FERC Denies FirstEnergy Solutions Complaint to Shift FTR Underfunding to All Transmission Customers on Pro Rata Basis

FERC dismissed a complaint from FirstEnergy Solutions Corp. which had sought to modify provisions of PJM's tariff related to the funding of Financial Transmission Rights (FTRs).

FirstEnergy Solutions had contended that FTR revenue inadequacies over the last three years demonstrate that FTRs are not funded to the levels that are necessary to provide the intended hedge against congestion, and because FTRs are not fully funded, the PJM Tariff provisions have become unjust, unreasonable and unduly discriminatory and preferential.

The Commission said that it has recognized that full funding of FTRs is a goal, but stressed that, "the PJM Tariff does not ensure full funding."

"In PJM, the right to financially firm transmission service is provided through the allocation of ARRs, which are directly allocated to loads to offset congestion,' FERC said. FTRs, in PJM, are awarded to bidders in an FTR auction.

FirstEnergy Solutions had essentially been seeking the removal of real-time congestion charges from the calculation of the Transmission Congestion Charges, and thus FTRs. Instead, real-time congestion costs would be allocated, positive or negative, to all transmission customers on a pro-rata basis, FirstEnergy Solutions proposed.

"FirstEnergy has not shown that allocating these costs to other parties will create any better incentive to address the underlying causes of FTR underfunding," FERC said.

"FirstEnergy essentially is arguing that the current allocation mechanism for real-time congestion costs be replaced with an equally, if not more, arbitrary mechanism. While some parties, like FirstEnergy, may benefit from such a reallocation, FirstEnergy has not shown that such a reallocation will benefit the overall market structure in PJM nor allocate costs to those that cause the costs to be incurred or have the incentive to reduce those costs," FERC said.

Docket EL13-47