By Christen Smith

PJM industrial customers said Tuesday that voluntarily buying and selling renewable energy credits shouldn’t count as subsidies in the RTO’s capacity market, urging FERC to reconsider its broad definition of the word to exclude those transactions (EL16-49, EL18-178).

FERC, in its Dec. 19 ruling expanding PJM’s minimum offer price rule to all resources, said distinguishing between RECs mandated through state renewable portfolio standards and those bought as part of power purchase agreements is impossible. The new MOPR, meant to address price suppression from state subsidies, has drawn criticism from a broad section of stakeholders who say FERC went too far in attempting to control states’ generation choices. (See related story, PJM MOPR Rehearing Requests Pour into FERC.)

Both the RTO and the PJM Industrial Customer Coalition (ICC) note that if resources can certify that all the RECs it sold were voluntary — rather than within the confines of state-sponsored RPS programs — then those resources should be exempt from the MOPR. At the very least, PJM argued in its rehearing request, FERC should have adopted a “safe harbor” for voluntary REC transactions.

The ICC was joined in its rehearing request by the Illinois Industrial Energy Consumers, the Electricity Consumers Resource Council (ELCON), the Industrial Energy Consumers of America, the Pennsylvania Energy Consumer Alliance, the Industrial Energy Consumers of Pennsylvania and the American Forest and Paper Association.

In their filing, the groups said they share FERC’s goal “of ensuring just and reasonable prices in both the short-term and the long-term through proper and sustainable operation of the PJM capacity market” and appreciate that the “order conveys a clear signal that states’ efforts to subsidize capacity resources will not be permitted to interfere with the efficient functioning of the PJM capacity market.”

But the ruling, they said, does not “enable its practical implementation without unlawfully upsetting existing commercial arrangements and market dynamics.”

“In a voluntary REC transaction, the RECs are not needed or used by the retail customer or its load-serving entity for state RPS compliance,” the groups said. “Because there is no nexus between the customer’s load and any state RPS, the generating resource does not obtain any state subsidy from its sale of the RECs.”

Hershey, the famed chocolate company, also filed a motion to intervene in the proceedings Tuesday upon learning that its pending PPAs that include voluntary REC transactions would be subject to the MOPR. The agreements were designed to help Hershey meet its greenhouse gas emission-reductions goals in line with the Science-Based Targets Initiative. The company said in its filing that FERC’s decision has “effectively stalled Hershey’s project and impeded its ability to meet Hershey’s environmental goals and the expectations set by the company’s consumers and investors.”

ELCON, in a separate filing it made against the MOPR, reiterated that such contracts should not be subjected to the new price floors.

“In particular, private capital that pursues voluntary capacity contracts in bilateral markets should not face administrative corrections,” the group said. “For example, corporate consumers are increasingly deploying their own capital to voluntarily purchase power through the bilateral market or procure renewable energy credits, which do not constitute subsidies. Voluntary payments received outside of the capacity market should receive categorical exclusion.”