Dive Brief:

• Between a controversial proposal to nationally overhaul solar net metering policy and the Federal Energy Regulatory Commission's highly-scrutinized minimum offer price rule (MOPR), federal and state tension "is at an all time high," according to Maryland's head regulator.

• "The line between federal and state jurisdiction right now has never been blurred more," Maryland Public Service Commission Chair Jason Stanek said during a Thursday webinar hosted by Advanced Energy Economy. He and Commissioner Bob Gordon of the New Jersey Board of Public Utilities both expressed increasing frustration with the MOPR in particular, and its potential impacts to the coastal states' budding offshore wind market.

• The two states have been some of the most vocal MOPR opponents and are planning to file a brief with the D.C. Circuit Court of Appeals later this month to further the legal action that has already been taken against the rule. Meanwhile, FERC Chair Neil Chatterjee on Thursday encouraged states to give the rule time.

Dive Insight:

FERC passed the MOPR order in December, despite strong opposition from states, clean energy advocates and other stakeholders. The biggest immediate concern for states like New Jersey and Maryland is the order's impact on offshore wind development — New Jersey is aiming to add 7,500 MW by 2035 and Maryland's renewable portfolio standard has a 1,200 MW offshore wind carveout.

Because offshore wind is capital-heavy and hasn't reached the same level of cost-competitiveness as solar and onshore wind energy, most all analysts expect the resource will not clear the new MOPR bidding prices, which are raised for all new resources entering the market that receive state subsidies.

"For New Jersey and some other states that have been very active in advancing clean energy policies and subsidising these resources, I would say that the greatest threat that we're facing is FERC's recent" MOPR order, said Commissioner Gordon. "We believe that there's great potential, as a result of that ruling, if it were to stand, to raise the cost of clean energy resources and really threaten the economic viability of them."

New Jersey and Maryland are looking into potentially exiting the PJM capacity auction through some version of a Fixed Resource Requirement (FRR) alternative.

"Everything is on the table for us. And we're in the process of evaluating what our next move is going to be. But this is a real threat," said Gordon.

PJM's independent market monitor has found New Jersey exiting the PJM capacity market through an FRR could cost up to $386.4 million​ in the next auction and could cost Maryland up to $206.6 million​.

But in comments filed Wednesday, utilities Exelon and Public Service Enterprise Group advocated for a single-zone FRR to bring in clean energy resources over time, disputing the market monitor's findings. Competitive generators, however, sided with the IMM, and encouraged the state instead to encourage PJM to develop its version of the New England ISO's Competitive Auctions with Sponsored Policy Resources mechanism.

Chatterjee told reporters Thursday he also supports the IMM's findings, and cautioned states to wait for PJM auction results before rushing to exit the capacity market.

"The reason my colleagues and I are so supportive of these competitive markets is because of the benefits that they provide to consumers. And should states take the decision to withdraw, there would be huge costs to those states, to their consumers," he said.

"Let's see how this process plays out. Let's see how the auctions play out. I for one, think the IMM makes a compelling case that this action will not have the effect that some of the states and stakeholders fear it will have."

Maryland's Stanek also expressed frustration over a proposal in front of FERC that experts say would effectively end net metering across the country as it currently exists. The group pushing the petition claims to be a ratepayers association, the New England Ratepayers Association (NERA), but a number of stakeholders have questioned its affiliation and high-priced backers.

Stanek says the group's petition is just another potential example of federal interference in state clean energy policies, and poses a potential harm to states' long-term goals to ween off fossil fuels and add more renewables.

"We believe, as states, that there's been an unprecedented level of interference [from the federal government] in allowing a state to determine its resource portfolio mix," said Stanek. "So whether it be [the MOPR] or it be this NERA petition from this mysterious group up in New England ... the tension between the states and the federal government is at an all time high."