Document Accession #: 20201203-3053 Filed Date: 12/03/2020

173 FERC ¶ 61,205 OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: James P. Danly, Chairman; Neil Chatterjee and Richard Glick.

ISO New England Inc. Docket Nos. ER18-1509-001 EL18-182-001

ORDER ADDRESSING ARGUMENTS RAISED ON REHEARING AND TERMINATING SECTION 206 PROCEEDING

(Issued December 3, 2020)

The Attorney General for the Commonwealth of Massachusetts (Massachusetts AG); the Connecticut Public Utilities Regulatory Authority and the Connecticut Department of Energy and Environmental Protection (together, the CT Parties); Eastern New England Consumer-Owned Systems (ENECOS);1 Indicated New England EDCs;2 the Maine Public Utility Commission (Maine PUC); the Natural Gas Supply Association and the American Wind Energy Association (together, NGSA/AWEA); the New England Power Generators Association, Inc. (NEPGA); and the Sierra Club, Natural Resources Defense Council, and Sustainable FERC Project (together, Public Interest Organizations)

1 ENECOS is made up of Braintree Electric Light Department, Concord Municipal Light Plant, Georgetown Municipal Light Department, Hingham Municipal Lighting Plant, Littleton Electric Light & Water Department, Middleborough Gas & Electric Department, Middleton Electric Light Department, Norwood Light & Broadband Department, Pascoag (Rhode Island) Utility District, Reading Municipal Light Department, Taunton Municipal Lighting Plant, Wellesley Municipal Light Plant and Westfield Gas & Electric Department.

2 The Indicated New England EDCs are Eversource Energy Service Company, on behalf of its electric distribution companies (EDCs) (The Connecticut Light and Power Company, NSTAR Electric Company, and Public Service Company of New Hampshire); and Massachusetts Electric Company, Nantucket Electric Company, and Narragansett Electric Company. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 2 -

seek rehearing and/or clarification of the Commission’s order in this proceeding issued on July 2, 2018.3

Pursuant to Allegheny Defense Project v. FERC,4 the rehearing requests filed in this proceeding may be deemed denied by operation of law. However, as permitted by section 313(a) of the Federal Power Act,5 we are modifying the discussion in the July 2018 Order and continue to reach the same result in this proceeding, as discussed below.6 This order also terminates the Federal Power Act (FPA) section 206 proceeding instituted in Docket No. EL18-182-000.

I. Background

On May 1, 2018, ISO New England Inc. (ISO-NE) filed in Docket No. ER18- 1509-000 a petition for waiver of certain provisions of the ISO-NE Transmission, Markets and Services Tariff (Tariff) to allow ISO-NE to retain two retiring generating units owned by Generation Company, LLC (Exelon)—Mystic 8 and 9—for the 2022/23 and 2023/24 capacity commitment periods in order to maintain fuel security.7 The only fuel source for Mystic 8 and 9 is natural gas provided by the Everett Marine Terminal (Everett), a liquefied natural gas import terminal located adjacent to Mystic 8 and 9. Exelon purchased Everett to ensure a reliable source of fuel for Mystic 8 and 9. In its petition for waiver, ISO-NE alleged that the retirement of Mystic 8 and 9 would not only deprive the ISO-NE electric system of 1,700 MW of winter generating capacity with on-site fuel but also result in the loss of Everett’s biggest customer. According to ISO-NE, Everett’s loss of Mystic 8 and 9 as a customer would make it

3 ISO New England Inc., 164 FERC ¶ 61,003 (2018) (July 2018 Order).

4 964 F.3d 1 (D.C. Cir. 2020) (en banc).

5 16 U.S.C. § 825l(a) (“Until the record in a proceeding shall have been filed in a court of appeals, as provided in subsection (b), the Commission may at any time, upon reasonable notice and in such manner as it shall deem proper, modify or set aside, in whole or in part, any finding or order made or issued by it under the provisions of this chapter.”).

6 Allegheny Def. Project, 964 F.3d at 16-17. The Commission is not changing the outcome of the July 2018 Order. See Smith Lake Improvement & Stakeholders Ass’n v. FERC, 809 F.3d 55, 56-57 (D.C. Cir. 2015).

7 ISO-NE, Petition for Waiver, Docket No. ER18-1509-000, at 3 (filed May 2, 2018). Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 3 -

more likely that Everett would cease operation, thus increasing the region’s risks of reserve depletion and load shedding.

In the July 2018 Order, the Commission denied ISO-NE’s petition for waiver, finding that ISO-NE sought not only to suspend existing Tariff provisions but also to create a new process to retain resources needed for fuel security using a cost-of-service agreement. The Commission found that a request to institute this new process should have been filed under FPA section 205.8 Nevertheless, the Commission went on to find preliminarily that the Tariff may be unjust and unreasonable because it fails to address specific regional fuel security concerns identified in the record.9 The Commission expressed concern that the Tariff’s failure to address fuel security issues sufficiently could result in the violation of mandatory reliability standards.

Accordingly, the Commission invoked its authority under FPA section 20610 and directed ISO-NE either to (1) submit by August 31, 2018 interim Tariff revisions that provide for the filing of a short-term cost-of-service agreement to address demonstrated fuel security concerns, and to submit by July 1, 2019 permanent Tariff revisions reflecting improvements to ISO-NE’s market design that will better address regional fuel security concerns; or (2) show cause by August 31, 2018 as to why the Tariff remains just and reasonable absent those filings.11 On August 31, 2018, ISO-NE submitted proposed interim Tariff revisions. On December 3, 2018, the Commission accepted the proposed revisions effective October 30, 2018 and directed ISO-NE to submit annual informational filings.12

8 16 U.S.C. § 824d (2018); July 2018 Order, 164 FERC ¶ 61,003 at P 47.

9 July 2018 Order, 164 FERC ¶ 61,003 at P 49. ISO-NE issued an Operational Fuel-Security Analysis (OFSA) and also performed additional studies using the same OFSA model (the Mystic Retirement Studies) to evaluate operational risks for the 2022/23 and 2023/24 winter periods arising specifically from the retirement of Mystic 8 and 9. The OFSA is available at https://iso-ne.com/static- assets/documents/2018/01/20180117_operational_fuel-security_analysis.pdf. The Mystic Retirement Studies are available at https://www.iso-ne.com/static- assets/documents/2018/04/npc_20180406_addl_II.pdf.

10 16 U.S.C. § 824e (2018).

11 July 2018 Order, 164 FERC ¶ 61,003 at P 55.

12 ISO New England Inc., 165 FERC ¶ 61,202 (2018) (December 2018 Order). Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 4 -

II. Rehearing Requests

Public Interest Organizations argue that the Commission erred by failing to respond to, or provide a reasoned explanation for rejecting, arguments that key assumptions underlying ISO-NE’s analysis were flawed in a way that materially affected the results of that analysis.13 Public Interest Organizations state that parties to this proceeding submitted evidence that at least four assumptions in the ISO-NE analysis were materially flawed, and that the Commission failed to respond to this evidence.14 Public Interest Organizations state that “[t]he Commission must ‘respond meaningfully to the arguments raised before it,’ and make an ‘effort to grapple with alternate theories,’” but the Commission failed to do so here.15 Public Interest Organizations also contend that the Commission erred because it did not support its determination that ISO-NE’s analysis was reasonable with substantial evidence.16 Public Interest Organizations request that the Commission reverse its finding that the ISO-NE analysis is reasonable and either rescind its show cause order or clarify that any future determination regarding the justness and reasonableness of ISO-NE’s Tariff will not regard the validity of the ISO-NE analysis as an already adjudicated fact.17 The Massachusetts AG asserts that the Commission erred in initiating an FPA section 206 proceeding because it did so in reliance on studies that the Massachusetts AG maintains contain flawed assumptions.18 The Maine PUC also argues that the Commission accepted ISO-NE’s analysis without substantial evidence.19

NGSA/AWEA contend that the Commission erred by accepting ISO-NE’s fuel risk scenarios at face value. They argue that in reviewing ISO-NE’s study, the Commission should have made a closer examination of whether its modeling used reasonable, fact-based inputs that produce reasonable outcomes, and they maintain that the Commission should require ISO-NE to take a more holistic approach to

13 Public Interest Organizations Rehearing Request at 5.

14 Id. at 9-13.

15 Id. at 13 (quoting Pub. Serv. Comm’n v. FERC, 397 F.3d 1004, 1008 (D.C. Cir. 2005); K N Energy, Inc. v. FERC, 968 F.2d 1295, 1296 (D.C. Cir. 1992)).

16 Id. at 5, 14-17.

17 Id. at 4.

18 Massachusetts AG Rehearing Request at 3-5.

19 Maine PUC Rehearing Request at 5-9. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 5 -

studying how reliability can be achieved.20 The Maine PUC states that, while the Commission noted in the July 2018 Order that there currently is no established methodological framework for fuel security analysis, the Commission should have attempted to establish such a framework or otherwise discussed the standard for determining whether there is a fuel security concern in the future.21 The Maine PUC also maintains that the Commission erred by not requiring ISO-NE to perform a transmission security analysis if it submitted short-term Tariff provisions to address fuel security.22

NGSA/AWEA assert that the Commission erred in finding that a short-term out- of-market solution to keep Mystic 8 and 9 in operation was needed to address ISO-NE fuel security issues. They argue that the Commission should have provided ISO-NE and its stakeholders with a year to pursue a market-based solution before adopting a short- term solution that further distorts the market.23 The Maine PUC maintains that given implementation of the “Pay-for-Performance” mechanism in the ISO-NE Tariff, the Commission unreasonably discounted the market’s ability to provide sufficient incentives to market participants to ensure that they perform under stressed system conditions.24 The Maine PUC states that the Commission “acknowledged that [Pay-for-Performance] would send a price signal,” and it argues that “if the Commission thought that changes to [Pay-for-Performance] were necessary, the reasonable course would be to tweak the market rules rather than opting for an out-of-market, short-term fix.”25

20 NGSA/AWEA Rehearing Request at 2-8.

21 Maine PUC Rehearing Request at 9-10.

22 Id. at 11-12.

23 NGSA/AWEA Rehearing Request at 3, 8-10.

24 “Pay-for-Performance” refers to ISO-NE’s two-settlement capacity market design, which is intended to give capacity suppliers an incentive to provide energy during scarcity conditions. See ISO New England Inc., 147 FERC ¶ 61,172, at PP 5-6 (2014). The pay-for-performance mechanism involves two settlements. Under the first settlement, resources that take on a capacity supply obligation will receive a capacity base payment, which is determined for each resource by multiplying the amount of MW associated with its capacity supply obligation by the FCA clearing price. The second settlement entails a capacity performance payment determined for each resource by measuring its performance against its forward position (i.e., its share of the system’s requirements at the time of each capacity scarcity condition).

25 Maine PUC Rehearing Request at 10-11. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 6 -

ENECOS claims that the Commission erred by accepting ISO-NE’s assertions regarding fuel security as a basis for initiating an FPA section 206 proceeding. It asserts that the Commission’s action is not supported by substantial evidence, and the absence of critical facts means that the Commission’s decision does not represent reasoned decision making.26 It also states that the Commission impermissibly based its decision on studies that are not in the record, specifically the Mystic Retirement Studies.27 ENECOS acknowledges that an agency may look beyond the administrative record, but maintains that an agency cannot do so when it prejudices a party, arguing that intervenors have been prejudiced by their inability to review the Mystic Retirement Studies.28 Finally, ENECOS asserts that the Commission erred by speculating about potential future modifications to ISO-NE’s Forward Capacity Market bidding rules with regard to retiring generation retained for fuel security. ENECOS states that in doing this, the Commission misunderstands the problem it seeks to address and prejudices the opportunities for stakeholder input in this expedited proceeding. According to ENECOS, the problem in this case is not fuel security but rather a commitment to rescuing equity investors from the consequences of their past decisions.29

NEPGA seeks clarification that when the Commission directed ISO-NE to address the treatment in the Forward Capacity Market of resources retained for fuel security purposes, and required that such resources be offered in the Forward Capacity Auction (FCA) at their competitive offer price or not at all, the Commission was also prohibiting “offering a Fuel Security Resource in the FCA as a price taker or at some other uncompetitive offer price.”30 For their part, CT Parties request a number of clarifications that would support the opposite result. CT Parties state that the ISO-NE Tariff dictates that a unit designated for reliability shall be entered into the relevant capacity auction as a price taker, and the market impact associated with a reliability resource participating in the auction as a price taker is the same regardless of the reason a unit is needed for reliability.31 Both NEPGA and CT Parties seek rehearing if the Commission does not provide the clarifications they seek.

26 ENECOS Rehearing Request at 4-7.

27 The Mystic Retirement Studies are studies that ISO-NE undertook in response to Exelon’s Retirement De-List Bids. See July 2018 Order, 164 FERC ¶ 61,003 at n.13.

28 ENECOS Rehearing Request at 7-8,

29 Id. at 4, 9-12.

30 NEPGA Clarification/Rehearing Request at 3.

31 CT Parties Clarification/Rehearing Request at 6-9. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 7 -

The Massachusetts AG requests that the Commission commit to expedited consideration of the to-be-filed market-design Tariff solution so that, if approved, ISO-NE may have a permanent, market-based fuel security solution in place no later than February 2020. According to the Massachusetts AG, this expedited consideration would effectively limit the applicability of the interim cost-of-service solution to Forward Capacity Auctions 13 and 14, which would limit the burden placed on ratepayers.32

Finally, Indicated New England EDCs ask the Commission to clarify that the central purpose of ISO-NE’s July 1, 2019 filing of permanent Tariff revisions is to assure that New England adds needed new infrastructure to address the fuel supply shortfalls and associated threats to electric reliability that ISO-NE identified in its Operational Fuel Security Analysis. According to Indicated New England EDCs, this clarification is necessary to ensure that the region solves the fuel security problem.33 CT Parties; the Conservation Law Foundation and Public Interest Organizations; the Environmental Defense Fund; the Massachusetts AG; NEPGA; the New England Power Pool Participants Committee; and NextEra Energy Resources, LLC submitted answers to Indicated New England EDCs’ clarification request. Indicated New England EDCs submitted an answer to the answers.34

III. Discussion

The rehearing requests address matters that are not ripe for rehearing. Rule 713(b) of the Commission’s Rules of Practice and Procedure permits requests for rehearing “of any final decision or other final order in a proceeding.”35 A final order is one that imposes an obligation, denies a right, or fixes some legal relationship as a consummation

32 Massachusetts AG Rehearing Request at 6-8.

33 Indicated New England EDCs Clarification Request at 2.

34 We reject the answers to Indicated New England EDCs clarification request and the answer to the answers pursuant to Rule 713(d) of the Commission’s Rules of Practice and Procedure, 18 C.F.R. § 385.713(d) (2019), and do not address them further in this order. In any event, as discussed below, we are dismissing Indicated New England EDCs’ clarification request as beyond the scope of this proceeding.

35 18 C.F.R. § 385.713(b) (2019). See also 16 U.S.C. § 825l(a) (2018) (parties “aggrieved by an order issued by the Commission in a proceeding . . . may apply for a rehearing within thirty days after the issuance of such order”). Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 8 -

of the administrative process.36 The only decision in the July 2018 Order that can be termed a final decision or a consummation of the administrative process is the Commission’s denial of ISO-NE’s waiver request. No party seeking rehearing challenges that denial. Instead, all rehearing requests allege errors related to the Commission’s initiation of a FPA section 206 investigation in the July 2018 Order. Initiating an investigation, however, does not constitute issuance of a final order. The July 2018 Order reflects only the Commission’s “preliminary” finding that ISO-NE’s Tariff “may be” unjust and unreasonable.37 That is not a final determination, and it is not subject to rehearing.38

Allegations of error in initiating an administrative investigation must contend with the fact that “[i]n general, an administrative agency’s decision to conduct or not to conduct an investigation is committed to the agency’s discretion” and is not reviewable by the courts unless “an agency simply ignores issues whose relevance to the public interest is obvious.”39 In practice, claims that an agency has ignored issues relevant to the public interest in this context generally take the form of arguments that failing to initiate an investigation causes such issues to be ignored, not arguments that the agency

36 Reliable Automatic Sprinkler Co. v. Consumer Prod. Safety Comm’n, 324 F.3d 726, 731 (D.C. Cir. 2003) (holding that “[f]inal agency action ‘mark[s] the consummation of the agency’s decision making process’ and is ‘one by which rights or obligations have been determined, or from which legal consequences will flow.”’) (quoting Bennett v. Spear, 520 U.S. 154, 178 (1997))).

37 July 2018 Order, 164 FERC ¶ 61,003 at PP 2, 49, 50.

38 See Investigation of Terms & Conditions of Pub. Util. Mkt.-Based Rate Authorizations, 103 FERC ¶ 61,349, at 62,373 (2003) (“Because the November 20 Order initiated an investigation and thus was not a final order, we will not consider requests for rehearing of the November 20 Order.”); City of Hamilton, , 82 FERC ¶ 61,349, at 62,359 (1998) (“Setting this matter for a trial-type hearing does not impose an obligation, deny a right, or fix some legal relationship as a consummation of the administrative process.”); Fla. Mun. Power Agency vs. Fla. Power & Light Co., 65 FERC ¶ 61,372, at 63,012 (1993) (“By not allowing rehearing of findings that were expressly preliminary . . . the Commission was exercising its discretion to develop workable, efficient procedures.”); Hunter v. FERC, 527 F.Supp.2d 9, 16-17 (D.D.C. 2007) (holding that issuance of an order to show cause is not final agency action); Energy Transfer Partners, L.P., 567 F.3d 134, 140-141 (5th Cir. 2009).

39 Corp. v. FERC, 613 F.2d 939, 944 (1979). Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 9 -

ignored issues by initiating an investigation.40 In any event, no party seeking rehearing has explained how the Commission’s initiation of an FPA section 206 investigation in this case ignores issues relevant to the public interest. Instead, these parties maintain in various ways that the revisions to ISO-NE’s Tariff discussed in the July 2018 Order would adversely affect the public interest. However, initiating the FPA section 206 investigation did not cause those arguments to be ignored; it created a forum in which they could be discussed.

Many challenges to the July 2018 Order focus on the Commission’s statement that “[w]e find ISO-NE’s methodology and assumptions in the OFSA and Mystic Retirement Studies reasonable,”41 which was an element of the Commission’s determination accepting “ISO-NE’s conclusions that the retirement of Mystic 8 and 9, under current ISO-NE Tariff provisions, could cause ISO-NE to violate mandatory reliability standards as soon as 2022.”42 Parties contesting this statement argue in various ways that the Commission did not provide substantial evidence to support it.43 However, the substantial evidence standard is a requirement that applies to review of final agency action,44 and, as discussed above, the decision to initiate an FPA section 206 proceeding is not a final agency action. Consequently, the Commission made no final determinations in the July 2018 Order regarding the methodology and assumptions used in the OFSA and Mystic Retirement Studies.45 Arguments concerning the evidentiary support for such determinations are therefore premature. Indeed, the cases cited on rehearing to support the claim that the Commission failed to provide substantial evidence

40 See, e.g., Southern Union Gas Co. v. FERC, 840 F.2d 964, 968 (D.C. Cir. 1988); Iroquois Gas Transmission System L.P., 69 FERC ¶ 61,165, at 61,631 (1994); JMC Power Projects v. Gas Pipeline Co., 69 FERC ¶ 61,162 (1994), reh’g denied, 70 FERC ¶ 61,168, at 61,528 (1995), aff’d, Ocean States Power v. FERC, 84 F.3d 1453 (D.C. Cir. 1996); American Gas Ass’n v. FERC, 912 F.2d 1496, 1504-1505 (D.C. Cir. 1990); Cerro Wire & Cable Co. v. FERC, 677 F.2d 124, 128 (1982).

41 July 2018 Order, 164 FERC ¶ 61,003 at P 49.

42 Id.

43 ENECOS Rehearing Request at 4-7; Maine PUC Rehearing Request at 5-9; Massachusetts AG Rehearing Request at 3-5; Public Interest Organizations Rehearing Request at 8-17.

44 5 U.S.C. § 706(2)(E) (2018); 16 U.S.C. § 825l(b) (2018).

45 Consequently, in response to the Public Interest Organizations, any future determination regarding the justness and reasonableness of ISO-NE’s tariff could not regard the validity of the ISO-NE’s analyses as an already adjudicated fact. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 10 -

to support its finding concerning the OFSA and Mystic Retirement Studies all pertain to final agency action,46 and as such they are inapplicable here.

Regarding various other allegations of Commission error in connection with the Commission’s directives to ISO-NE in the July 2018 Order, we find these to be likewise premature. NGSA/AWEA argue that the Commission erred in finding that a short-term, out-of-market solution to keep Mystic 8 and 9 in operation was needed to address ISO- NE fuel security issues. However, the Commission did not make that finding. It directed ISO-NE either to make certain filings, including tariff revisions that provide for the filing of a short-term cost-of-service agreement, or to show cause why the Tariff remains just and reasonable absent those filings. While the Commission disagreed with assertions that ISO-NE had not demonstrated “a compelling need for out-of-market action,”47 that statement was made in connection with instituting the FPA section 206 proceeding. As a result, the Commission simply found that a prima facie case existed that merited further

46 The cases cited by the parties raising this argument are Motor Vehicle Mfrs. Ass’n of the U.S. v. Mut. Automobile Ins. Co., 463 U.S. 29 (1983) (holding that the National Highway Traffic Safety Administration agency failed to present an adequate basis and explanation for rescinding a passive restraint requirement it had issued under the National Traffic and Motor Vehicle Safety Act of 1966); FERC v. Electric Power Supply Ass’n, 136 S.Ct. 760 (2016) (holding, inter alia, that the Commission had supported a final rule with substantial evidence); Tenneco Gas v. FERC, 969 F.2d 1187, 1214 (D.C. Cir. 1992) (holding that the Commission failed to consider adequately relevant evidence regarding the ability of owner pipelines with affiliates to control a partnership when sustaining a rebuttable presumption of control and, as a result, imposing requirements under Commission Order No. 497); National Fuel Gas Supply Corp. v. FERC, 468 F.3d 831 (D.C. Cir. 2006) (holding that a Commission order making the Commission’s Standards of Conduct applicable to natural gas pipeline companies’ non-marketing affiliates was not supported by substantial evidence); Algonquin Gas Transmission Co. v. FERC, 948 F.2d 1305 (D.C. Cir. 1991) (holding that a number of rate determinations made under section 5(a) of the Natural Gas Act were not supported by substantial evidence); S. C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014) (holding that findings in a Commission final rule were supported by substantial evidence); New England Power Generators Ass’n v. FERC, 881 F.3d 202 (D.C. Cir. 2018) (holding that in denying complaints, the Commission did not provide reasoned analysis or explanation regarding why it changed course from its past precedent); NSTAR Elec. & Gas Corp. v. FERC, 481 F.3d 794 (D.C. Cir. 2007) (holding that the Commission did not provide adequate support for a finding that rates were just and reasonable).

47 July 2018 Order, 164 FERC ¶ 61,003 at P 49. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 11 -

investigation in an evidentiary hearing.48 The Commission made no final decisions in this connection that could be subject to rehearing. As such, NGSA/AWEA’s concerns with potential market impacts resulting from a shorter-term cost-of-service mechanism are, as with the arguments addressed above, not appropriately raised on rehearing of the July 2018 Order.49

Much the same can be said of ENECOS’s claim that the Commission erred by “speculating” about potential future modifications to ISO-NE’s Forward Capacity Market bidding rules with regard to retiring generation retained for fuel security. ENECOS refers to the Commission’s suggestions regarding how ISO-NE could, if it elected to submit Tariff revisions, address the possibility that an owner of a resource that needs to be retained for fuel security reasons may need to decide, prior to receiving approval of its cost-of-service agreement, whether to retire the resource unconditionally.50 These suggestions are not final agency action that could be subject to a rehearing request since, as suggestions, they do not have binding effect. We also disagree with ENECOS that the Commission’s suggestions prejudiced stakeholder input in an expedited proceeding. Instead, the Commission’s guidance provided stakeholders with knowledge of possible lines of inquiry in the FPA section 206 proceeding and thus facilitated participation in the proceeding.

For similar reasons, we reject the Maine PUC’s contention that in the July 2018 Order, the Commission erred by failing to attempt to establish a methodological framework for the fuel security analysis. The Maine PUC does not explain why the Commission must address such matters before ISO-NE submits Tariff revisions rather than address them, to the degree necessary, after ISO-NE submits those revisions in a future filing. In addition, we disagree with the Maine PUC that the Commission erred in the July 2018 Order by not explicitly requiring ISO-NE to perform a transmission security analysis in connection with a filing of interim Tariff provisions with a short- term, cost-of-service agreement to address fuel security. According to the Maine PUC, performing a transmission security analysis is a Tariff requirement that became applicable once the Commission denied ISO-NE’s waiver request, and the Commission

48 Id. (stating that evidence “indicate[s] that the ISO-NE Tariff may be unjust and unreasonable because it contains no mechanism to address these pressing concerns”) (emphasis added).

49 The Commission addressed the complex issues related to implementing a short- term cost-of-service mechanism in the December 2018 Order. See December 2018 Order, 165 FERC ¶ 61,202 at PP 82, 86-87, 96.

50 See July 2018 Order, 164 FERC ¶ 61,003 at PP 56-58. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 12 -

thus erred in not requiring it.51 This argument conflicts with the Commission’s broad discretion to initiate investigations discussed above.52 The Commission found that the Tariff may be unjust and unreasonable because it fails to address the regional fuel security concerns at issue, and the Commission initiated its investigation on this basis. The Maine PUC claims that if the Commission had directed a transmission security analysis, the fuel security issues identified could have been evaluated in the stakeholder process.53 Even if that were true, it does not limit the Commission’s discretion to choose a course of action nor imply that the Maine PUC’s preferred route is more suitable than the one the Commission chose. Given the Commission’s discretion to investigate, and the absence of any requirement to make a determination on a transmission security analysis, the Commission did not err when it did not direct a transmission security analysis in the July 2018 Order.

We disagree with ENECOS that the Commission erred by relying on the Mystic Retirement Studies when initiating the FPA section 206 proceeding. ENECOS states that these studies were not part of the record, and therefore intervenors were substantially prejudiced because they did not have an opportunity to review them prior to the July 2018 Order. The initiation of the FPA section 206 proceeding did not prejudice any party, as it did not involve any final determinations by the Commission. In addition, ISO-NE proposed in its filing responding to the July 2018 Order to use in the FPA section 206 proceeding the same underlying model developed for the OFSA and used for the Mystic Retirement Studies to assess the need to retain a resource for fuel security,54 and therefore all parties have had an opportunity to review and comment on the essential features of the Mystic Retirement Studies prior to final Commission action.

NGSA/AWEA maintain that the Commission should have provided ISO-NE and its stakeholders with more time to pursue a market-based solution before adopting a short-term solution.55 In a similar vein, the Maine PUC argues that the Commission erred by allowing ISO-NE to file a short-term out-of-market solution rather than directing ISO-

51 Maine PUC Rehearing Request at 12.

52 See P 13 supra.

53 Maine PUC Rehearing Request at 12-13.

54 Id. PP 10-11.

55 See, e.g., NGSA/AWEA Rehearing Request at 9 (arguing that even if ISO-NE were correct that it cannot provide reasonable assurance that necessary changes to replace Mystic 8 and 9 will be in place in the 2022-2024 timeframe, the Commission should have at least have given ISO-NE and stakeholders a year to pursue a market-based solution before resorting to a short-term fix that further distorts the market). Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 13 -

NE to modify Pay-for-Performance rules. These arguments essentially dispute the Commission’s choice of procedures for investigating and addressing the concerns identified in the July 2018 Order. Those procedures, however, are squarely within the Commission’s discretion.56

We dismiss the requests by NEPGA and CT Parties for clarification or rehearing concerning the treatment of resources retained for fuel security purposes in the Forward Capacity Market. The Commission made no final determinations on this issue in the July 2018 Order, and it is therefore not ripe for rehearing. With respect to NEPGA and CT Parties’ request for clarification of the July 2018 Order on this point, we note that the Commission dealt with the treatment of resources retained for fuel security purposes in the Forward Capacity Market at length in the December 2018 Order.57 We therefore will not address the matter here.

We also dismiss Indicated New England EDCs’ request for clarification regarding the purpose of ISO-NE’s July 1, 2019 filing of permanent Tariff revisions, which the Commission required in the July 2018 Order. Indicated New England EDCs do not point to any unclear or ambiguous statements in the July 2018 Order that they contend require clarification. They instead request that the Commission make findings pertaining to infrastructure development that are beyond scope of this proceeding. We decline to do so.

As indicated above, the Commission initiated its FPA section 206 investigation to address fuel security issues. We now determine that the Commission’s acceptance of ISO-NE’s proposed Tariff revisions establishing a fuel security study methodology, a short-term cost-of-service mechanism to ensure fuel security, and related provisions governing the allocation of costs for such out-of-market compensation in the December 2018 Order renders the FPA section 206 investigation moot.58 Therefore, we will close the FPA section 206 investigation.

56 See Domtar Me. Corp. v. FERC, 347 F.3d 304, 314 (D.C. Cir. 2003) (“The agency . . . alone is cognizant of the many demands on it, its limited resources, and the most effective structuring and timing of proceedings to resolve those competing demands.”) (citation omitted); see also City of Las Vegas v. Lujan, 891 F.2d 927, 935 (D.C. Cir. 1989) (“[s]ince agencies have great discretion to treat a problem partially, [the court] would not strike down the [agency’s decision] if it were a first step toward a complete solution, even if [the court] thought [the agency] ‘should’ have covered both” issues in the same order) (footnote omitted).

57 December 2018 Order, 165 FERC ¶ 61,202 at PP 57-88.

58 See generally id. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Docket Nos. ER18-1509-001 and EL18-182-001 - 14 -

The Commission orders:

(A) In response to the requests for rehearing, the July 2018 Order is hereby modified and the result sustained, as discussed in the body of this order.

(B) The FPA section 206 proceeding in Docket No. EL18-182-000 is hereby terminated, as discussed in the body of this order.

By the Commission.

( S E A L )

Kimberly D. Bose, Secretary. Document Accession #: 20201203-3053 Filed Date: 12/03/2020 Document Content(s) ER18-1509-001.DOCX...... 1