State of New Jersey Board of Public Utilities Investigation of Resource Adequacy Alternatives
Docket No. EO20030203
Comments of the Electric Power Supply Association
Dear Secretary Camacho-Welch,
New Jersey’s 2019 Energy Master Plan put the state on a trajectory towards 100% clean energy by 2050. New Jersey’s emissions reduction goals are among the most ambitious in the country. The Electric Power Supply Association (“EPSA”) seeks to offer New Jersey market-based solutions to achieve them.
While long overdue, the December 2019 Federal Energy Regulatory Commission order expanding the MOPR sparked strong opposition from states, including New Jersey, concerned about meeting environmental goals under the new paradigm. As a result, states have begun to consider whether alternative mechanisms could more effectively meet those goals. We recognize the tension that exists on both sides of this issue, and we also recognize that the PJM markets will evolve. The New Jersey Board of Public Utilities (“Board”) has an opportunity to position itself as a leader among the PJM states in driving those discussions.
Our comments encourage the Board to embrace that opportunity and play a leading role in developing regional solutions to meet New Jersey’s goals. Our comments provide a framework from which the Board can facilitate dialogue throughout the PJM region and position itself as a driver of concrete solutions to meet aggressive emissions reduction goals through efficient wholesale energy markets. We recognize the Board cannot singlehandedly change the regional market design; myriad factors will influence any potential outcome. However, the competitive power suppliers stand ready to work with the Board to encourage those discussions—and more importantly solutions—in PJM.
The Fixed Resource Requirement (“FRR”) is not the right tool to achieve New Jersey’s environmental goals and resource adequacy needs. The FRR is a costly and risky mechanism to meet the state’s objectives and introduces new challenges during a time of great uncertainty and economic strain. Competitive electricity markets have achieved record low prices, spurred innovation, and accelerated emissions reductions, all while allowing consumers to avoid the risks associated with generation supply investments. Exiting the market will increase costs, create new reliability challenges, reduce competition, and inhibit, not advance, the achievement of New Jersey’s goals. As such, we strongly urge the Board to not pursue an FRR for New Jersey.
Fortunately, there are alternatives available to address New Jersey’s goals. As a first step, we encourage the Board to formally ask PJM to consider adapting the Competitive Auctions for Sponsored Policy Resources (“CASPR”) market design or a variation of it for the PJM region. Such a market design could accommodate New Jersey’s offshore wind goals while maintaining the unquestionable benefits of the competitive markets. A variant of CASPR could also solve the “double payment” problem.
To facilitate the achievement of New Jersey’s carbon reduction goals on a longer-term basis, we encourage the Board to consider regional, market-based approaches to achieve emissions reductions goals through the competitive markets. We offer a number of potential solutions— including carbon pricing in PJM and a Clean Energy Standard—for the Board to consider in consultation with PJM, other states in the PJM region, and all interested stakeholders.
We recognize the tension that currently exists between state policies and federal power markets. While there are diverse and passionate viewpoints on these challenging issues, now is the time to work collaboratively to find workable solutions that lead to sustainable environmental progress. Competitive power markets should be recognized as the best mechanism to achieve state clean energy goals—not an inhibitor to them. We hope our comments can help facilitate much needed discussions and help New Jersey find the best outcomes for its economy, its residents, and the environment.