Statement From EPSA President and CEO Todd Snitchler on PJM’s Market Seller Offer Cap
FOR IMMEDIATE RELEASE
August 15, 2023
CONTACT: Christina Nyquist | 603.930.8818 | cnyquist@epsa.org
WASHINGTON, D.C. – Changes to rules impacting electric reliability in the nation’s largest power market will remain in place following a decision issued today by the U.S. Court of Appeals for the D.C. Circuit. The Court denied power generators’ petitions to overturn changes made to PJM Interconnection’s market seller offer cap (MSOC) as ordered and approved by the Federal Energy Regulatory Commission in September 2021. As revised, generator offers into the capacity market are limited in a manner which interferes with their ability to earn a reasonable return on the investment needed to keep reliable electric generation resources running.
The Electric Power Supply Association (EPSA), which represents competitive power suppliers owning more than 50,000 MW of generation capacity in PJM, along with the PJM Power Providers Group, LS Power, Calpine, and Talen Energy, joined Petitioners Vistra Corp., and Constellation in a petition to the Court on November 5, 2021, seeking review of FERC’s decision. The case was argued last November.
EPSA President and CEO Todd Snitchler issued the following statement in response to the Court’s decision.
“We are disappointed by today’s outcome, which is another blow to the health of PJM’s competitive markets and the RTO’s ability to retain the resources needed in the short and longer terms. Most significantly, FERC’s Order to eliminate the Market Seller Offer Cap fails to properly reflect the risks and costs imposed on capacity suppliers and is at odds with PJM’s Capacity Performance Structure.
Now more than ever, with at least 40 GW of generation flagged by PJM for being at risk of retirement without sufficient replacement, it is critical that the resources needed for reliability have adequate incentives to stay running. Yet FERC and PJM are once again making it harder for markets to procure much needed resources rather than enable greater participation of resources that provide reliability.
Well structured, competitive electricity markets are the best mechanism to secure reliable and cost-effective power and shield ratepayers from investment risk. But the changes approved by the court to PJM capacity offers undermine the ability of private investors and developers to assume risk and earn an adequate return – jeopardizing PJM’s ability to procure sufficient generation to meet anticipated demand in today’s challenging landscape. This decision from the court adds urgency to the Board-directed stakeholder process underway at PJM to develop reforms that substantially address the flaws in the capacity market – the vehicle by which the RTO ensures resource adequacy and system reliability.”
EPSA has outlined potential prudent reforms and market design elements that can address current challenges and allow the PJM competitive power market to meet rising demand while adapting to future grid stress.
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The Electric Power Supply Association (EPSA) is the national trade association representing America’s competitive power suppliers. EPSA members provide about 150,000 MW of reliable and competitively priced electricity from environmentally responsible facilities using a diverse mix of fuels and technologies including natural gas, wind, solar, hydropower, geothermal, storage, biomass, and coal. EPSA seeks to bring the benefits of competition to all power customers. Learn more at www.epsa.org and connect with us on LinkedIn and Twitter @EPSAnews.
