New Jersey Could Exit PJM’s Capacity Market

In response to the The Federal Energy Regulatory Commission’s (FERC) December ruling, the New Jersey Board of Public Utilities is now considering a departure from the PJM Interconnection capacity market.

In December FERC directed PJM to expand their Minimum Offer Price Rule (MOPR) that would essentially force new state-subsidized energy resources to participate in the capacity market with higher price floors. Groups including the Maryland Public Service Commission (PSC) believe that the order will have negative effects on the region’s renewable resources, and could effectively price many out of the market. New Jersey believes that the decision by FERC could hold back its 100 percent clean energy future by 2050 outlined in the State’s 2019 Energy Master Plan. Last Friday the New Jersey Board of Public Utilities issued an order for the state to begin exploring other options to participation in the PJM capacity market.

From the New Jersey Board of Public Utilities order establishing an investigation:

The December 19 Order’s expanded MOPR potentially disrupts a number of New Jersey’s efforts to shape its electric generation resource base.

The Board cannot sit idle while FERC considers rehearing and clarification. The 2019 EMP (New Jersey Energy Master Plan) makes plain New Jersey’s commitment “to exploring all possible options . . . to ensure that the State can realize a clean energy future at reasonable prices.”

From coverage in Utility Dive:

New Jersey’s investigation will consider several questions, including whether an Fixed Resource Requirement (FRR) alternative can satisfy the state’s resource adequacy needs, and if modifications to the state’s default Basic Generation Service construct could facilitate resource adequacy procurements aligned with its clean energy objectives.

An FRR approach would mean New Jersey effectively “withdraws one or more service areas from the broader PJM capacity market,” according to a blog post by law firm Preti Flaherty. It could also mean “adopting a statewide clean energy standard that would require load-serving entities to source increased percentages of renewable or other clean energy.”

Useful links:

Prior Conduit Street coverage: Maryland Public Service Commission Disappointed With Federal Energy Order

New Jersey Board of Public Utilities order establishing an investigation