FERC on Tuesday mostly accepted PJM’s tariff revisions accounting for when the default offer price floor exceeds the market seller offer cap (MSOC) under the RTO’s expanded minimum offer price rule (MOPR) (EL16-49-004, et al.).

In a ruling in October, the commission rejected PJM’s revisions to the MSOC, saying it had “never been a subject of” the MOPR proceeding and was beyond the scope of the compliance directive. (See FERC Acts on PJM MOPR Filing.)

But it recognized that sellers “may be left without a valid offer under potentially conflicting tariff provisions in circumstances where the default or resource-specific offer price floor for a particular resource is higher than the market seller offer cap for such resource.”

FERC directed that, in such a circumstance, the seller should submit an offer using the MOPR resource-specific review process. It directed PJM to make a change to Attachment DD of its tariff to say that any sell offer for a new entry capacity resource with a state subsidy shall have an offer price no lower than the applicable MOPR floor offer price, “unless the applicable MOPR floor offer price is higher than the applicable market seller offer cap, in which circumstance the capacity resource with state subsidy must seek a resource-specific value determined in accordance with the resource-specific MOPR floor offer price process to participate in a Reliability Pricing Model (RPM) auction.”

PJM Filing

FERC found PJM’s compliance filing, submitted Nov. 13, “consistent with the directives of the compliance order” with the exception of one provision regarding the MSOC.

PJM included the Attachment DD language directed by the commission but also proposed an additional sentence to the tariff, which stated, “In the event the resource-specific MOPR floor offer price is greater than the applicable market seller offer cap, the capacity market seller of such capacity resource may only submit an offer for such resource equal to the resource-specific MOPR floor offer price into the relevant RPM auction notwithstanding the provisions in Tariff, Attachment DD, section 6.4(a) or Tariff, Attachment DD, section 6.5(a).”

Despite changes to the methodology for calculating revenue offsets, the RTO said there could still be instances where a resource’s offer floor exceeds its MSOC and that the additional sentence addressed these circumstances.

The Organization of PJM States Inc. (OPSI) protested that the sentence was not directed by FERC and that the commission should not permit PJM to accept an offer higher than the applicable MSOC. The RTO should instead “determine that when the applicable offer price floor exceeds the applicable market seller offer cap, the seller should be permitted to offer at the applicable market seller offer cap.”

The commission rejected the additional sentence on the grounds that it exceeded the October compliance order, directing PJM to submit a new compliance filing within 15 days removing the sentence from the tariff.

“As PJM posits, we acknowledge that circumstances may occur where the applicable offer price floor, whether default or resource-specific, may be higher than the applicable market seller offer cap, either default or resource-specific, such as where a resource is treated as new for the purposes of the MOPR and existing for the purpose of the offer cap,” the commission said in its ruling. “We also agree with PJM that the compliance order found that, in these circumstances, the resource must use the resource-specific offer price floor.”

Other Rulings

FERC also granted PJM’s request to reinstate the deadline — 30 days prior to the capacity auctions — for submission of demand seller offer plans. The RTO explained that when it sought waiver of preauction deadlines in its March 18 compliance filing, which the commission granted, the RTO “inadvertently listed the preauction deadline for submission of demand resource sell offer plans as 21 days prior to the start of the capacity auction.”

However, PJM said the deadline for the submission of demand resource sell offer plans should remain 30 days prior to each auction, consistent with the provisions of the tariff.

The commission also denied a request from the Independent Market Monitor for clarification on the definition of fixed resource requirement (FRR).

“The compliance order accepted PJM’s proposal regarding excluding FRR revenue from the definition of state subsidy and acknowledged that FRR entities can be compensated in a variety of ways, including those recognized as state subsidies,” FERC said. “The Market Monitor posits broad hypotheticals regarding how this tariff provision may be applied in specific circumstances. We decline to address hypothetical applications at this juncture, as PJM will need to evaluate each application based on its specific facts.”

FERC Comments

The commissioners unanimously approved the order, with new Commissioner Mark Christie not participating in the ruling.

Commissioner Richard Glick said he concurred on the “relatively narrow determinations” in the order, but he wrote separately “to underscore my continuing disagreement with the conclusions that the commission has reached throughout this proceeding.”

Commissioner Allison Clements said she also concurred with the narrow determinations in the order because PJM’s filing “largely complies with those directives.”

Clements said while she didn’t participate in the previous orders, she “strongly” disagrees with a strict MOPR.

“I believe the commission must look forward, past the false dichotomy presented in this proceeding that implies that we must choose to either ‘protect’ the markets within the commission’s jurisdiction or to accommodate state public policy goals,” Clements said.