Coalition launches to block N.J. from grid market exit

Source: By Arianna Skibell, E&E News reporter • Posted: Wednesday, November 11, 2020

A group of consumer advocates and business groups has formed a coalition to stop New Jersey from exiting a regional power market overseen by the nation’s largest grid operator, PJM Interconnection, citing pandemic uncertainty.

The Garden State coalition is organizing under the name NJ Ratepayers United and is composed of ratepayer advocates, utilities and industry groups, including the Chemistry Council of New Jersey, the Electric Power Supply Association, NRG Energy, Vistra Energy, the New Jersey Large Energy Users Coalition, AARP New Jersey and New Jersey Citizen Action, among others.

At issue is a Federal Energy Regulatory Commission rule change that opponents say will make it difficult for renewable and nuclear resources to compete with fossil fuel power plants in PJM’s wholesale market, which sprawls across 13 Midwestern and Mid-Atlantic states and the District of Columbia.

“Exiting our current regional market would create more uncertainty and higher electricity rates at a time when the state’s consumers can ill afford to pay even more,” Evelyn Liebman, AARP New Jersey’s director of advocacy, said in a statement.

Capacity markets offer a way for grid operators to make sure there will be enough power generation to meet demand in the future, typically three years out. Generation resources like a coal plant or wind farm bid into PJM’s periodic auctions to qualify to provide electricity in later years.

Officials in states that have adopted ambitious clean energy targets — like New Jersey — worry the new rule will make it hard for some renewable resources to compete. Generators often rely on the revenue generated from the market to stay afloat.

New Jersey, along with states like Illinois and Maryland, is now eyeing a market exit. The states are weighing an alternative plan to meet their reliability needs through a so-called fixed resource requirement, or FRR, to ensure the development of projects they see as crucial for spurring economic recovery from the coronavirus pandemic and combating climate change (Energywire, June 8).

The FRR is complex and untested, which is spurring backlash. Members of the newly formed NJ Ratepayers United say the proposed overhaul would eliminate ratepayer protections and empower select companies, namely Public Service Enterprise Group and Exelon, to leverage their market power to pad their pockets. The two companies are pushing for the FRR option in New Jersey.

“Giving more market power to a few corporations will lead to higher prices at a time when many New Jersey families are already struggling to pay their energy bills,” Dena Mottola Jaborska, associate director of New Jersey Citizen Action, said in a statement. “Our residents deserve more protections and access to affordable energy, not a complicated energy scheme that only benefits corporate profits.”

But proponents of an exit say it will allow the state to meet its renewable energy targets without federal interference. New Jersey, a state with ambitious offshore wind targets, has opened a formal investigation into the FRR option. The state’s Board of Public Utilities recently called for ideas and comments, and it is currently weighing companies’ proposals.