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PJM seeks FERC approval of changes to mimimum offer price rule


From the December 12, 2012 issue of Public Power Daily

Originally published December 12, 2012

By Robert Varela
Editorial Director
The PJM Interconnection LLC has asked the Federal Energy Regulatory Commission to approve changes to its minimum offer price rule (MOPR) that would replace the current unit-specific review process with two categorical exemptions. The MOPR is intended to protect PJM’s capacity market from "buyer-side market power" by preventing new resources from making low offers into the RTO's forward capacity market that artificially suppress wholesale capacity prices. One exemption would be for load-serving entities (such as public power utilities) that meet certain net short and net long criteria and that are operating under longstanding business models that predate PJM’s capacity market.

The other categorical exemption would be for state-sponsored generation selected through a competitive and non-discriminatory state procurement process—which must be open to both new and existing capacity—and for projects that receive no out-of-market payments related to the construction of new generation. 

The Maryland Public Service Commission issued a statement slamming the proposal and said it would continue to oppose the filing before FERC. "These revisions will, if allowed to take effect, protect existing generators—whose plants were built by ratepayers before deregulation—and erect new and higher barriers to competition, all to the detriment of the public interest," said PSC Chairman Douglas Nazarian.

"Based on its experiences, PJM has concluded that the unit-specific MOPR exception process is not serving the long-term interests of the capacity market and should be replaced as soon as possible," PJM told FERC in its Dec. 7 filing.

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