Gas generators ask FERC to apply PJM MOPR logic to NYISO

Dive Brief:

Two gas generators filed a complaint with federal regulators, claiming the New York Independent System Operator's (NYISO) market rules are unjust and discriminatory.
The Cricket Valley Energy Center and Empire Generating Company filed the complaint on Wednesday with the Federal Energy Regulatory Commission, asserting that current market rules do not address price suppression caused by state subsidies, and therefore disadvantage resources not receiving those payments.
Their request mirrors the complaint filed by Calpine Corporation and other generators in 2016 that eventually led to the controversial Minimum Offer Price Rule (MOPR) expansion within the PJM Interconnection's wholesale capacity market.

Dive Insight:

Under FERC's December PJM order, the commission ultimately determined that state clean energy policies that compensate resources such as wind, solar and nuclear for their carbon-free attributes distort competition within PJM's footprint. The order claims to "level the playing field" for all resources by raising the bidding floor price for any resource that receives a state subsidy within the PJM's 13-state, plus Washington, D.C., footprint.

Generators in the New York service territory are now calling on FERC to apply the same logic to the NYISO market.

"We are asking FERC to strike a balance to support competition, ensure system reliability and create a level playing field for electricity resources," Damon Anderson, commercial vice president at Advanced Power, which led the development of the Cricket Valley project, said in an email.

"FERC ruled in PJM that subsidies can still exist but are not allowed to distort competitive prices," he said. The generators are calling for "a clean MOPR," or one that "provides transparency and results in the least cost set of resources to meet reliability," he added. The complaint requested the rules apply throughout the New York control area, and that the commission "fast-track processing and the issuance of an order on or before December 31, 2020."

New York has a goal of reaching 70% renewable energy by 2030, one formally adopted by the state's Public Service Commission on Thursday. As part of those goals, load-serving entities in the state are required to meet annual renewable energy and zero emission generation goals, compensated through zero emission credits (ZECs), renewable energy credits or offshore wind credits.

Cricket Valley and Empire argue that subsidies for these resources remain unaddressed in the NYISO capacity market, leading to price suppression for other generators in the market.

Cricket Valley is a gas plant in the midst of development, expected to generate 1,100 MW in Dover, New York, once completed. Its development and construction has so far cost $1.5 billion, according to the complaint, and it was built in part to satisfy "long-term reliability concerns" within the region. "But only a few short years later, the capacity price signal to which Cricket Valley responded has been crushed, in no small part by the retention of nuclear units in Rest of State through ZECs subsidies," the complaint alleges.

Empire Generating is a 635 MW gas plant that recently emerged from bankruptcy, which it blames, in part, on expected capacity and energy price increases, incumbent upon the retirement of local coal and nuclear facilities. Those prices failed to materialize, and the generator in its complaint faults that and price suppression from renewable energy credits on the facility's ultimate collapse.

NYISO is currently evaluating the filing and will answer the complaint within the timeline established by FERC, a spokesperson said in an email.

Critics of the complaint say expanding the MOPR within NYISO makes even less sense than it did in the PJM market.

Several states within the PJM have continued to express outrage over the MOPR expansion, viewing it as an infringement on their right to incentivize clean energy generation and address climate change. Though the short-term impact of the MOPR is widely expected to allow onshore wind, solar and nuclear generation to clear the PJM's next auction, offshore wind is not expected to clear, frustrating New Jersey and Maryland, which have offshore wind goals that the states fear will be hindered by the federal rule.

Expanding the MOPR within a single-state ISO is even more of an overreach by FERC than it was in the multi-state PJM, according to Ari Peskoe, director of Harvard Law School's Electricity Law Initiative.

"In a single-state ISO where the state has adopted unambiguous clean energy policies, a ‘clean MOPR' makes even less sense than it does in PJM," he said in a Tweet.

"FERC should take a deep breath and recall the purpose of [regional transmission operators (RTOs)]/ISOs is to coordinate the planning and operations of transmission-owners. Where the utility members have legal obligations to support clean energy, it is counterproductive to force the RTO/ISO to oppose the state," he added.