D.C. Circuit Rejects Challenge To FERC Orders On ISO-NE Scarcity Pricing Rules

On January 19, 2018, the United States Court of Appeals for the District of Columbia (the "D.C. Circuit") rejected the New England Power Generators Association's (the "Association") challenge to two FERC orders on ISO New England Inc.'s ("ISO-NE") scarcity pricing mechanisms in ISO-NE's real-time and capacity markets.  The D.C. Circuit rejected the challenge both on procedural grounds and on the merits.

When energy in ISO-NE's real-time market is scarce, ISO-NE's Tariff includes a special scarcity pricing mechanism that is automatically triggered to ensure that generators produce enough energy in real time (the "Scarcity Rates").  Similarly, in ISO-NE's capacity market, ISO-NE's Tariff includes a special pricing mechanism called the Peak Energy Rent Adjustment (the "Adjustment") that is designed, according to the D.C. Circuit, to recover some revenues earned by capacity suppliers when prices in the real-time energy market are very high.  Although the triggers