Stuart Caplan

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PJM Interconnection, L.L.C. (“PJM”) postponed its May 2019 annual capacity auction (known as a Base Residual Auction or “BRA”) pending further FERC orders over the expansion of PJM’s Minimum Offer Price Rule (“MOPR”) to cover all resources receiving “State Subsidies.” In an October 15, 2020 order (“October 2020 Order”) addressing arguments on rehearing, PJM’s MOPR-related compliance filings, and PJM’s proposed May 2019 BRA implementation schedule, FERC largely upheld its April 16, 2020 order on rehearing (“April 2020 Order”) (see April 22, 2020 edition of the WER) of its December 19, 2019 order in which it directed PJM to apply the MOPR to all state-subsidized capacity resources (“Replacement Rate Order”) (see December 20, 2019 edition of the WER). In the October 2020 Order, FERC also largely accepted PJM’s March 2020 and June 2020 MOPR-related compliance filings; directed PJM to submit a further compliance filing on certain issues; and set aside its April 2020 Order on limited grounds.

Most notably, FERC:

  • Set aside its finding in the April 2020 Order that state default service auctions meet the definition of State Subsidy, and accepted in PJM’s proposal to exclude independently evaluated, non-discriminatory, fuel-neutral, competitive state-directed default service auctions from application of the expanded MOPR;
  • Directed PJM to submit a compliance filing:
    • proposing further revisions to the provisions governing which resources are eligible to elect the Competitive Exemption from the MOPR;
    • modifying its proposal regarding the gaming provisions that dictate under what circumstances a resource that elects the Competitive Exemption and then accepts a State Subsidy will forfeit its capacity revenue; and
    • modifying its tariff to provide 30 days for sellers to notify PJM of a material change in subsidy status unless such material change occurs within 30 days of the auction, in which case sellers will have five days to notify PJM of the change; and
  • Granted PJM’s proposed implementation schedule for the 2019 BRA and subsequent BRAs, but found that PJM could not commence the BRA schedule until FERC has issued a subsequent order on compliance filing in another case in which FERC directed PJM to adopt operating reserve demand curves and to calculate forward looking energy and ancillary service off-sets reflecting this market rule change (“Reserves Proceeding”) (see May 28, 2020 edition of the WER).

Continue Reading FERC Issues Order on Rehearing and Compliance in the PJM MOPR Proceeding; Directs PJM to Wait to Conduct 2019 BRA for 2022/23 Until the Issuance of Another FERC Order

On April 16, 2020, FERC issued two orders in the proceedings related to PJM Interconnection, L.L.C.’s (“PJM”) Minimum Offer Price Rule (“MOPR”). First, FERC denied requests for rehearing and granted limited clarification with respect to its June 29, 2018 order (“Paper Hearing Order”) where it (i) found PJM’s then-existing tariff to be unjust and unreasonable because it failed to address the suppressive effect of resources receiving out-of-market payments on the capacity market, and (ii) implemented a paper hearing to establish a revised MOPR to apply to both new and existing resources receiving out-of-market payments, regardless of resource type (see July 11, 2018 edition of the WER). Second, FERC largely affirmed its December 19, 2019 order arising out of the paper hearing, in which it directed PJM to apply the MOPR to all state-subsidized capacity resources (“Replacement Rate Order”) (see December 20, 2019 edition of the WER).
Continue Reading FERC Largely Affirms and Provides Limited Clarification and Rehearing on its Orders Requiring PJM to Apply the Minimum Offer Price Rule to All Resources Receiving State Subsidies

On February 20, 2020, FERC issued four separate orders with significant impacts on renewable and storage resources under the New York Independent System Operator, Inc.’s (“NYISO”) buyer-side mitigation (“BSM”) rules (collectively, “February 20 Orders”). BSM rules serve some of the same purposes as PJM’s Minimum Offer Price Rule or “MOPR.” While the orders explicitly limit or reject proposed renewable and storage exemptions, the orders are equally important for what they do not do. Focused on the cases and records before it, FERC declined to extend BSM to apply outside of the so-called Mitigated Capacity Zones or “MCZs” (New York City, or Zone J, and the Lower Hudson Valley, or Zones G through J). Consequently, BSM still does NOT apply to any units, including renewable, storage or nuclear units, outside of these MCZs. FERC also directed NYISO to better tailor a renewable exemption specific to the MCZs. The extent to which this will help the new development of offshore wind in New York remains to be seen.  In dissenting opinions, Commissioner Richard Glick argued, among other things, that the majority’s overall approach to BSM will protect incumbent generators while impeding state clean energy policies.
Continue Reading FERC Issues Four Orders Affecting Renewable and Storage Resources’ Ability to Obtain Capacity Market Revenues Under NYISO’s Buyer-Side Mitigation Rules

On December 19, 2019, FERC issued a long-awaited order in which it directed PJM Interconnection, L.L.C. (“PJM”) to apply its Minimum Offer Price Rule (“MOPR”) to all state-subsidized capacity resources (“December 2019 Order”). FERC also adopted limited grandfathering and exemptions for certain resources.  The December 19 Order will have a significant impact on PJM’s capacity market. PJM requires resources subject to the MOPR to offer into the PJM capacity auctions at or above a PJM-determined offer floor. When this floor is above capacity auction clearing prices, the resource does not clear the market or receive any capacity market revenue. Capacity prices are also higher than they would be had the resource cleared the market.
Continue Reading FERC Orders PJM to Apply the Minimum Offer Price Rule to All Resources Receiving “State Subsidies”