PJM submitted its compliance filing (PDF) March 18 in response to a Federal Energy Regulatory Commission (FERC) order to expand PJM’s Minimum Offer Price Rule (MOPR) used in the PJM capacity auctions.
The FERC order issued in December significantly expanded the application of the MOPR used in PJM’s capacity market, which had previously only applied to new natural gas-fired resources. PJM’s compliance filing conforms PJM’s Tariff to the order and will enable PJM to implement the new requirements in a timely and efficient manner.
Since FERC issued its December order, PJM has been committed to listening to input from stakeholders. During that time, PJM has heard from every stakeholder sector, conducting nine formal stakeholder meetings to discuss the filing and surrounding issues and convening PJM’s Liaison Committee, which allows member representatives to meet directly with the PJM Board of Managers.
In its filing, PJM has worked hard to balance disparate stakeholder input. The filing:
- Establishes the Net Cost of New Entry (Net CONE) and Net Avoidable Cost Rate (Net ACR) values for the necessary resource classes
- Provides flexibility for unit-specific offer reviews
- Deals with the circumstances, as required by FERC, where resources elect the competitive exemption and then later receive a subsidy
- Establishes auction timing that achieves a balance between states’ needs – given the potential passage of legislation and processes that would follow that legislation – and the much-needed market certainty of running a timely auction
- Asks FERC to notice our filing and provide no less than 35 days for comment – instead of the typical 21 day period – given the size of the filing, the importance of the issues and the current circumstances.
PJM proposes in the filing to run the 2022/2023 Delivery Year auction six months after FERC approves its compliance filing. PJM also asks FERC for the flexibility to add limited additional time if state-legislated changes are required, as long as the auction is concluded no later than March 2021.
PJM would be able to run subsequent auctions with as little as six months in between to help maintain an orderly process for each auction while working to return to a normal auction schedule. FERC’s December order did not include many of the exemptions proposed by PJM to accommodate state public policy initiatives. PJM has stated that it can run competitive auctions in the short term, but in a separate request for rehearing, PJM asked FERC to reconsider certain elements of its order. That request is pending.