MOPR reconsidered: Competitive generators move away from FERC’s PJM order, toward carbon pricing
Competitive generators are quietly reversing course on a controversial federal rule many see as a blatant attempt to squash state energy policies.
Though competitive suppliers, led by generator Calpine, initiated the complaint that led to the Minimum Offer Price Rule (MOPR) expansion with the PJM Interconnection, they are now pivoting their support toward more market-based mechanisms, largely as a response to state threats to exit the PJM capacity market altogether, three industry sources close to discussions confirmed.
“The [MOPR expansion] policy has no economic foundation — price controls never ‘fix’ subsidies — and it’s painted merchants as the political villain,” Devin Hartman, director of energy and environmental policy at free market think tank R Street Institute, said in an email. Merchant generators “need to turn political angst against subsidies and towards embracing their core business model: market competition.”
The MOPR sets a minimum price floor for resources bidding into the wholesale markets, and the Federal Energy Regulatory Commission in December expanded that rule to apply to all resources receiving a state subsidy. It quickly became a source of political animosity between states, clean energy interests, generators and federal regulators, causing merchant generators to rethink their approach.
The transition has been in the works for a while — the Electric Power Supply Association (EPSA) and several of its members were among the broad coalition that requested the Federal Energy Regulatory Commission host a technical conference on carbon pricing. Though EPSA has supported carbon pricing since 2007, some stakeholders now see it as one potential offramp for the PJM MOPR expansion. And Calpine as early as May indicated it and other members were willing to come to the table to workshop long-term solutions to the MOPR, an early recognition that some generators did not find the policy politically viable.
But while EPSA acknowledges there are “more efficient” solutions than the MOPR, the group maintains it was necessary public policy, and says stakeholder fears that it will impinge of state clean energy ambitions are likely overblown.