U.S. FERC Reverses Course on Rehearing, Rejecting Southwest Power Pool Effective Load-Carrying Capacity Accreditation Methodology

On March 2, 2023, in a 3–1 decision, the U.S. Federal Energy Regulatory Commission (FERC) rejected, without prejudice, Southwest Power Pool (SPP) proposal to adopt an Effective Load Carrying Capacity (ELCC) capacity accreditation methodology for wind and solar resources (Rehearing Decision). Commissioner Allison Clements issued a concurring statement, and Commissioner James Danly issued a dissenting statement. The Rehearing Decision reverses FERC’s August 2022 decision accepting, subject to conditions, SPP’s proposal to accredit wind and solar resources based on historical performance using an ELCC methodology (August Decision).

On rehearing, American Clean Power Association, Advanced Energy Economy, Solar Energy Industries Association, Sustainable FERC Project, Natural Resources Defense Council, Advanced Power Alliance, and Sierra Club (Clean Energy Advocates) argued that FERC erred in the August Decision by accepting a proposal that was based in part on a conference call between SPP and FERC staff during which no other party was permitted to speak and of which no transcript is available and asserted that it was unduly discriminatory against wind and solar resources to accredit wind and solar based on unforced capacity (UCAP) while accrediting thermal resources based on installed capacity (ICAP). UCAP accounts for historical outages and other reliability events while ICAP does not.

FERC in its Rehearing Decision found that the August Decision did not comport with the notice requirements under Section 205 of the Federal Powers Act and FERC regulations because SPP’s proposal did not provide a definition of “seasonal net peak load.” FERC did not address the remainder of Clean Energy Advocates’ arguments on rehearing. FERC also rejected SPP’s compliance filing in response to the August Decision as moot. FERC encouraged SPP to expeditiously submit any future filings it may choose to make.

In her concurring statement, Commissioner Clements found that the SPP proposal was both unjust and unreasonable because it applies different credits to wind and solar resources than to thermal resources. She indicated that SPP cannot use the ICAP method for thermal resources while adopting the ELCC method for wind and solar.

Commissioner Danly dissented in part on the basis that the Rehearing Decision “fail[ed] to address the merits at all,” indicating that he found SPP’s proposal to be “just and reasonable.” Commissioner Danly further argued that the Rehearing Decision failed on procedural grounds, departing from decades of FERC practice by repeatedly requesting more information from SPP only to declare that which was requested as insufficient. Commissioner Danly concluded that the notice defect identified by FERC should not have resulted in FERC reversing course, and FERC should instead have cured the defect and then denied rehearing.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.