The Electric Power Supply Association, a commercial generator trade group, also objected to PJM`s claim that subsidies for offshore wind in states like New Jersey „will only reduce costs“ for consumers in other states like Pennsylvania and Ohio. „Significantly, with this statement, PJM recognizes that the July 30 filing will do exactly what New Jersey and others have in mind: allowing one state`s policy decisions to skew wholesale prices in other states,“ the association said. After the rule change went into effect by law in September 2021, several producer associations and two state utility commissions petitioned the U.S. Court of Appeals for the Third Circuit to review. They argue, inter alia, that the targeted MOPR is unfair and inappropriate because external payments lower market prices for capacity, undermine the adequacy and reliability of resources, and do not prevent the inefficient entry of resources receiving public payments. Under these new rules, PJM must establish resource-specific RPMPs for new and existing resources that receive (or may receive) government subsidies, including renewable energy credits used to promote renewable energy and zero-emission credits (ZECs) designed to keep certain existing zero-carbon nuclear power plants in operation. The regulations also require that new demand response, energy efficiency and storage resources also be subject to an MPR if they receive (or are eligible to receive) government grants. Minimum Price Offerings (SMR) rules in electricity markets developed in the mid-2010s, but this trend has recently reversed. RFF scientists discuss lessons learned from MOPR that could improve electricity markets in the future. Market power on the buyer`s side. The problem with conventional market power is the ability of a seller, a monopoly, to set prices in a market.

This is one of the reasons for competitive auctions. There is also the case where the buyer can dictate prices to his advantage. If a participant in the electrical capacity market is both a seller and a buyer, which is common, it may be in that company`s interest to offer extremely low prices if its needs as a buyer outweigh its interests as a seller. The competence of the Federal Energy Regulatory Commission covers both problems of market power. This new, narrower MMPR will exclude many resources, particularly renewable resources, that would otherwise be subject to the MMPR. These resources are more likely to manage PJM capacity market auctions and generate the resulting revenues. Conversely, thermal resources not previously subject to the OMPR will now face increased competition in capacity auctions, which could reduce auction prices. The generators that could be most affected by the new order could be the existing nuclear fleet, which depends on capacity revenues.

Many PJM states — particularly Illinois, New Jersey and Ohio — have chosen to offer financial support to economically struggling nuclear power plants to keep these carbon-free plants online. The nameplate capacity of currently subsidized nuclear power plants in these three states is nearly 8,000 MW (EIA Monthly Electric Generator Inventory, ICF), or nearly a quarter of PJM`s nuclear capacity. As we reported earlier in December 2019, FERC had asked PJM to extend the MPR to new and existing resources that receive or may receive certain off-market payments, i.e., „government grants.“ FERC`s policy was to determine the ability of subsidized resources to use subsidies to reduce their capacity market offerings, thereby reducing overall capacity market prices, while preventing the closure of non-competitive resources. In response, YPM „expanded“ its MPR to set a minimum bid price for internal and external resources that receive or are eligible for government grants. Under this order, „government subsidies“ included all direct or indirect payments, commissions, rebates, consumer levies, subsidies or other financial benefits arising from an action or process of a state, political subdivision or electricity cooperative that fell into one of three categories: critics also called the expanded MOPR „unworkable“, and FERC President Richard Glick wants to re-approve rules that reflect state policy before PJM launches its next capacity auction for the 2023-2024 delivery year in December.