The PJM Board of Managers announced yesterday that it has directed PJM staff to file a proposal to roll back the expanded Minimum Offer Price Rule (MOPR) that was put in place in response to a December 2019 FERC directive. 1/ pjm.com/-/media/about-…
The PJM proposal that will be filed with FERC removes both the pre-existing MOPR that applied to gas units and the expanded MOPR that applied to resources receiving a state subsidy, and replaces them with a much narrower MOPR. A summary is linked here: 2/ pjm.com/-/media/commit…
Basically, the PJM proposal applies MOPR to either actual exercises of buyer-side market power (determined after fact-specific investigation) or to state laws that condition the receipt of a subsidy on clearing in the capacity market. 3/
With respect to application of the MOPR to resources supported by state law, while PJM will conduct an initial screening and attestation process, *only FERC* will decide whether a state law provides subsidy support conditioned on clearing in the capacity market. 4/
If PJM, w/ advice and input from the IMM, determines a state law provides conditioned subsidy support, it will make an FPA section 205 filing at FERC declaring its intent to apply MOPR to resources supported by that state law. Or, parties can file a FPA section 206 complaint. 5/
The standard PJM will apply, and invite FERC to apply, might look familiar - it is essentially a "targeting" and "tethering" test derived from Hughes v. Talen and other recent Supreme Court precedent on preemption. 6/
In all, my personal view is that this is a reasonable outcome that gets us beyond endless MOPR wars. I also think leaving the call to FERC is the right move. Forcing PJM to arbitrate the validity of state policies was unworkable, to say the least. 7/
FERC filing is coming later this month. Also, NEPOOL (the stakeholder body in ISO-NE) just yesterday started the process of replacing its existing MOPR policies. So it looks like expanded MOPRs applied to state policies are quickly headed to the dustbin of history. 8/8
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