Democrats question FERC order affecting nuclear, renewables

Source: By Jeremy Dillon, E&E News reporter • Posted: Saturday, February 15, 2020

A group of 36 House Democrats is challenging proposed changes ordered by the Federal Energy Regulatory Commission to the PJM Interconnection capacity market.

In a letter led by Reps. Don Beyer (D-Va.) and Mike Quigley (D-Ill.), the group seeks answers about changes the lawmakers allege would raise energy prices and box out renewables and some nuclear energy from competing in the nation’s largest capacity market.

The Democrats’ concerns align with those expressed by clean energy trade groups, environmentalists, some states and PJM itself.

They all oppose the perceived heavy-handedness of federal intervention into state energy preferences through the order.

“In sum, given today’s rapidly evolving electricity sector, FERC’s policy change will effectively nullify state policies to choose their generation mix, unnecessarily raise costs for consumers across PJM, and denies the ability of states to move energy policies forward,” the lawmakers wrote.

In December, FERC moved to extend the “minimum offer price rule” — a type of bid floor for capacity bids in PJM’s auction — to cover any electricity resources that receive state subsidies, like many wind and solar projects and existing nuclear plants.

Clean energy advocates argue that the higher rates would effectively freeze new renewable resources and nuclear energy from competing in PJM’s capacity market — to the detriment of states seeking to reduce carbon emissions and combat climate change.

Republican appointees on FERC, led by Chairman Neil Chatterjee, argued the changes were needed to better offset the influence state subsidies were having on the market and other generators.

Confusion over the order has already scuttled one renewable energy deal. The Hershey Co. said in a filing to FERC last week that the order interfered with negotiations it had underway for a power purchase agreement for renewables for its operations in Pennsylvania (Energywire, Jan. 23).

Some states have even begun to think about pulling out of PJM entirely due to the change. That could undermine the purpose of the wholesale markets, the lawmakers warned.

“It creates a direct conflict between wholesale power markets and state policy goals,” the lawmakers said. “This needless conflict will inevitably cause states to reconsider the benefits of wholesale markets, placing decades of work developing competitive deregulated markets at risk.”