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FERC Withdraws Proposal That RTOs Allocate Real-Time Uplift Only To "Expected" Cost Causers

FERC Drops Proposal That Costs Be Allocated To Entities Which Deviate From Their Day-Ahead Market Schedules

April 20, 2018

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Reporting by Paul Ring • ring@energychoicematters.com

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As part of a final rule on price formation issues, FERC withdrew its proposal that would have required that each RTO/ISO that currently allocates the costs of real-time uplift to deviations should allocate such real-time uplift costs only to those market participants whose transactions are reasonably expected to have caused the real-time uplift costs.

FERC's original proposal would have assigned uplift costs, in RTOs which currently allocate the costs of real-time uplift to deviations, to entities which deviate from their day-ahead market schedules

"[W]e decline to adopt the preliminary finding related to uplift cost allocation in the NOPR," FERC said

"[S]ome commenters raised substantial concerns about the uplift cost allocation reforms proposed in the NOPR. They expressed concern about the application of the NOPR proposal to certain RTOs/ISOs in light of the reasons for uplift in these markets, and whether certain RTOs/ISOs would be able to implement the generic uplift cost allocation reforms proposed in the NOPR. We find those concerns sufficiently persuasive to decline to take generic action at this time. Accordingly, we withdraw the NOPR proposal to require that each RTO/ISO that currently allocates the costs of real-time uplift to deviations allocate such real-time uplift costs only to those market participants whose transactions are reasonably expected to have caused the real-time uplift costs," FERC said

Still, while withdrawing the proposal, FERC said, "We continue to believe that uplift should ideally be allocated to those market participants whose transactions caused the uplift and that allocations of uplift costs should avoid penalizing behavior that can improve price formation."

FERC instead will require greater transparency on uplift, directing that each RTO/ISO establish in its tariff: requirements to report, on a monthly basis, total uplift payments for each transmission zone, broken out by day and uplift category; requirements to report, on a monthly basis, total uplift payments for each resource; requirements to report, on a monthly basis, for each operator-initiated commitment, the size of the commitment, transmission zone, commitment reason, and commitment start time; and the transmission constraint penalty factors used in its market software, as well as the circumstances under which those factors can set locational marginal prices, and any process by which they can be changed."

Docket No. RM17-2

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