FERC directs PJM to expand Minimum Offer Price Rule

Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission (FERC) has directed PJM Interconnection L.L.C. to expand its Minimum Offer Price Rule (MOPR) to address state-subsidized electric generation resources (with certain exemptions), a decision it says will “protect the competitive capacity market administered by PJM.”

FERC says this action reaffirms and builds on its June 29, 2018, order, which found that out-of-market payments provided, or required to be provided, by PJM states to support operation of certain generation resources threaten the competitiveness of PJM’s capacity market. That order ruled PJM’s open access transmission tariff is unjust and unreasonable because the MOPR failed to address the price-distorting impact of resources receiving out-of-market support.

PJM is a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 U.S. states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia) and the District of Columbia.

“I recognize, and wholeheartedly respect and support, states’ exclusive authority to make choices about the types of generation they support and that get built to serve their communities. They still can do so under this order,” FERC Chairman Neil Chatterjee said. “But the Commission has a statutory obligation, and exclusive jurisdiction, to ensure the competitiveness of the markets we oversee,” Chatterjee added. “An important aspect of competitive markets is that they provide a level playing field for all resources, and this order ensures just that within the PJM footprint.”

PJM now has 90 days to comply with the order, and at that time is to provide FERC with a new timeline for the next auction.

The American Council on Renewable Energy issued a statement saying FERC overstepped its authority with this decision.

“FERC delivered an early Christmas gift to the fossil fuel industry today at the unfortunate expense of ratepayers in PJM,” said Gregory Wetstone, president and chief executive officer of ACORE. “While we have been waiting for regulatory clarity in the PJM market, a Minimum Offer Price Rule directly conflicts with state policies designed to accelerate the transition to pollution-free, renewable power. ACORE is reviewing the implications of this order and our available options, but what is clear today is that FERC overstepped its authority with a decision that will ultimately lead to more pollution and higher electricity rates for consumers.” 

Click here for more details on the order.

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