By Rory D. Sweeney

WILMINGTON, Del. — PJM’s long-awaited capacity construct redesign will have to wait at least another month for endorsement by a key stakeholder committee, and its path to implementation includes additional hurdles after that.

Stakeholders at last week’s Markets and Reliability Committee meeting voted to defer an endorsement vote on the Independent Market Monitor’s MOPR-Ex proposal until the committee’s Jan. 21 meeting. PJM confirmed that even if it does receive endorsement, staff won’t recommend that the Board of Managers approve filing it for FERC approval; they will instead recommend their own proposal, despite not earning stakeholder endorsement.

John Horstmann of Dayton Power and Light made the deferral motion, which was seconded by Bob O’Connell of Panda Power Funds. Horstmann offered that a delay would give stakeholders a chance to review FERC’s response to the Department of Energy’s Notice of Proposed Rulemaking on price supports for coal and nuclear facilities, which is due by Jan. 11. It also provides additional time, without delaying a scheduled vote at the Jan. 25 Members Committee meeting, to review changes to the proposal requested by stakeholders and incorporated by the Monitor to secure endorsement. (See PJM Monitor Battles Exelon on MOPR-Ex Proposal.)

The proposal was developed by the Monitor as an extension of the minimum offer price rule (MOPR) in effect in PJM until FERC rejected it earlier this month on remand from a U.S. appeals court. (See On Remand, FERC Rejects PJM MOPR Compromise.) Its critics have been vocal, but it was the only proposal to receive endorsement at the Capacity Construct/Public Policy Senior Task Force (CCPPSTF), which spent the past year considering revisions to PJM’s capacity design. As the task force concluded earlier this year, many stakeholders preferred the status quo, but the RTO’s rules prevent that from being a voting option. Fearing that, without a clear stakeholder mandate, PJM would file its own two-stage repricing proposal, voters coalesced around the Monitor’s proposal, which is seen as having the least impact on the existing design.

But to secure enough votes for endorsement at the MRC, the Monitor revised the version approved by the CCPPSTF. That move has muddied the endorsement process and confused some stakeholders. It has also incensed other stakeholders, who argue that the Monitor is hypocritically picking winners and losers in drafting a rule ostensibly designed to avoid picking winners and losers.

Exelon’s Jason Barker questioned Monitor Joe Bowring on revisions to an exemption to the MOPR for resources developed under state renewable portfolio standards. Exelon, which offered its own two-stage repricing proposal in the CCPPSTF, contends that the Illinois zero-emissions credit (ZEC) program, which benefits several of its nuclear facilities, should be included in the exemption.

Bowring argued that he doesn’t “get to write the rules,” so his proposal must operate within the structures developed by states.

“We are taking those standards as they exist. … We deleted portions that would have resulted in most, if not all, RPS programs being not in compliance with this,” he said. “I know you would like to conflate ‘zero-emissions’ with ‘renewable,’ but they are not the same thing. This is the RPS, not the ZEC standard.”

In a subsequent email to RTO Insider, Bowring added that FERC has ceded regulatory authority over RPS programs and that the U.S. Supreme Court provided additional leeway for states in setting renewables standards in its decision rejecting Maryland’s plan to subsidize generation. (See Supreme Court Rejects MD Subsidy for CPV Plant.)

As a result, there is only a limited ability for FERC-approved rules to affect the market participation of generation developed under RPS programs. The MOPR-Ex is intended to respect existing programs while introducing an element of competition, Bowring said.

“I can tell you most of the [state] advocate offices would not vote for the other version, but with this modification made … I think you gained the support of most of the advocate offices,” said Greg Poulos, executive director of the Consumer Advocates of the PJM States (CAPS). “Status quo is the preferred option, but this is the next best option because of the RPS exemption.”

Monitor’s Lead

The situation is further confused by PJM taking a back seat in developing necessary revisions to its governance documents.

“We are trying to facilitate at this point,” said PJM CFO Suzanne Daugherty.

Carl Johnson, who represents the PJM Public Power Coalition, took the RTO to task for what he saw as the “extraordinary” situation in which it would “not actively draft the Tariff language” for a proposal endorsed by a task force and said he plans to address it in the future.

Staff defended themselves, saying they “didn’t decline” to write the language but “engaged with the IMM staff and legal counsel” to determine that it might be better for the Monitor to write the first draft to ensure its intentions are accurately reflected.

“PJM is continuing to do its legal analysis, but PJM has been in close connection with the IMM,” PJM attorney Chris O’Hara said.

He noted that analysis might determine that applying the MOPR to any qualifying facility (QF) under the Public Utility Regulatory Policies Act isn’t defensible, “but that would entail a complete rewrite to what the stakeholder group did.”

PJM Recommendation

PJM’s Stu Bresler announced that staff’s “recommendation to the board would be that we not file that proposal” because “it does not accommodate state public policy decisions” and raises discriminatory concerns.

Bowring responded that in the event of a “super-majority” stakeholder endorsement, “we would then consider making that filing ourselves, so one way or the other, we expect the proposal to get to the commission.”

Such a filing would be under Section 206 of the Federal Power Act, he confirmed.

Poulos asked whether PJM would recommend the status quo; Bresler clarified that is the pre-2012 MOPR rule, which was in place prior to the filing FERC recently rejected.

“No, that would not be our recommendation to the board,” he said, adding that PJM would recommend its repricing proposal to replace the existing MOPR rule.

MOPR Status

FERC’s rejection also muddies PJM’s capacity auction schedules. The RTO asked FERC for a waiver on its deadline for filing MOPR exemptions for its Feb. 26 Incremental Auction, PJM’s Jen Tribulski said. Generators will have until Jan. 12 to request exemptions for the third IA for delivery year 2018/19. Unit-specific exemptions for the Base Residual Auction for 2021/22 will be due on Jan. 10. All exemptions are based on the pre-2012 rule.