Energy regulatory attorney Jason Johns contributed an article to Renewable Energy World titled “You get MOPR’d! And you get MOPR’d!,” published February 17, 2020. In the article, Johns discusses a late-2019 FERC decision on PJM Interconnection’s contested Minimum Offer Price Rule (MOPR). MOPR was written to dictate how generation resources of all kinds account for certain subsidies when bidding into the PJM Interconnection – the largest U.S. capacity market.
PJM filed its initial MOPR proposal in October 2018, in reaction to a June 2018 FERC decision that found that out-of-market payments provided by states to support the entry or continued operation of certain preferred generation resources threatened the competitiveness of PJM’s capacity market.
The PJM proposal was intended to strike a balance between state public policy goals and the need for competitiveness in the market. However, FERC elected to dramatically reformulate the MOPR — in part by including a likely overbroad definition of “state subsidy” and by distinguishing between new and existing resources, which favors “legacy thermal generators” over newer resources that are becoming a larger part of PJM’s portfolio.
Johns writes that “there are several elements of the decision that could be considered ‘arbitrary and capricious,’ meaning that FERC failed to articulate a rational connection between its decision and the record.” The decision has prompted almost 50 requests for rehearing from energy industry stakeholders.
Johns concludes: “There is no way around it — the MOPR is a mess. What many hoped would put this years-long saga to rest turned out to only amplify its impact and the uncertainty affecting development within the PJM market. The MOPR is far from over. Better hold on tight — it’s going to be a bumpy ride.”