Several wholesale capacity markets have experienced low clearing prices in recent years, due in part to state-subsidized resources (renewables and, sometimes, nuclear) outcompeting unsubsidized generators (natural gas and coal) with low bids. Last month, the Federal Energy Regulatory Commission (FERC) released a long-awaited—and controversial—final order that directs regional grid operator PJM to expand its minimum offer price rule (MOPR) to state-subsidized resources in the capacity market. In particular, the FERC’s order requires PJM to set a minimum bid price for all new and existing resources—with some exceptions—that receive out-of-market state subsidies.
By requiring state-subsidized resources to comply with MOPR, market prices for capacity would rise. FERC’s order, which is intended to restore “just and reasonable” rates, has been praised by fossil fuel generators. However, environmental groups and consumer groups have argued that the rule could prevent state-sponsored clean energy resources from participating in the market and could lead to high costs for consumers. On January 22, 2020, Resources for the Future (RFF) hosted a timely conversation on the MOPR order. The event began with a brief primer on the MOPR and was followed by a panel discussion on the implications of FERC’s MOPR order for states’ clean energy policy goals, anticipated impacts on the resource mix in PJM, and potential impacts on ratepayers.
- Kathryne Cleary, Resources for the Future
- Craig Glazer, PJM Interconnection
- Robert Gramlich, Grid Strategies
- Sarah Novosel, Calpine Corporation
- Susan Tierney, Analysis Group, Resources for the Future
- Moderator: Karen Palmer, Resources for the Future