FERC Orders Refunds To Market Participants Who Had Been Required To Pay Deactivated Generator For Reactive Service, Won't Direct Refund Of Amounts Overpaid Prior To Generator's Emergence From Bankruptcy

FERC issued an order requiring refunds resulting from the prior payment to Midwest Generation, LLC for reactive service from generating units which had been deactivated and therefore did not provide such service despite being paid for such service

FERC noted that the total refund obligation is $3.65 million, as calculated through June 30, 2016, to be updated to include interest through the refund payment date.

However, about $2 million of this amount accrued to Midwest Generation emerging from bankruptcy. Citing precedent, FERC said that it would not direct Midwest Generation to pay the amounts accrued prior to emerging from bankruptcy on April 1, 2014, but said that, "PJM and those parties owed refunds may choose to pursue the refunds in the bankruptcy proceeding if they believe they can be recovered despite the discharge."

As a result, FERC only directed Midwest to pay to PJM the portion of the refund obligation that accrued after Midwest emerged from bankruptcy on April 1, 2014, in the amount of $1.7 million, as calculated through June 30, 2016, to be updated to include interest through the refund payment date

FERC also directed PJM to flow through such refunds, "to PJM market participants that paid for Midwest’s provision of Reactive Service during the April 1, 2014 through June 30, 2016 period."

Docket No. EL16-66