PJM Interconnect will not proceed to a basic residual auction (BRA) until the Federal Energy Regulatory Commission (FERC) has approved new capacity and a recalculated minimum floor price (MOPR) floor price for existing entities shaken on December 19. Market order. But when this happens is still very uncertain.

PJM has not finalized the proposed calendars for 2022/2023 and 2023/2024 BRA, but stated that even if the calendar is accelerated, the auction calendar will be postponed to 2024 2027/2028 [BRA]. Delay of five auctions. The schedule will depend on the timely ordering of PJM compliance documents by FERC, on March 18 which expires.

First, PJM’s activities span 13 states and the District of Columbia. It will have to update its free access transmission rates. This document constitutes the framework for PJM operations to extend the scope of the application of the MOPR to the purchasing States according to the new broad definition of the FERC. State subsidies for all subsidized units and long list of exemptions. It must then develop and submit new floor prices for all resource categories.

At the same time, the FERC order is redefined as an existing resource that has successfully bid, executed an interconnected construction service contract or an unexecuted interconnected contract that PJM submitted to FERC before the order. The avoidable net cost rate (RTA) should be used. . The ACR reflects the annual cost over time of existing resources. If the unit is to retire, it can be avoided, but it does not include the cost of entering the market, which essentially reflects that the threshold for entering resources into the market is below the threshold for market entry. PJM must also calculate the CONE value to provide a new response to demand, including behind-the-scenes power generation and energy efficiency, and many other types of resources such as black liquor, coal gas and gas landfill.

The main purpose of the PJM meeting on January 8 was to gather input from stakeholders. Obviously, this is a complex issue, and in our stakeholder group, the views related to the order are very different. So we will have to sit down and weigh our views on all the inputs we receive. However, we did not intend to do this until we received the input.

However, as implied by a public speech submitted for discussion at the conference, many of PJM’s stakeholders, including generators involved in the wholesale electricity market, have various concerns about orders. Many want to clarify the different parts of the order. Although some generators have urged grid entities to hold forthcoming annual auctions immediately, other generators have called for extensions and submit their compliance proposals to FERC to address pressing concerns.

For example, the competitive generator LS Power praised FERC’s order as a pragmatic approach aimed at striking the right balance between grid reliability and the state’s desire to support certain resources. Addressing the broader industry and concerns of Commissioner Richard Glick, who issued a severe objection to the order on December 19, the company believes the order will not prevent states from determining their resources, the The order will not prevent the development of renewable energy projects. These projects do not rely on the capacity market to support investment. LS Power pointed out: In fact, wind and solar energy account for only 1.2% of PJM capacity requirements. Non-exempt subsidy units can also continue competitive bidding, refuse state subsidies or apply to PJM for exemptions for specific sectors.

However, in response to other competing power producers such as Calpine and Vistra Energy, LS Power urged PJM to resume the two delayed BRA auctions immediately, calling for the 2022/2023 event no later than August 2020 The auction will be held at the end of 2020 at 2022/2024. It also requires guidelines for unit exemptions and clarification of how aggregated distributed energy and energy efficiency resources are handled, especially the definition of subsidies that apply to regional caps and trade plans.

Calpine’s appeal in 2016 partially stimulated the FERC order of December 19, and the party reiterated that the subsidies hurt the competitive market and created uncertainty for producers who are entirely dependent on the wholesale market for the product. Electricity to make money. Order is neither a war against renewable energies, nor a priority for certain technologies over others. Instead, the FERC has made it clear that it will not allow the competitive markets it oversees to be undermined by government action.

Exelon is a utility company that has lobbyed many legislative measures to keep its Illinois and New York nuclear power plants uneconomic and failed to release record nuclear capacity during PJM’s last BRA, but the company urged PJM to pass arrangements The plan comes to consider all states in its footprint under the new MOPR to conduct the next auction of legislative and regulatory action at a reasonable time to avoid overpayment by consumers. Some states will need one year to respond to the FERC MOPR order.

Exelon also requested some clarification in the compliance package, including that, despite changes in daily customers, utility power plans and energy efficiency plans in retail states should also be considered existing resources, and RGGI does not include any Action subsidy.

PSEG has more than 8 GW of commercial power generation in PJM’s footprint, and 3.6 GW of nuclear power generation in New Jersey (gets zero emissions credit), and urges states with clean energy plans to evaluate fixed resource demand (FRR) options, please note that MOPR poses a double payment risk for state-backed resources. It also called on PJM to properly handle the implementation of FRR and time auctions.

The American Municipal Electric Power Company (AMP), a public power cooperative, said the order threatened the public power business model as it considered it a subsidy, urging PJM to ask for more time and seek extension applications. This avoids further litigation, delays and uncertainties, and ensures transparency, including feedback from PJM’s independent market monitors. It also called for discussions on how the PJM will inoculate itself and / or prepare for any withdrawal if the rules differ from anticipated future lawsuits.

AMP offers a long list of recommendations to correct the lack of experience of PJM with public power business models. She said that the importance of the issue could not be underestimated. Repetitive agitation of rules, like MOPR orders, will only reinforce our comments and continue to wholeheartedly believe that self-sufficiency helps protect our members and our nonprofit organizations from price fluctuations and regulatory uncertainty. So far, we may have, for us, the reliability pricing model (PJM is the name of its capacity market) is not a market, but a non-market structure determined by the administration, not subject to litigation and major changes. Prudent investment decisions for new construction.

Following the one-day meeting of the PJM Market Executive Committee, the Electricity Supply Association (EPSA) released a separate interpreter on January 8 explaining how MOPR affects its members, who are competing to own and operate 150 GW National electricity supplier capacity.

EPSA praised FERC’s move in its documents to help resolve regulatory uncertainty and maintain a competitive market. In response to criticism of the entire industry that the order can provide relief for fossil power generation, EPSA emphasizes that many of its members, including Vistra Energy, NRG Energy, Carl Pine, Competitive Energy Investment Corporation, BP, etc., have passed emission reductions. Goals, joined the Climate Leadership Council, and supported tools such as carbon pricing to help advance clean energy goals.

FERC’s order does not hinder continued renewable energy integration or our common environmental goals; it simply guides us in using tools consistent with competing markets to do so. Creating a reliable, affordable clean energy future for Americans is a common goal for Americans. That is why we must keep the competitive market intact. Transparent and competitive energy markets are the most effective way to encourage environmental sustainability without compromising reliability or burdening consumers with unnecessarily high costs.

However, FERC’s orders will only affect the capacity portion of the new renewable energy market, which currently accounts for only a small portion of these developers’ revenues. It states that the order does not apply to existing renewable energy, whether or not the state sponsors it. PJM’s 180 GW of power generation includes 15 GW of wind and solar installed capacity. In the 2018 auction, the capacity market only cleaned up 2 GW of renewable energy, accounting for only 1% of wind and solar energy.

At the same time, the FERC order also applies to any resource that receives state subsidies, including obsolete, expensive nuclear and coal facilities, such as those that have recently received support in Ohio. For those resources whose true cost (excluding subsidy payments) is below the minimum price set by PJM, there are still exemptions for specific units. If the true cost of resources is below the MOPR floor price, then these resources can be allowed to be auctioned at their lower prices.

EPSA also declined to criticize the order as a violation of state rights. To understand the origin of a FERC order, it needs to remember some history. In January 2018, FERC submitted a letter to the Seventh Circuit Court of Appeals in support of the court’s subsequent findings that a zero emission credit (ZEC) cannot replace federal law. However, FERC stated in the same letter that the appropriate place to mitigate the effects of federal government subsidies is in the FERC jurisdiction market. Therefore, although ZEC and other subsidies may be legal, FERC still has the task of ensuring that the wholesale market is fair and reasonable.

Source: Internet

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