FERC Chairman Richard Glick had strong words at Thursday’s open meeting regarding the end of PJM’s expanded minimum offer price rule (MOPR), saying “good riddance” to the controversial rule that had been in effect since 2019 (ER21-2582).
PJM’s narrowed MOPR proposal, filed by the Board of Managers on July 30, took effect Sept. 29 by operation of law after FERC deadlocked 2-2. The new rule applies only to resources connected to the exercise of buyer-side market power or those receiving state subsidies conditioned on clearing the capacity auction. (See FERC Deadlock Allows Revised PJM MOPR.)
“The expanded PJM MOPR was an absolute disaster, creating enormous uncertainty, threatening to impose billions of dollars in additional costs onto consumers and imperiling the future of the PJM capacity market itself,” Glick said.
Glick said PJM’s original MOPR in 2006 was a “narrowly constructed instrument” that was designed to address concerns about the exercise of buyer-side market power in the RTO’s capacity market. As wind and solar generation became more competitive and energy prices decreased, Glick said “new rationales” were offered to expand the rule’s reach.
The expanded MOPR order was a “thinly veiled attempt to frustrate state efforts to promote cleaner energy,” he said. The narrowed rule “returns the focus of the MOPR to where it belongs.”
Glick said he may have written some of the proposal’s aspects “slightly differently,” but it “plainly meets [the] standard” of Federal Power Act Section 205.
The commissioners on Tuesday issued formal statements explaining their views on the change, with Glick and Commissioner Allison Clements filing a joint statement.
Commissioner Mark Christie said in his statement that he agreed that the expanded MOPR needed “to be replaced or significantly modified” because it was “simply unsustainable” because of the disparate energy policies among PJM’s 13 states and D.C. But he called the RTO’s proposal the “flawed and rushed result of an ‘expedited’ stakeholder process.”
“Finding a replacement MOPR that properly accommodates state policies while ensuring a credible capacity market to benefit consumers — one in which competition is real, not a sham — has always been the challenge,” Christie wrote. “PJM’s present proposal simply fails to meet the challenge and, as the pleadings filed by intervenors to this docket demonstrate, the proposal fails to meet the FPA Section 205 standard of being just and reasonable and not unduly discriminatory or preferential.”
Christie said PJM’s Independent Market Monitor was “explicit” in its concerns that the PJM proposal was going to “open the door wide open” to exercises of market power, providing a “devastating critique” that the RTO’s markets “would be better off, more competitive and more efficient with no MOPR than with PJM’s proposed approach.”
“We must do better, and we can,” Christie wrote. “We should not rush into place a grossly inadequate proposal just to meet the artificial deadline of the December Base Residual Auction — an auction PJM itself has already asked to postpone — and do so just because we do not like the current MOPR structure.”
Commissioner James Danly had yet to issue his own statement of the MOPR as of Thursday’s commission meeting, saying he couldn’t meet the “internally agreed upon deadline.” He said it would be published “in the next day or so.”