Renewable energy cheers revised MOPR at PJM
Minimum Offer Price Rule or MOPR topic ruled stakeholder discussions for a while at PJM Interconnection. This saga started in 2016 with Calpine complaining at FERC about “price suppression” due to state subsidies for renewable energy in the PJM’s capacity market auction. Since a Republican was elected to the White House in November 2016, the saga continued with FERC finding the PJM capacity market design “unjust and unreasonable” in 2018.
Fast forward to September 2021, with a Democrat leading FERC and a Democrat at the White House, there is a lot of stakeholder desire to put this MOPR behind and work on a future grid – Advanced Notice of Proposed Rulemaking (ANOPR) on transmission planning and generator interconnection. ANOPR, not MOPR, better serve renewable developers.
With FERC Commissioners tied 2-2 along party lines, this PJM MOPR rule is the first major policy having a ripple effect in the energy news cycle. Once again, MOPR is making news because the US Senate has not confirmed a fifth FERC Commissioner. We expected the Democrat nominated as fifth Commissioner to vote with Democrats on the Commission, including Chairman Glick and Commissioner Clements, at least on this MOPR topic. But he might have recused himself even if confirmed because of his work at the DC Public Service Commission.
The nuance here is that PJM’s proposed MOPR approach didn’t get a FERC Commissioner vote since it was a tie. Which meant, PJM’s proposal prevailed, and hence clean energy advocates are rejoicing and celebrating.
This new reformed PJM MOPR is a big deal for supporters of renewable energy and state energy advocates because of the implications of the capacity price. In addressing the PJM MOPR topic in April 2021, FERC Chairman Glick famously said something along the lines of “if PJM cannot fix it, FERC should act!”
Way back when it all started
We don’t know if Calpine thought their 2016 complaint would take so many years to resolve one way or the other. This MOPR issue put all renewable projects in jeopardy at PJM’s capacity market. PJM’s capacity market prices are the most leading indicator of locational capacity prices for any Regional Transmission Organization (RTO).
Due to this MOPR distraction, PJM spent much time that it could have spent on planning for the grid of the future. MISO and SPP did not have this MOPR anchor to drag them down. So, during PJM generator interconnection stakeholder deliberations, MISO and SPP’s queue clustering process is the role model for PJM.
Implications for renewable developers
MOPR discussions took a heavy toll on PJM RTO staff and its stakeholders. As a result, PJM lost sight of another hefty topic – generator interconnection process reform. But PJM is catching up with the industry and proposing tariff changes similar to what MISO and SPP have for addressing queue backlogs. Hence renewable developers must be prepared to see a faster turnaround for interconnection studies.
With the Republican-led FERC old MOPR rule, capacity from states with Renewable Portfolio Standards (RPS) and clean energy targets could be penalized in the PJM capacity auction. But not anymore in this new PJM MOPR proposal. Hence that is good news for developers. PJM’s capacity auction looks ahead 3 years into the future. Unlike the MISO auction, which is voluntary and looks ahead only one year. SPP does not have a capacity market. PJM also had a new CEO, Manu Asthana, who took over in January 2020. So, in PJM’s defense, PJM had a lot going on in late 2019 and early 2020 before the new FERC Chairman Glick took over.
Remember the time when New Jersey threatened to leave PJM’s capacity market?
In a sign of frustration, the state of New Jersey Board of Public Utilities (NJBPU) (their version of state Public Utility Commission) had initiated a proceeding to quit PJM’s capacity market in March 2020. But NJBPU reversed its course in July 2021 after receiving strong signals from FERC and PJM that PJM’s MOPR issue could be resolved to their satisfaction. Another parallel effort is underway in plain sight at PJM that concerns offshore wind (OSW) prospects in New Jersey.
New Jersey has entered into a State Agreement Approach with PJM that allows the state to select transmission developers for actively meeting their aggressive OSW mandates.
Old MOPR was bad policy and bad politics. What’s next?
So, the key takeaway is that RTOs are important in energy policy. And when a bad policy like the old MOPR combines with bad politics, it takes up too much oxygen in the RTO stakeholder forums – that is the lesson policymakers should learn.
PJM’s capacity market auctions started and then stopped due to this MOPR issue. Now, we can be assured that capacity market auctions will start again, even though it takes a while to get all the previous auctions done and caught up with the regular cycle. In the meanwhile, PJM’s generator interconnection queue is bursting with solar and energy storage projects.
Subscribe to Renewable Energy World’s free, weekly newsletter for more stories like this