UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION ) ) Docket No. ER PJM Settlement, Inc. ) ANSWER OF PJM INTERCONNECTION, L.L.C. ( PJM ), pursuant to Rule 213 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission ( Commission ), 1 submits this answer to the response of Orange Avenue FTRS, LLC ( Orange ), filed on August 23, 2018, in the captioned proceeding. 2 As set forth below, the Commission should accept this limited answer 3 and grant the Waiver Request. I. The sole purpose of this answer is to clarify the limited scope of the Waiver Request and to confirm PJM s entitlement to the waiver of a temporal requirement, assuming that the Commission determines that a waiver is necessary. 4 The Commission routinely grants 1 18 C.F.R Response of Orange Avenue FTRs, LLC, Docket No. ER (Aug. 23, 2018) ( Orange Response ). 3 In answering the Orange Response, and properly framing the limited scope of the Waiver Request, Request of PJM Interconnection, L.L.C. and PJM Settlement, Inc. for Waiver, Docket No. ER (July 6, 2018) ( Waiver Request ), PJM seeks to assist the Commission s understanding of the issues and ensure a complete and accurate record. In similar circumstances, the Commission has found good cause to permit an answer that is otherwise not sanctioned by the Commission s rules. See, e.g.,, 139 FERC 61,165, at P 24 (2012) (accepting answers to a protest because they have provided information that assisted [the Commission] in [its] decision-making process );, 104 FERC 61,031, at P 10 (2003) (accepting answer because it will not delay the proceeding, will assist the Commission in understanding the issues raised, and will [e]nsure a complete record upon which the Commission may act ); Morgan Stanley Capital Gr., Inc. v. N.Y. Indep. Sys. Operator, Inc., 93 FERC 61,017, at 61,036 (2000) (accepting answer as helpful in the development of the record ). 4 The Commission is respectfully reminded that the Waiver Request was submitted as a precaution, without any concession by PJM that the PJM Open Access Transmission Tariff s ( Tariff ) two-day Collateral return provision (i.e., Tariff, Attachment Q, section III) applied. PJM is still in the process of gathering information to determine whether the Collateral is no longer required to be maintained an express precondition to the Tariff s directive governing return of Collateral. The Commission may reasonably conclude that the Waiver Request is not necessary to allow PJM to retain the Collateral pending the conclusion of PJM s ongoing investigation. Any such conclusion, of course, would render moot the Waiver Request and Orange s objections thereto.

2 prospective relief from tariff provisions establishing scheduling or deadline requirements, similar to the provisions identified in the Waiver Request. Allegations in the Orange Response concerning the circumstances surrounding the 2017 Pledge Agreement 5 and the subsequent financial default by GreenHat Energy LLC ( GreenHat ) which allegations PJM disputes, as previously addressed 6 have no bearing on the Waiver Request for one basic reason: the Commission is not being asked to prejudge the outcome of the parties factual disputes and the Commission need not reach those factual issues in order to grant the Waiver Request. 7 II. To be clear, the Waiver Request does not seek authorization to convert the Collateral or to use it to set off the GreenHat losses. Those remedies will be pursued, if at all, through other yet-to-be determined legal processes. The Waiver Request merely seeks additional time to allow PJM to complete its evaluation of the proper disposition of the Collateral and, as necessary, to initiate appropriate legal action. 8 In this regard, granting temporary relief from the Tariff s Collateral return deadline avoids the potential of having to unwind (and claw back ) any 5 Partial Assignment and Pledge Agreement between GreenHat Energy, LLC and PJM Interconnection, LLC, dated June 23, 2017 ( Pledge Agreement ). 6 See Motion for Leave to Answer and Answer of, Docket No. ER (Aug. 8, 2018) ( August 8 Answer ). 7 Orange repeatedly focuses on the Pledge Agreement and falsely asserts that there was an absolution of its prior fraudulent representations (the Pledge Agreement expressly incorporated the prior representations of value). The Pledge Agreement itself is only one possible basis of personal liability of Mr. Kittell, the shared owner/managing member of GreenHat and Orange. PJM is reviewing, and anticipates investigations into other matters, including possible violations of market behavior rules and a host of other potentially actionable claims against Mr. Kittell and/or the companies under his control. But to be clear, the Commission is not being asked to make any determination with respect to any of this. 8 As explained in the Waiver Request, PJM s ongoing investigation into the GreenHat default is focusing on the relationship between GreenHat and Orange, and the representations made by those entities shared owner/managing member, Mr. Kittell and subsequent GreenHat default. See Waiver Request at 4. 2

3 repayment made to Orange that is ultimately determined to be properly used to offset the costs to the PJM Membership of the GreenHat default. 9 III. In its Response, Orange devotes considerable attention to the parties divergent explanations regarding the circumstances leading to the GreenHat default. However, these differing perspectives need not be reconciled in order to find that the Waiver Request satisfies the Commission s standards governing waivers. These standards provide that, in order to grant a waiver, the Commission must find that the waiver was sought in good faith, is of limited scope, addresses a concrete problem, and does not have undesirable consequences. 10 The Waiver Request complies with each of these standards and nothing in the Orange Response offers any meaningful rebuttal. IV. More specifically, PJM demonstrated that the Waiver Request was of limited scope, as it was confined to a one-time, temporary postponement of the Tariff s Collateral return timing provisions. 11 In other words, the Waiver Request serves temporarily to maintain the status quo, with no broader or enduring consequences. In its Response, Orange does not argue that the Waiver Request is impermissibly broad; in fact, the Orange Response contains no discussion whatsoever of the Commission s waiver standards, electing instead to focus exclusively on an 9 See Tariff, Attachment Q, section III ( Collateral which is no longer required to be maintained under provisions of the Agreements shall be returned at the request of a Participant no later than two Business Days following determination by PJMSettlement within a commercially reasonable period of time that such Collateral is not required. ). 10 See, 150 FERC 61,122, at P 45 (2015). 11 PJM also demonstrated, without any specific rebuttal from Orange, that the Waiver Request resolved a concrete problem (avoidance of a potentially improper return of Collateral) and did not produce undesirable consequences. Waiver Request at 6-7; see also August 8 Answer at

4 extraneous defense of GreenHat s alleged understanding and conduct relative to the parties Pledge Agreement negotiations. V. The Commission will routinely grant waiver where, as here, the utility seeks prospective and temporary relief from a tariff s timing and deadline provision. For example, in Midcontinent Independent System Operator, Inc., the Commission considered a request for waiver involving the offer deadlines applicable to the Midcontinent Independent System Operator, Inc. s ( MISO ) 2017/2018 Planning Resource Auction. 12 Over intervenor objections, the Commission granted the waiver, finding that MISO acted in good faith and that the waiver would contribute to market certainty. 13 Other cases are to the same effect. In Dunkirk Power LLC, the Commission granted a market participant s request for waiver of tariff deadlines governing reactivation of a capacity resource, thereby allowing the generator an extension of time in which to demonstrate eligibility to maintain Capacity Resource Interconnection Service status. 14 In New York Independent System Operator, Inc., the Commission granted a utility s request to waive tariff-imposed timelines governing the submittal of required regional transmission organization reports. 15 And in, the Commission granted PJM s request for waiver of Tariff deadlines applicable to the receipt and administration of requests for exemption from PJM s 12 Midcontinent Indep. Sys. Operator, Inc., 162 FERC 61,023 (2018). 13 Id. at P Dunkirk Power LLC, 147 FERC 61,146 (2014). 15 N.Y. Indep. Sys. Operator, Inc., 143 FERC 61,012 (2013). 4

5 Minimum Offer Price Rule. 16 Time and again, waiver requests involving tariff deadlines or scheduling requirements are routinely granted. 17 For the reasons set forth herein, and as further supported in the Waiver Request and the August 8 Answer, the Commission should grant the Waiver Request. Respectfully submitted, Jacqulynn B. Hugee Craig Glazer Jacqulynn B. Hugee Vice President Federal Government Policy Associate General Counsel 1200 G Street, N.W., Suite Monroe Boulevard Washington, D.C Audubon, PA (202) (phone) (610) Craig.Glazer@pjm.com Jacqulynn.Hugee@pjm.com Christopher O Hara Deputy General Counsel 2750 Monroe Blvd. Audubon, PA (610) Chris.OHara@pjm.com August 31, , 162 FERC 61,055 (2018). 17 See, e.g., Pub. Serv. Co. of N.H., 162 FERC 61,104 (2018) (waiving tariff deadline governing submission of restoration plan); Shell Energy N. Am. (US), L.P. v. Cal. Indep. Sys. Operator Corp., 153 FERC 61,307 (2015) (waiving tariff provision governing deadline for notification of billing dispute); Aragonne Wind, LLC, 145 FERC 61,106 (2013) (waiving tariff s one-year notice requirement for exercise of rollover rights); Conservation Servs. Group Inc., 145 FERC 61,284 (2013) (waiving capacity qualification deadlines of ISO New England Inc. s tariff to permit consideration of supplemental data). 5

6 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Washington, D.C., this 31 st day of August Jacqulynn B. Hugee Attorney for