Focused MOPR Represents Radical Departure from Over 15 Years of Precedent, Potentially Unlawful
FOR IMMEDIATE RELEASE | May 10, 2022
CONTACT: Todd Snitchler 330.316.7492 | tsnitchler@epsa.org
WASHINGTON – The Electric Power Supply Association (EPSA) filed its opening brief in the U.S. Court of Appeals Third Circuit regarding the Federal Energy Regulatory Commission’s (FERC) default approval of PJM’s “Focused MOPR.” EPSA was joined by the PJM Power Providers (P3) Group, the Pennsylvania Public Utility Commission (PA PUC) and the Public Utility Commission of Ohio (PUCO) in filing briefs with the Third Circuit on May 9, 2022.
In its filing, EPSA argues that FERC’s deadlock on the Focused MOPR violated the Administrative Procedures Act, and thus the resulting effectiveness of the new mitigation approach was arbitrary and capricious because of its unreasoned departure from precedent. Moreover, EPSA argues that FERC failed to respect the principles of horizontal federalism by permitting individual states to project their own policy preferences onto other states via the PJM capacity market. In doing so, state policy preferences of one state are negatively impacting the decisions of other states due to the advantage FERC offers to states choosing preferred resources rather than a fuel neutral approach consistent with the agency’s mandate.
“FERC’s actions in the MOPR case represent a radical departure from over 15 years of precedent, and its failure to provide a majority approval explaining this departure is unlawful. Should this decision stand, it will have serious consequences, namely allowing FERC to exceed the authority granted to it under the Federal Power Act. FERC’s decision favors preferred resources and discriminates against existing resources that ensure grid reliability. Furthermore, the Commission’s deference to state actions that impact federally regulated wholesale electricity markets enables some states with resources preferred by the current FERC to impose their policy choices and costs onto neighboring states that have made different policy choices,” said Todd Snitchler, EPSA President and CEO. “The Commission should not encourage such preferential treatment, putting its thumb on the scale, and instead focus on providing proper oversight to well-functioning wholesale electricity markets within the scope of its authority.”
The PA PUC and PUCO argued in their joint brief that, “FERC’s approval by inaction should be vacated because PJM’s changes will allow buyer-side market power to infiltrate its capacity market with a low likelihood of screening.” Adding that this “inaction will have the effect of lowering prices below the competitive level. When that happens, electric reliability suffers because capacity is underbuilt. In the past, FERC has authorized MOPR reforms for PJM that involved meaningful review of capacity market offers and mitigation of uncompetitive conditions. … FERC may not now abdicate its duty and allow a FERC-regulated utility, PJM, to change its own tariff without any FERC action. Such an abdication is the very definition of arbitrary and capricious agency action.”
In its statement, P3 added that these “concerns are shared not only by power generators around the country but utility regulators in states that have invested resources and made sacrifices across decades to ensure the viability of competition in power generation. The MOPR is intended to prohibit capacity resources from using below-cost bids (often made possible through subsidies) to artificially depress auction-clearing prices, force competition to flee in search of better returns and thereby reduce the vibrancy of the market in the future.”
EPSA anticipates FERC filing its reply comments on July 8th with final briefing concluding on August 26th. Oral argument has not yet been scheduled in the matter.
To read EPSA’s brief, click here.
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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.
