On March 24, 2022, FERC issued an order granting a motion to extend the deadline for submitting the cost justification filings required for spot market sales in the Western Electricity Coordinating Council (“WECC”) region that exceed FERC’s $1,000/MWh energy price cap. Sellers will now have 30 days after the end of the month in which any such sales occurred rather than seven days.
FERC established WECC bid and price caps in 2002 in response to the Western energy crisis, and set the current cap amount in 2010. FERC clarified the cap is a “soft” cap, meaning that any bids above the cap are subject to cost justification and refund, and that cost justification filings must be filed within seven days after the end of the month in which sales in excess of the cap occurred. FERC initially declined to provide guidance regarding what it would consider to be sufficient justifications. However, after extreme heat in the West during August 2020, which resulted in numerous justification filings, FERC provided guidance explaining what it would consider to be sufficient cost justification (see June 29, 2021 edition of the WER). On July 19, 2021, two market participants filed motions describing the challenges associated with preparing the justification filings in seven days, and requesting that the filing deadline be extended to 30 days after the end of the month in which the triggering sales occurred.
In its March 24, 2022 order, FERC granted the two July 19, 2021 motions. As FERC explained, allowing parties more time to gather the required information will likely lead to more complete filings, increase the likelihood that market participants will receive settlement data for the relevant transactions, and help ensure that market participants are considering all sales in a given month as opposed to making rolling submissions for each trade date. FERC also noted its expectation that the extension would minimize the need for supplemental filings and amendments, and reduce the number of requests for individual deadline extensions.
A copy of the order is available here.