Utility Dive covered FERC's new rule on capacity market pricing for the PJM region, quoting AEE's Jeff Dennis. Read excerpts below and the entire UD piece here.
Federal regulators on Thursday voted to effectively raise the bids of subsidized resources selling their power into PJM Interconnection's wholesale capacity market. Under the plan, new resources receiving subsidies will now be subject to the Minimum Offer Price Rule (MOPR), which raises the price floor for those resources attempting to sell their power into the wholesale market. The move is intended to prevent potential "unacceptable market distorting effects" caused by state clean energy policies, according to Federal Energy Regulatory Commission Chair Neil Chatterjee. Commissioner Richard Glick was the sole dissenting vote of the three commissioners.
States, clean energy advocates and market observers fear FERC's move will severely hinder incentives intended to bring new zero emissions resources online, while favoring incumbent fossil fuels. A range of estimates have found the plan could raise market costs from a range of $2.4 billion to $8.4 billion annually.
FERC's Thursday decision is consistent with Chatterjee's previous efforts to steer federal energy policy away from renewables subsidies, based on his assessment that resources such as solar and wind have matured in the market and can compete on their own.
"This was about new entrants to the market competing on a level playing field. And if there's not a price suppressive impact, then they ought to be able to compete without subsidies," Chatterjee told reporters.
Stakeholders have been awaiting a final decision on a reform to PJM's market since the grid operator's market monitor first submitted the proposal in April of 2018 in order to address suppressed market prices, which the grid operator blamed on increased state subsidies for carbon-free resources, including nuclear and renewables. Others have blamed the grid operator's low capacity market bids on low natural gas prices and an oversupply of generation. Commissioner Glick and clean energy advocates expressed frustration over FERC's decision, decrying it as an overstep in the markets that will hamper growing state interest in building out higher levels of renewable energy resources.
"There's a clear bias against new generation," Glick told reporters. "There's no reason to treat existing generation differently unless you're trying to promote existing generation to stay online, which is what I think is happening..."
"FERC's order is an unfortunate and unnecessary transformation of a limited rule designed to prevent market manipulation into a price support scheme for existing coal and natural gas power plants," Jeff Dennis, general counsel and managing director at Advanced Energy Economy, said in a statement...
Read the entire UD piece here.