House Democrats Condemn FERC Attack On Clean Energy Economy
Washington, January 29, 2020
Today, Reps. Don Beyer (D-VA), Mike Quigley (D-IL) and Matt Cartwright (D-PA) led a letter signed by 36 House Democrats to the Federal Energy Regulatory Commission (FERC) expressing serious concerns over a recent FERC order that would change the market structure for the nation’s largest electricity market, PJM Interconnection (PJM). In their letter, the Members argued the order will eventually raise costs for consumers in the PJM market by forcing them to buy duplicative capacity, severely jeopardize the nation’s advanced energy economy, and nullify state efforts to advance clean energy policies.
The Members wrote:
“We are deeply concerned by the Commission’s December 19 Order to make significant changes to PJM Interconnection’s (PJM) capacity market. The Commission’s policy decision will functionally nullify the energy preferences of states, increase consumer costs by forcing customers to pay twice for generation capacity, and deny states flexibility to pursue their policy goals. Moreover, the Commission’s order runs contrary to its duty to ensure that the markets are truly competitive by restricting the kinds of resources that can participate in the capacity market while effectively requiring customers to purchase all their capacity (plus an extra buffer) from this market.
“The order threatens to preempt state policies that choose the energy generation mix within their borders. Under the Federal Power Act (FPA), states have the authority to support the resource mix of their choice. Indeed, most states in PJM require utilities to source some of their energy needs from zero-emission energy resources, including wind, solar, and nuclear power plants. However, the new FERC order broadly defines “state subsidies” to subject nearly all of these resources to a minimum bid in the market, called the Minimum Offer Price Rule (MOPR). In effect, this broad definition appears to sweep in nearly all state policies developed to date to encourage deployment of energy technologies, namely renewable portfolio standards, energy efficiency resource standards, renewable energy certificate markets, clean energy standards, and any state-legislated or mandated tax incentives that are in place for any power generation technology (nuclear, fossil fuel or renewables). For example, this new order would force a minimum bid on nuclear power plants in Illinois and New Jersey, new renewable resources built to meet state targets in Maryland, New Jersey, and Pennsylvania, and even nuclear and coal plants eligible to receive support in Ohio.
“Lastly, FERC’s Order largely denies states any flexibility in setting energy policy goals. FERC’s broad definition of state subsidy effectively subjects any new resource to MOPR if it intends to comply with a state program. Thus, states are inherently penalized for using their authority under the FPA, as any future exercise of the authority will bear enormous costs. Because of the loose definition of “subsidy,” this means that corporations, cities, utilities and individuals will also pay more. Additionally, many large energy users have voluntarily pursued the procurement of renewable energy resources to source some of their energy needs and meet sustainability targets. This order creates uncertainty and will likely impose price increases for customers who want clean energy.
“In sum, given today’s rapidly evolving electricity sector, FERC’s policy change will effectively nullify state policies to choose their generation mix, unnecessarily raise costs for consumers across PJM, and denies the ability of states to move energy policies forward. It creates a direct conflict between wholesale power markets and state policy goals. This needless conflict will inevitably cause states to reconsider the benefits of wholesale markets, placing decades of work developing competitive deregulated markets at risk.”
A signed copy of the full letter can be found here.