Most PJM states oppose capacity repricing proposal
PJM’s capacity repricing proposal has garnered attention at FERC and in Congress, but it remains unpopular with a number of major stakeholders in the mid-Atlantic electricity market.
Under the proposal, PJM’s capacity auctions would be split in two. The first round would operate largely like today, but a second phase would make adjustments to accommodate resources either subsidized or mandated by government policies. PJM would recalculate prices after the first round by removing offers submitted by sellers with subsidies and replacing them with reference prices, reflecting what the grid operator estimates would be a competitive offer.
The proposal is intended to better integrate state electricity policies with PJM’s market construct, but most states in the market oppose the plan.
In a letter to the PJM board on Wednesday, OPSI argued that the grid operator’s staff had not demonstrated that state policies currently threaten the market, nor that their repricing proposal would “properly respect” state laws and policies.
“OPSI recommends that the PJM Board reject the repricing proposal and re-direct PJM Staff on a course of action that will correct or otherwise address the lack of underlying support, flaws, and unintended consequences inherent in the repricing proposal,” the organization wrote. “OPSI suggests a renewed and revised stakeholder process subject to a wider focus than that of the [capacity repricing proposal].”
Utility regulators from Delaware, D.C., Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, Pennsylvania, Virginia, North Carolina and Tennessee supported the OPSI statement. West Virginia and Ohio opposed it.
States are not alone in their opposition to the PJM plan. The grid operator’s independent market monitor proposed an alternative that would expand the market’s minimum offer price rule (MOPR) to include subsidized resources.
PJM, however, said in a subsequent letter that while more stakeholders supported the alternative, dubbed MOPR-Ex, the grid operator would forge ahead and submit its capacity repricing proposal to FERC. The grid operator did not respond to a request for comment on this story.
“While MOPR-Ex would not prevent state programs from providing support to individual generators, it would most likely exclude generators obtaining this support from clearing the PJM Capacity Market,” PJM CEO Andy Ott wrote. “PJM believes this approach is not sustainable and does not strike an appropriate balance between legitimate state interests and wholesale market integrity.”