Andy Ott and Joseph Bowring often disagree.
But last week, PJM’s Senior Vice President for markets and the Independent Market Monitor said there’s at least one thing on which they agree: the MOPR unit-specific review process is “flawed, non-transparent and provide[s] too much discretion to PJM and the IMM.”
The Markets and Reliability Committee approved a problem statement Thursday to standardize and improve the transparency of the unit-specific review process used in applying the Minimum Offer Price Rule (MOPR).
PJM and the monitor wanted to do away with the unit-specific MOPR exemptions in favor of blanket exemptions for winners of competitive solicitations and self-supply resources.
But the Federal Energy Regulatory Commission ruled May 2 (ER13-535) that eliminating the review for generators that don’t meet the exemptions was not just and reasonable. Instead, FERC suggested that PJM conduct a stakeholder process to consider revisions to the process. (See “Split Decision on MOPR.”)
MOPR was added to PJM’s capacity market rules in 2006 to prevent buyer-side market power.
The problem statement and issue charge approved by MRC seeks to develop new financial modeling assumptions, with a goal of standardizing them and making them more consistent with those used to establish Net CONE (cost of new entry). Among the issues to be considered are asset life and calculations of net revenue and cost of capital.
The project, to be assigned to the Capacity Senior Task Force, is scheduled for completion in time for a December 1 FERC filing and implementation in the 2014/15 delivery year.
Compliance Filing
Ott also briefed the MRC on a compliance filing the RTO must make in response to the FERC order.
PJM’s response, filed yesterday:
- allows MOPR exemptions for qualifying facilities under contract to capacity market sellers;
- pledges to review the net short and net long thresholds for the self-supply exemption every four years; and
- defines “repowering” to clarify that it includes both projects that increase capacity and those that don’t. PJM had proposed that repowered gas generators be treated as a new resource under MOPR.
Also yesterday, Calpine Corp., FirstEnergy Corp. and NRG Energy Inc. filed requests asking FERC to reconsider its ruling, joining a rehearing request filed last week by the Illinois Commerce Commission.
The Illinois filing alleges FERC erred in allowing PJM to subject integrated gasification combined cycle (IGCC) generators to MOPR.
Calpine Corp said FERC was mistaken in requiring PJM to retain the unit-specific review. The commission “neglected to address the fact that the MOPR modifications set forth in the December 7 Filing were proposed as a package that was overwhelmingly approved by stakeholders and that reflected significant compromises on the part of Calpine and other parties,” Calpine said.
FirstEnergy said the self-supply exemption is based on PJM’s analysis of the 2015/2016 auction, which it said is not representative of current market conditions. The company said FERC should address the potential that the exemption could be gamed.
NRG said the commission had abandoned its long-standing “regulatory compact” with investors. “The MOPR Order cuts the legs out from under the buyer-side power mitigation rules by selectively approving the elements of the PJM proposal that would weaken the MOPR, while rejecting those elements that would strengthen the buyer-side market power protections,” the company said.
