UPDATE: April 16, 2021: During FERC's monthly meeting on Thursday, Commissioner James Danly introduced his own proposal for the PJM Interconnection capacity market, requesting input on the merits of a "State Option to Choose Resources" concept. His plan would expand on the ISO-New England Competitive Auctions with Sponsored Policy Resources plan by giving "states the unfettered right to substitute their preferred resources for resources that clear in a capacity auction."
Federal Energy Regulatory Commission Chair Richard Glick wants to see market reform in the PJM Interconnection by December, and is willing to have FERC take action on its own if stakeholders are unable to come up with a compromise in time.
PJM and its stakeholders are in the midst of trying to come up with a plan that addresses states' concerns around the minimum offer price rule (MOPR) expansion — an order approved by FERC in 2019 that effectively raises the price for all state-subsidized resources bidding into the PJM capacity market. Glick, who long opposed the rule, indicated during the commission's technical conference on wholesale market reform in March that he'd be willing to have FERC tackle the rule, and in a podcast released by consulting firm GT Power Group released Tuesday was more explicit on his preferred timeline.
"I personally believe we need to figure out an alternative or a modification to the current MOPR process before the December auction," he said on GT Power Hour. "And I certainly would prefer not to delay that December auction. So I'd like to see some sort of action ... before that December timeframe, but I don't want to draw a line in the sand."
After years of debate, PJM's expanded MOPR may only apply to one capacity auction if FERC's chair has his way.
Glick said he is prioritizing regulatory certainty for market participants, and doesn't want to delay either the 2022 capacity auction scheduled for May, or the 2023/24 auction scheduled for December. He also continued to emphasize that he'd prefer stakeholders to come up with their own market proposals over FERC unilaterally stepping in and opening up a new 206 proceeding, in part because he believes FERC "made a complete mess" of the issue when it addressed stakeholder concerns in 2018.
"The majority of the commissioners decided that they knew what was better for PJM ... than everybody else did," he said. "So we went down a path ... with a number of delayed auctions. … The commission kept on changing its approach, and made a complete mess of a situation that we're only now digging ourselves out of, which is why, again, I think the preferable option is for PJM and the stakeholders to work on something that they could send to us that we could review under Section 205 in the Federal Power Act."
Addressing the MOPR is a "top priority" for PJM, spokesperson Susan Buehler said in an email, adding that the stakeholder process is working under a "compressed schedule" to come to a board decision and potentially file with FERC "by late July."
"This would allow for FERC to issue an order and for PJM to conduct required pre-auction activities in time for 2023/2024 Delivery Year auction, scheduled for December," said Buehler.
But Glick said he is certainly willing to ask the commission to take action if PJM stakeholders are unable to forward a proposal, preferably in time for the December auction.
"I do understand the stakeholder process — sometimes it gets messy, and sometimes it gets delayed. And there's not always enough consensus developed for something to be presented to FERC," he said. "If that's the case, I do think we have an obligation under the law to step in and act under Section 206 of the Federal Power Act, to ensure that the markets are just and reasonable and not unduly discriminatory. And from my perspective, we should be doing that, but only until we know that the PJM stakeholder process won't actually bring something to the commission."
Two of FERC's other commissioners, during the commission's technical conference in March, also indicated an openness to revisit the MOPR, including Commissioner Neil Chatterjee, who was chair when the rule was implemented.
"Although I voted for our MOPR orders, and believe those determinations were supported by the record, I'm not wedded to the policy calls of the past," he said. "And I'm open to better accommodating state policies, so long as we're still able to meet our statutory mandate."
Commissioner Allison Clements, who joined the commission after the rule was implemented, has also said she opposes the MOPR, and in an interview with Utility Dive said that if stakeholders do not come to a consensus around a durable replacement design, she'd also be open to the commission stepping in.
"I hope that the stakeholders will come to a consensus around durable market design," she said. "But if that's not the case, then I will have to come up with an actual answer to that question."
Commissioner Mark Christie, in an interview with Utility Dive, did not want to speculate on a pending proceeding, but said he hopes stakeholders will come up with their own solution as well.