FERC Directs PJM to Expand Minimum Offer Price Rule (MOPR)

New FERC Order Directs PJM to Expand Minimum Offer Price Rule; Uncertainty Ensues

What We Do Know

While PJM still needs to go through the compliance process, and details will not be finalized until FERC approves the PJM filing, here is what we know:

  1. FERC directed PJM to expand its MOPR to apply to any new or existing resource that receives, or is entitled to receive, a state subsidy, unless an exemption applies.
  2. FERC outlined the following exemptions from the expanded MOPR:
    1. Existing renewable resources that are participating in state renewable portfolio programs;
    2. Existing demand response, energy efficiency, and storage resources; 
    3. Existing self-supply resources; and 
    4. Competitive resources that do not receive state subsidies.
  3. Based on these new rules, at a minimum, PJM capacity pricing will likely remain relatively stable in the near future. That said, if existing nuclear units that have been clearing the PJM auction do not clear future auctions as a result of the MOPR, PJM prices will likely increase.
  4. New renewable resources that are receiving a subsidy will be priced at a designed high MOPR offer price, but they will also have a unit-specific exemption that will allow them to make the case to the PJM Internal Market Monitor for a lower price. Renewable resources not receiving any subsidy can choose a competitive exemption and will not be subject to the MOPR.
  5. States with strong clean-energy goals are likely to consider changing how they participate in the PJM capacity market, potentially even pulling the entire state out. If this happens, it could have a ripple effect across all of PJM.

Enel’s regulatory team is deeply engaged in the compliance process, already presenting to PJM stakeholders to ensure that demand response continues to play a major role in the PJM resource mix. 

As always, we will aim to keep readers posted on these and other major market developments. In the meantime, contact your Enel X service representative to better understand the possible implications of this FERC order on your operations and ongoing energy strategy.

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