The American Public Power Association (Association) has submitted comments to the Federal Energy Regulatory Commission calling for public power’s self-supply resources to be excluded — or carved out as an exemption — from any expanded PJM minimum offer price rule (MOPR).
The Association agrees with FERC that the reliability pricing model (RPM) provisions of PJM’s tariff are unjust, unreasonable, and discriminatory. and has concluded that the benefits of the RPM are not commensurate with the costs to customers.
However, according to John McCaffrey, Regulatory Counsel for the Association, “An expanded MOPR encompassing all new and existing resources that receive state out-of-market support would do more harm than good. Blanket application of the expanded MOPR to public power self-supply resources would improperly interfere with public power utilities’ efforts to provide reliable, reasonably-priced service to their customers in PJM.”
The support provided to public power self-supply resources through retail rate revenue and/or other advantages of the public power business model (such as non-taxable bond interest) is not out-of-market support. Therefore, such support should not be subject to mitigation by the expanded MOPR.
A broadly-expanded MOPR could raise prices, heighten the risk of paying for excess capacity, increase market complexity, and interfere with state policy goals. It will inhibit development of any generation outside of the PJM energy and capacity markets and interfere with public power’s ability to get the right resource mix to meet system and customer needs.
FERC should not apply the MOPR to public power self-supply resources. More broadly, the Association urges the Commission to encourage PJM and its stakeholders to rethink the region’s resource adequacy construct.