On May 31, 2018, CPV Power Holdings, L.P., Calpine Corporation, and Eastern Generation, LLC (together, “Complainants”) filed a complaint against PJM Interconnection, L.L.C. (“PJM”), contending that PJM’s Open Access Transmission Tariff (“Tariff”) does not prevent the suppression of prices in PJM’s Reliability Pricing Model (“RPM”) market by resources receiving state subsidies, and that the solutions that PJM had proposed to FERC—“Capacity Repricing” and “Minimum Offer Price Rule (“MOPR”)-Ex”—are “inadequate and unjust and unreasonable.”  The Complainants argued that FERC should instead require PJM to adopt a “Clean MOPR”—meaning a MOPR “applicable to all subsidized resources and without categorical exemptions like those in PJM’s MOPR-Ex proposal.”

The MOPR is a mechanism in PJM’s RPM designed to curb the ability of new generators to artificially depress capacity auction clearing prices by submitting below-cost bids.  In recent years, PJM, market participants, and FERC have sought to address the competitive implications in the RPM of generators receiving certain state-sponsored subsidies like Zero Emissions Credits (“ZECs”), which may enable generators in some instances to submit below-cost bids.  On April 9, 2018, PJM filed two alternative proposals with FERC to address supply-side state subsidies that could otherwise depress prices in the RPM: (i) the “Capacity Repricing” proposal, which would establish a two-stage capacity market to accommodate subsidized resources; and (ii) the “MOPR-Ex” proposal, which would expand PJM’s use of the MOPR to address subsidized resource entry (see April 17, 2018 edition of the WER).  PJM’s proposal is still pending at FERC.

In their May 31 complaint, Complainants argued that neither the proposals in PJM’s April 9 filing, nor a parallel, currently-pending 2016 complaint against PJM, which similarly sought to address the competitive implications of subsidized resources, would enable FERC to “take the sort of comprehensive action that is urgently needed at this time.”  Instead, the Complainants stated that their complaint provided a vehicle for the Commission to adopt a “Clean MOPR,” and “thereby fully mitigate the impact of subsidized resources on the RPM market.”  According to Complaints, under a “Clean MOPR,” any new or existing unit receiving a “Material Subsidy” would be mitigated to a reference price.  This approach would retain just two of the exceptions and exemptions from PJM’s MOPR-Ex proposal: (1) the competitive entry exemption (an exemption that covers only those resources that do not receive a Material Subsidy); and (2) the unit-specific exception.  The Complainants argued that this approach represented a “just and reasonable alternative for the screening and mitigation of offers in the PJM Capacity Market.”

A copy of the Complaint may be found here.