Updated PJM MOPR Proposal
Overview and objective
PJM proposes to clearly define Buyer-Side Market Power (BSMP) and to prohibit and mitigate the exercise of BSMP through the minimum offer price rule (MOPR) and/or referral to FERC, as further described below. The approach outlined herein will maximize transparency and market confidence while ensuring PJM and the independent market monitor (IMM) are able to mitigate the exercise of BSMP when it is identified, while also better accommodating state public policies and self-supply business models. In addition, PJM proposes to further clarify the actions of a state (or
subdivision thereof) which may improperly interfere with bidding in PJM’s capacity market and FERC’s rate-making authority (deemed Conditioned State Support).
PJM will only apply the MOPR in the limited situations of either a) Exercise of BSMP, or b) Conditioned State Support, as further set forth below. PJM will utilize two attestations to be provided by all market sellers as described below as a key tool in implementing this proposal.
– BSMP shall be defined as “Ability of market participant(s) with a load interest to suppress market clearing prices for the overall benefit of their portfolio.”
– Exercises of BSMP require both the ability and incentive to do so. The exercise of BSMP shall be defined as “Anti-competitive behavior of market participant(s) with a load interest, or directed by a load interest, to
uneconomically lower capacity market offer(s) in order to suppress market clearing prices for the overall benefit of the market seller’s load portfolio or that of the directing load interest.” It is the exercise of BSMP that shall be prohibited.
– Conditioned State Support shall be defined as “Out-of-market payments or other financial benefit from a state, or political subdivision of a state acting in its sovereign capacity, provided in exchange for the sale of
a FERC-jurisdictional product conditioned on clearing in any RPM auction. The term ‘conditioned on clearing in any RPM auction’ refers to directives as to the price level at which a resource must be offered in the
capacity market or directives that the unit is required to clear in any capacity auction.”
Conditioned State Support
State policies deemed to be Conditioned State Support may improperly interfere with bidding in PJM’s capacity market and FERC’s rate-making authority. As such, PJM will apply the MOPR to resources receiving Conditioned State Support (in accordance with the process described below).