows and directed that NYISO continue to work with market participants, neighboring ISOs, and the North American Electric Reliability Corporation (NERC) to develop longer-term solutions.  FERC also noted that its Office of Enforcement has been investigating Lake Erie scheduling since May. 

According to NYISO's July 21 filing, the offending scheduling practices allowed market participants to take advantage of pricing differences between NYISO and neighboring PJM.  NYISO also argued that the circuitous scheduling resulted in market distortions, and increased congestion and uplift charges.  However, NYISO argued that the scheduling behavior was not technically prohibited by its tariff; thus, NYISO proposed a set of tariff revisions that would allow the grid operator to stop roundabout scheduling in the short-term.  FERC approved those revisions, which will take effect beginning July 22 through November 18, 2008.

NYISO's proposal is controversial, drawing fire from market participants, but support from customers, neighboring ISOs, and state officials.  In a letter filed with FERC on August 12, Senator Charles Schumer (D-NY) estimated the improper congestion costs to be between $240-290 million and demanded that FERC investigate any possible links between the loop flow issues and New York consumers' spiking electric bills.  FERC's continuing investigation will ensure that the issue remains at the forefront of the agency's and NYISO's agendas.

PG&E Announces Plans to Buy 800 MW of Solar Power

One of the largest utilities in California, Pacific Gas and Electric Company ("PG&E"), has signed two contracts to purchase up to 800 MW of power from two new solar plants that will be constructed by photovoltaic (PV) systems manufacturers, OptiSolar, Inc. and SunPower Corp., on the Carrizo Plain in San Luis Obispo County, California.  Once completed, the new plants will dwarf existing solar plants' generating capacity.  The deal has been heralded by industry observers as a momentous step forward for the development of large-scale solar projects.  However, both agreements are contingent upon renewal of the federal investment tax credit, which is currently stalled in Congress.

Under the agreements, PG&E will purchase 550 MW of solar power from Topaz Solar Farms LLC (owned by OptiSolar), and another 250 MW of solar power from High Plains Ranch II LLC (owned by SunPower).  The OptiSolar plant is expected to come on-line in 2012, and the SunPower plant expects to begin delivering power in 2010 and to be fully operational by 2012.  While the companies will use different PV technology, both plan to deliver solar power to PG&E at prices comparable to other forms of renewable energy, although the exact prices were not disclosed publicly.  PG&E will use the solar power to satisfy California's substantial renewable portfolio standard, which requires the state's utilities to obtain 20% of their power from renewable energy by 2010.