Governors' Wind Energy Coalition

THE OTHER SIDE OF THE FERC PRICE FLOOR: Environmentalists have lambasted FERC’s recent move to set a price floor , which they say will hobble renewables and nuclear power that receive state support from PJM’s capacity market. They’ve called the order an attack on clean energy and a bailout for fossil fuels. But supporters of the move say the effects on wind and solar — which comprised only about 1 percent of the capacity cleared in PJM’s last auction — will be minimal, Pro’s Gavin Bade reports this morning.

“The destruction of the renewable energy industry has been wildly overstated,” said Todd Snitchler, CEO of the Electric Power Supply Association, a trade group for coal and gas generators whose members also own some wind and solar plants. FERC’s defenders point to existing wind and solar facilities that are exempt from the new price floor, and many expect that voluntary renewable energy purchases — rather than those mandated by states — will also escape it when PJM files its compliance plan with FERC in March, Gavin reports.

On the other side: Opponents of the FERC order argue that excluding renewables and nuclear energy from the capacity market will drive up prices that fossil fuel plants receive for their power, creating incentives to build more natural gas plants even as states ramp up their efforts to fight climate change. And removing even a small revenue source from wind and solar facilities could scuttle some planned projects.

What’s next: Prior to FERC issuing the order, states with clean-energy subsidies warned they could pull their entire power sectors out of the capacity market if the commission blocked those resources. Such actions will have to come after FERC votes on whether to reconsider or clarify parts of its order. PJM said it would request rehearing for clarification on some details but has not yet outlined its concerns. “The impact of the FERC order on renewable resources is something we’re still working to determine,” spokesperson Jeff Fields wrote in an email.

Regardless, renewable energy companiesand environmentalists are likely to challenge the order in court. “There are lots of opportunities for ‘arbitrary and capricious’ challenges,” said Ari Peskoe, director of the Harvard Electricity Law Initiative, including FERC’s broad definition of which subsidies will qualify for the price floor, and why FERC did not include an option for individual plants to opt out of the capacity market.