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).