On August 28, 2026, FERC granted Hillsboro Solar, LLC’s (Hillsboro) authorization to make wholesale sales of electric energy, capacity, and ancillary services at market-based rates (MBR) on the condition that Hillsboro adopt the same market power mitigation as Hillsboro’s affiliate, Duke Energy Florida, LLC (Duke Energy Florida) in certain balancing authority areas (BAAs). In doing so, FERC emphasized that long-standing Commission precedent requires an MBR seller to include the same market power mitigation as any mitigated affiliate in its tariff in order to obtain MBR authority.
On April 17, 2026, as amended on May 6, 2026, May 13, 2026, and July 16, 2026, Hillsboro applied for authority to make wholesale sales of electric energy, capacity, and ancillary services at market-based rates. Hillsboro is developing a 274-megawatt solar photovoltaic generation facility in Lawrence County, Alabama (Hillsboro Facility). Upon the Hillsboro Facility achieving commercial operation, the entire output of the facility will be sold to Tennessee Valley Authority under a 20-year firm power purchase agreement. Hillsboro’s proposed MBR tariff states it will not make MBR sales in two markets: the Florida Power Corporation and the City of New Smyrna Beach, Florida BAAs.
As part of MBR authority applications, entities are required to report their upstream affiliations. In its MBR application, Hillsboro reported that Brookfield Corporation (Brookfield) is an upstream owner of Hillsboro. Brookfield is affiliated with Duke Energy Florida. Duke Energy Florida has been granted MBR authority in various BAAs, and is subject to cost-based mitigation in the following BAAs: Florida Power Corporation, Duke Energy Progress – West, Duke Energy Progress – East, Duke Energy Carolinas, and the City of New Smyrna Beach, Florida. Hillsboro reasoned that while it was affiliated with Duke Energy Florida, it was not affiliated with Duke Energy Carolinas or Duke Energy Progress, and therefore should not be required to adopt the same cost mitigation measures as those in the Duke Energy Carolinas or Duke Energy Progress BAAs. Hillsboro argued that there should be no “transitive property of mitigation measures” that causes Hillsboro to be subject to mitigation of the affiliates of Duke Energy Florida with whom Hillsboro itself is not affiliated. No interventions or protests were filed in response to Hillsboro’s application or any of its amendments.
FERC approved Hillsboro’s application for MBR authority, effective June 17, 2026, subject to condition, finding that Hillsboro satisfied the Commission’s requirements for MBR authority. FERC now considers Hillsboro a Category 2 seller in the Southeast region, and a Category 1 Seller in the Central, Northeast, Northwest, Southwest, and Southwest Power Pool regions.
However, FERC determined that Hillsboro’s MBR tariff must include the same market power mitigation as Duke Energy Florida because Duke Energy Florida is affiliated with Hillsboro. FERC emphasized that this is not a “new” requirement for MBR sellers, and that the Commission has previously directed MBR sellers and their affiliates to adopt a mitigated seller’s market power mitigation in their MBR tariffs. FERC stated that not requiring such mitigation would allow Hillsboro to engage in market-based rate sales in the Duke Energy Carolinas and Duke Energy Progress BAAs where its affiliate Duke Energy Florida is subject to cost-based rates. Thus, FERC reasoned the purpose of the requirement is to prevent the possibility of circumventing market power mitigation rules through sales by affiliates. FERC noted that permitting such circumvention would effectively create a loophole, which would undermine market competition and fail to adequately protect ratepayers against unjust and unreasonable rates. FERC also found that previously accepted MBR tariffs of Hillsboro’s affiliates through Brookfield, which are also affiliated with Duke Energy Florida, were accepted in error because such MBR tariffs did not contain the required market power mitigation — specifically, cost-based rate limitations in the Duke Energy Carolinas and Duke Energy Progress BAAs.
In approving Hillsboro’s application for MBR authority, FERC directed Hillsboro to file a revised tariff in compliance with FERC’s findings within 30 days.
FERC’s order, issued in Docket No. ER26-2244-001, is available here.