PJM continues trying to untangle subsidized resources from its capacity market
New York — As PJM Interconnection prepares to file tariff revisions with federal regulators regarding changes to its capacity market structure designed to address subsidized resources, stakeholders Tuesday discussed PJM’s plan, along with how to handle New Jersey’s recently enacted nuclear subsidy law.
he US Federal Energy Regulatory Commission on June 29 rejected two proposals from PJM designed to mitigate the effects of state-subsidized energy resources on the region’s capacity market. FERC established a proceeding (EL18-178) to work out details of the plan, which PJM and its stakeholders discussed at Tuesday’s Markets & Reliability Committee special session on the issue.
The grid operator has been refining its definition of “subsidy,” which it currently characterizes as a material subsidy received “in any way” by a capacity market seller for a capacity resource that is greater than 1% of that resource’s “actual or reasonably anticipated” total revenues from markets administered by PJM, according to the tracking document being used to formulate the FERC filing.
PJM’s updated proposal will only consider subsidies that the capacity market seller is “entitled to” at the time the election for a resource carve-out is due. A capacity market seller with an annual resource, which is subject to the minimum offer price rule because it is receiving a subsidy, is eligible to elect a carve-out for that resource.
Market participants that choose to elect a resource carve-out must do so 120 days prior to the start of the base residual auction, which has been pushed back to August from May next year to allow ample time for these rule changes to be approved and implemented. PJM noted that if a resource receives an actionable subsidy after the BRA, the MOPR will be applied in the incremental auctions for that delivery year and the resource will not be eligible for a carve-out as the load will already have been included in the BRA for that delivery year.
NEW JERSEY ZECS
Some stakeholders asked how the “eligible” subsidy distinction would be handled in the case of New Jersey where legislation was recently passed to allow nuclear power plant owners to apply for zero-emissions credits.