Dive Brief:
- The D.C. Circuit Court of Appeals has remanded back to federal regulators a 2013 decision that rejected proposed PJM Interconnection market adjustments focused on the minimum offer price rule (MOPR).
- PJM's changes to the MOPR were the result of a compromise between generators and load-serving entities, but the Federal Energy Regulatory Commission conditioned the proposal on the grid operator's retention of the unit-specific exemption, which courts determined resulted in an "entirely different rate design," SNL reports.
- D.C. Circuit sided with the generators, who asked the court to review the agency's decision in 2013. The court determined FERC exceeded the "passive and reactive role" it is prescribed under Section 205 of the Federal Power Act.
Dive Insight:
FERC reasoned PJM's new exemptions would discourage new resources from coming into the market after ordering the grid operator to retain its unit-specific review. The federal agency conditioned its approval on the compromise on a set of changes that PJM and the court said it exceeded its authority.
“Section 205 does not allow FERC to suggest modifications that result in an entirely different rate design than the utility’s original proposal or the utility’s prior rate scheme," the court determined as it remanded FERC's order.
SNL Energy writes that the original compromise which FERC denied was "noteworthy because it was backed by the vast majority of PJM's stakeholders."
The minimum offer rule was developed to keep state subsidies from artificially depressing prices, an issue which market operators FERC is still dealing with today. In May, the agency held a technical conference on wholesale power markets, as stakeholders searched for ways to integrate state policies into organized markets.
