By Rory D. Sweeney

VALLEY FORGE, Pa. — PJM’s Independent Market Monitor faced a barrage of questions last week at the final stakeholder evaluation of its capacity market proposal ahead of a vote at Thursday’s Markets and Reliability Committee meeting.

Monitor Joe Bowring was absent for the first half of the meeting, leaving his chief counsel, Jeffrey Mayes, to answer whatever he could. Many were technical, however, and had to await Bowring’s arrival.

PJM offered stakeholders no assistance, making it clear from the start that its facilitation of the meeting did not indicate its support of the proposal. The Monitor’s MOPR-Ex proposal was the only one among 10 debated at the Capacity Construct/Public Policy Senior Task Force (CCPPSTF) to receive the task force’s endorsement and automatic consideration at the MRC.

After a year of meetings at the CCPPSTF, many stakeholders decided they preferred the current capacity design to any of the proposals, but they feared PJM would file its own two-stage repricing proposal in the absence of a clear endorsement by stakeholders. They believed that the RTO’s repricing proposal, which isolated subsidized generation offers from competitive ones by administratively reorganizing auction results, was such a drastic change that it could not be undone once implemented, while the Monitor’s proposal, which would extend the minimum offer price rule (MOPR), was as close to the status quo as possible.

The MOPR-Ex proposal would allow exemptions for many unique circumstances, including public power facilities and generators subsidized through states’ renewable portfolio standards, but it would not include Illinois’ zero-emission credit (ZEC) program. That doesn’t sit well with Exelon, which stands to benefit the most from the ZECs and whose own repricing proposal was rejected by the task force.

Exelon’s Jason Barker peppered the Monitor with questions about revisions to the RPS exemption that were inserted after the CCPPSTF endorsed it. Those revisions will be proposed at the MRC as an alternative to the endorsed version.

He asked Mayes if ZEC programs, designed to curb air emissions like other states’ renewable energy programs, qualify as “renewable” under the proposal. Mayes said no.

“We don’t understand the rationale of that program,” Mayes said. “The definition of ‘renewable’ is not all that complicated.”

The reason for the revisions, he said, was that programs that incented one type of renewable energy, such as wind or solar, are acceptable, but being preferential to a certain type of technology to harness that energy, such as offshore wind or rooftop solar, was not.

“It’s ironic that we’re trying to protect against states picking winners and losers and drafting tariff language that picks winners and losers,” Barker said. “They’d have the same effect on the marketplace, but one would be mitigated and one would not.”

The exemption calls for the inclusion of some programs based on the date of their implementation.

“It’s called ‘grandfathering.’ You’ve never heard of it?” asked Ruth Ann Price, who represents Delaware’s Division of the Public Advocate. “What Jason is trying to do is he’s trying to show some discrimination. I get it.”

Barker and his colleague Sharon Midgley also questioned revisions that prohibited supply from affiliates but allowed public power to overbuild facilities and then have the excess capacity exempted from the MOPR floor price.

Bowring acknowledged some of the concerns and said he would consider ways to address them in a revised final proposal.

The situation is complicated by a ruling from FERC that struck down the MOPR that PJM has been using since 2013 and on which the Monitor based its proposal. (See On Remand, FERC Rejects PJM MOPR Compromise.) The previous iteration of the rule was limited to gas-fired units and included fewer exemptions, and PJM has indicated it’s planning to allow that version to largely go back into effect with enhancements to calculation methods that have been developed since it was implemented.

Bowring, however, was unconcerned.

“I think the MOPR-Ex aligns explicitly with the order,” he said.

“They seemed to pretty emphatic that extending the mitigation period would be more costly,” Barker said, referring to FERC’s denial of an extension of the MOPR mitigation from one year to three years.

Bowring said the mistake was in using a floor price that was designed for a new unit for the subsequent years after the initial mitigation. Had the floor been switched to being based on the units’ net avoidable cost rate, it would have been consistent, he said.