For Immediate Release – February 22, 2023
Contact: Christina Nyquist | cnyquist@epsa.org
WASHINGTON, D.C. – Late last night, the Federal Energy Regulatory Commission (FERC) accepted a deeply flawed proposal filed by PJM Interconnection to change capacity market auction rules after its most recent auction. The Electric Power Supply Association (EPSA) had filed a protest with FERC January 20 with an expert affidavit from Dr. Paul Sotkiewicz in response to the December 23, 2022 PJM section 205 and section 206 filings to revise its RPM Locational Deliverability Area Reliability Requirements during the December Base Residual Auction for the 2024/2025 Delivery Year, for which results had been slated for announcement December 20. Several other market participants and stakeholders, including nuclear owners, developers and owners of both renewable and fossil power generation resources, as well as their respective trade associations, and the Public Utilities Commission of Ohio objected to the PJM filing.
EPSA President and CEO Todd Snitchler issued the following statement:
“Under the cover of darkness last night, FERC issued an order granting PJM’s request to change auction results after the fact. This action is in clear violation of the filed rate doctrine, the rule against retroactive ratemaking, and 100 years of Supreme Court precedent.
As EPSA has previously noted, the arsonist’s dilemma remains an active concern, and in this instance the arsonist and the property owner worked together to further damage the markets and then, right on cue, the firemen lament that markets simply aren’t working and need an entire review of their veracity. When properly designed and administered, there is no question the competitive electricity markets deliver better outcomes than a cost-of-service monopoly model. Yet this decision is another in a growing list where FERC actions undermine the workability and value proposition of markets only to then raise concerns about whether parties would be better off returning to a cost-of-service regime where, naturally, regulators would have more say over the decisions of market participants’ investments and decisions. We can point to any number of examples where that model has been a failure in ensuring consumers are protected from market participants who impose higher costs without any improvement in service.
EPSA and likely others will appeal this order and based on 100 years of precedent feel strongly that it will be overturned. In the meantime, if FERC is really interested in focusing on reliability, it could start by respecting precedent and stop issuing orders that fundamentally undermine investor confidence in the markets it oversees, which drives out needed investment in resources of all types – dispatchable and non-dispatchable – due to a lack of any kind of certainty that the rules will actually apply when billions of dollars of investment are at risk.
Reliability requires investment in resources and the confidence of market participants to make those investment decisions. In the end, the consumers that FERC aims to protect from high costs will undoubtedly bear the full cost of the reliability problems decisions like this will cause.
It’s not common that market participants are asked to be volunteer firefighters that must do the work of the paid fire department, but when the fire department brings gasoline and not water to the fire, someone has to try and save the structure.”
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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.
