FERC Issues Guidance On Justification For Sales Above WECC Soft Price Cap

FERC issued an order providing guidance regarding the $1,000/MWh soft price cap in the Western Electricity Coordinating Council (WECC).

"[W]e provide guidance that justification for sales above the $1,000/MWh soft price cap may be based on, but is not limited to, demonstrations from at least one of three frameworks: (1) a production cost-based framework; (2) an index-based framework; and (3) an opportunity cost-based framework," FERC said

"We also provide guidance regarding justification for sleeve transactions," FERC said

FERC clarified that both the entity providing the sleeve and the original seller are required to file justifications with the Commission to justify sale prices that exceed the $1,000/MWh WECC soft price cap. The original seller would be required to justify a sale above $1,000/MWh using one of the frameworks above, assuming the original sale also exceeded $1,000/MWh.

"We clarify that financial transactions that do not result in the delivery of a physical electricity product are not subject to the WECC soft price cap," FERC said

"The guidance provided in this order applies to justification filings pending before the Commission and to any prospective filings that include a justification for sales above the $1,000/MWh WECC soft price cap," FERC said

Further specifics concerning FERC's guidance may be found in FERC's June 17 order in Docket No. ER21-40-000, et al.