New rules may be on the horizon as the Federal Energy Regulatory Commission (FERC) takes up wholesale energy market price formation. The notice of the proposed rulemaking, issued September 17, 2015, in Docket No. RM15-24-000, proposes to require wholesale market operators to settle energy transactions (i.e., calculate and assign financial charges and credits) in the real-time energy markets using a five-minute interval, the same time interval used to dispatch energy resources. Also, the proposed rule would subject operating reserves transactions to the same requirement. Lastly, the proposed rule would require wholesale market operators to trigger shortage pricing for any dispatch interval during which a shortage of energy or operating reserves occurs, regardless of the duration of the shortage event.
Wholesale markets conduct their real-time energy market dispatch using five-minute dispatch intervals. That five-minute interval, however, is not uniformly applied by the wholesale market operators in their settlement calculations. As a result, price signals seen by energy resources do not always accurately represent the value of the services provided by such resources. In circumstances where revenues earned through the energy market fail to cover the resource’s offer, the wholesale market operator will provide make-whole, or uplift, payments to the resource. The Commission’s goal is to have the proposed rules promote the transparency of market prices, provide accurate price signals to market participants and reduce the reliance of uplift payments. If adopted, the proposed rules would likely require wholesale market operators and market participant to incur significant costs to make software, process and equipment changes. Comments on the proposed rulemaking are due by November 30, 2015.