By Rich Heidorn Jr.

Dominion Energy asked FERC on Friday to reconsider its conclusion that self-supply resources suppress PJM capacity prices, contending the commission’s position is inconsistent with an exemption it granted similar resources in NYISO.

Dominion asked to supplement its Jan. 21 request for rehearing of the commission’s December order requiring PJM to apply the minimum offer price rule (MOPR) to all state-subsidized resources (EL16-49, EL18-178). (See PJM MOPR Rehearing Requests Pour into FERC.)

PJM had asked FERC to approve its previous exemption for self-supply resources owned by public power entities (cooperative or municipal utilities), vertically integrated utilities subject to traditional bundled rate regulation and load-serving entities that serve retail customers. In 2013, the commission ruled that “a self-supply LSE that owns or contracts for a large proportion of the capacity needed to meet its load has no reason to finance uneconomic entry given that such a strategy would not be profitable.” (See Is Self-supply Suppressing Prices?)

But FERC’s Dec. 19 order found that self-supply resources were subsidized because the energy and capacity they produce are purchased through state-directed procurements.

Dominion said in its rehearing request that the commission failed to justify making self-supply capacity subject to MOPR and ignored evidence that self-supply does not suppress prices.

In the Feb. 20 NYISO order, however, the commission accepted a self-supply exemption proposed by NYISO on terms similar to PJM’s proposal, Dominion said (EL16-92, ER17-996). (See FERC Narrows NYISO Mitigation Exemptions.)

“In the 2020 NYISO order, the commission accepted in part, subject to condition, the NYISO’s proposed self-supply exemption, the NYISO’s proposed net short and net long threshold criteria for the self-supply exemption, and generally all other aspects of the NYISO’s proposed self-supply exemption. … Yet, the commission made no effort to distinguish between its findings regarding the NYISO’s proposal and its nearly opposite findings in this proceeding made just two months prior,” Dominion said.

“If the NYISO’s proposal is adequate and the commission continues to find that self-supply entities do not possess the incentive to artificially suppress pricing in the NYISO market, the commission should likewise find that, with well defined guardrails, self-supply entities in PJM also continue to lack the incentive to artificially suppress prices in PJM capacity markets. Moreover, the commission should permit the self-supply exemption in substantially the same form originally proposed by PJM in this case,” Dominion said. “The commission is obligated to provide its reasoning when departing from existing policy or precedent.”

A Dominion official told an energy conference last week that growing vertically integrated utilities such as Dominion may need to leave the capacity market if the ruling is not changed. (See related story, “A Maryland Capacity Auction? Dominion Going FRR?” Overheard at ACORE Policy Forum 2020.)

Dominion Energy Virginia, which owns 27,100 MW of generation, is planning to build 2.6 GW of wind generation off the coast of Virginia and is about halfway through a plan to add 3,000 MW of solar generation.