Electricity Markets

New Jersey BPU launches investigation of possible exit from PJM capacity market

The New Jersey Board of Public Utilities (BPU) has launched an investigation of whether alternatives to the state’s participation in the regional capacity market administered by the PJM Interconnection would better enable New Jersey to achieve its energy and environmental goals, and is seeking comments on a variety of topics related to the investigation.

The BPU’s March 27 order cites a January New Jersey Energy Master Plan statement that the Federal Energy Regulatory Commission is actively attempting to support fossil fuel interests “under the guise of promoting ‘fair’ competition.”

The Energy Master Plan cited FERC’s December 2019 order in which it directed PJM to expand its current minimum offer price rule (MOPR) to address state-subsidized electric generation resources, with certain exemptions. This expansion of the MOPR will also apply to new public power and electric cooperative self-supply resources.

The BPU’s order further stated that FERC’s MOPR order “potentially disrupts a number of New Jersey's efforts to shape its electric generation resource base,” and that “the Board cannot sit idle while FERC considers rehearing and clarification.”

The BPU order also noted that the Energy Master Plan discusses a variety of options for the board’s consideration.

These include using the Fixed Resource Requirement (FRR) as a mechanism to leave the capacity market, requiring load-serving entities to procure a higher percentage of clean energy through a Clean Energy Standard, and “other clean energy markets or mechanisms to competitively source carbon-free energy and ensure appropriate decision-making for resource adequacy.”

In the Order, the BPU directs its staff “to investigate whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy paradigm and, if not, recommend how best to meet New Jersey’s resource adequacy needs in a manner consistent with the State’s clean energy and environmental objectives, while considering costs to utility customers.” 

BPU staff may conduct this investigation on behalf of the Board through technical conferences, public hearings, or written comments, the order noted. 

The BPU said the first of these investigative actions is the request for written comments that accompanied the order and posed the following questions:

  • Can New Jersey utilize the FRR alternative to satisfy the state’s resource adequacy needs? (Included in this topic is how an FRR might be implemented through legislation and regulation, which entity would procure capacity, and the pros and cons of whether to establish a State Power Authority);
  • Can New Jersey Utilize the FRR to accelerate achievement of New Jersey clean energy goals? (Includes whether to adopt an energy market carbon dispatch price and “whether there are any other models for meeting the state’s resource adequacy needs and advancing the state’s clean energy agenda”);
  • Can modifications to the Board’s Basic Generation Service construct facilitate resource adequacy procurements aligned with the Energy Master Plan clean energy objectives? (Includes consideration of a “portfolio manager approach as a means of providing for a wider range of resource options.”);
  • Can other mechanisms, such as a Clean Energy Standard or Clean Energy Market, facilitate achievement of New Jersey clean energy goals? (The focus of this question is on “alternative competitive processes to facilitate the State’s long-term clean energy objectives.”)

Comments are due April 29.

APPA, others said FERC’s MOPR is flawed

FERC’s MOPR order will expose public power utilities and their customers to the risk of having to pay twice for new capacity resources, without providing them any effective way to mitigate that risk, the American Public Power Association, American Municipal Power and the Public Power Association of New Jersey said in seeking rehearing of the December decision.