The U.S. Court of Appeals for the District of Columbia Circuit on Friday rejected challenges by Entergy’s utility subsidiaries to the Federal Energy Regulatory Commission’s decision to approve the Midcontinent grid operator’s seasonal capacity rules.
The court also dismissed arguments in support of Entergy made by the Mississippi, Louisiana and Arkansas public utility commissions, and East Texas Electric Cooperative, which operates in eastern Texas.
FERC “reasonably explained” its decision in 2022 to approve the Midcontinent Independent System Operator’s proposal to switch to a seasonal capacity market from an annual market centered on meeting peak summertime power needs, the court said.
Entergy challenged various aspects of FERC’s decision, including the shift to a seasonal market framework.
The New Orleans-based utility company also objected to MISO changing its accreditation methodology to focus on power plants’ performance during periods of peak electricity demand over the previous three years, rather than resources’ projected capacity, the court said.
It also challenged FERC’s approval of a requirement that power plant owners replace capacity if they plan an outage longer than 31 days during a three-month season, or else pay a fine greater than the cost of acquiring replacement capacity, the court said.
Finally, Entergy challenged MISO’s rule that resources must schedule planned outages and give the grid operator 120 days notice to receive an exception from its calculation of Tier 2 hours — hours when the grid is most stressed — for planned outages, according to the court’s ruling.
In all cases, FERC adequately explained its decision, the court said.
FERC, for example, relied on a study that gives evidence that MISO’s new methodology is more accurate than its old approach when predicting resource performance during periods of highest demand, the court said.
The study found that MISO’s old methodology overestimated how much electricity would be offered into the market by about 8% to 22% while the new methodology’s estimates were off by about 1%, the court said.
“Based on that accuracy study, FERC reasonably concluded that MISO’s new methodology of looking to resources’ past seasonal performance would accurately predict resources’ future performance during the periods of highest demand,” the court said.
The court also dismissed Entergy’s argument that MISO’s seasonal capacity framework would lead to high volatility, making it hard to plan for the future.
FERC “reasonably” explained that it expected volatility to be low and that any volatility would not pose significant problems.
FERC found power plant owners would have multiple options for avoiding fines under MISO’s new rules on the length of allowable power plant outages, including shortening maintenance periods and acquiring replacement capacity, according to the court.
Power plant owners can also opt out of the capacity market for a season while maintenance is undertaken or schedule maintenance so that it straddles two seasons, enabling planned outages of up to 62 days, the court said.
