Rockville, MD (PRWEB) September 25, 2011
The concept of capacity markets has always been controversial as they were created in settlement processes. The issue has become increasingly contentious of late, due in part to efforts by Maryland and New Jersey, in the constrained areas of eastern PJM, to build generation outside the market.
New Jersey created contracts, with funding from its ratepayers, for about 2,000 MW of new natural gas plants that were to bid low in the Reliability Pricing Model (RPM). Generators sued New Jersey in federal court alleging the contracts are discriminatory in the case PPL EnergyPlus v Lee Solomon (2:2011cv00745) at the US District Court for New Jersey. Maryland had a similar plan, which never left the proposal stage. That sparked strong opposition from generators who filed a complaint at FERC (Docket EL11-20), and from PJM, which proposed its own changes (Docket ER11-2875) to the Minimum Offer Price Rule (MOPR).
The Federal Energy Regulatory Commission's (FERC) acceptance of PJM's proposal effectively stopped efforts in Maryland and New Jersey to sponsor new generation outside the wholesale market. The new MOPR prevents state-sponsored plants from clearing in capacity markets, so if state regulators want to go forward with them, consumers will have to pay for the same capacity twice.
Generators in New England also filed a complaint at FERC (Dockets EL10-50 and EL10-57) to get what they saw as just capacity prices, with ISO-NE issuing its own proposal (ER10-787) that would pay two capacity prices, the so-called Alternative Pricing Rule. But FERC said it was unacceptable to let state-sponsored generation clear in the market and imposed PJM's buyer-side market protections on the New England market as well.
How state-sponsored generation could and should interact with FERC-regulated wholesale markets is still up for debate. Get the latest on both sides of the dispute from four key industry experts on Restructuring Today’s latest webinar "After FERC's MOPR Ruling: Predicting the Future of Capacity Markets" on Wednesday, September 28, 2011 or on the multi-media recording that will be available shortly after the event. For details, please visit http://www.restructuringtoday.com/ferc-mopr-pr
The FERC orders are up for rehearing and the issue is playing out in the courts. With PJM debating ways to get more long-term price signals to new generators and ISO-NE complying with FERC's order, it is clear that both RTOs still have work to do.
Listen as this panel offers its expertise about the future of capacity markets and whether states should create generation in restructured wholesale markets:
- Doug Egan, CEO, Competitive Power Ventures
- William Hogan, Raymond Plank Professor of Global Energy Policy, John F Kennedy School of Government
- Sonny Popowsky, consumer advocate, Pennsylvania Office of Consumer Advocate
- John Shelk, president and CEO, Electric Power Supply Association
- James Downing (Moderator), editor, Restructuring Today
Here are some of the questions we plan to cover during this in-depth, 90-minute webinar:
- Can capacity markets put the proverbial steel in the ground on their own?
- How will capacity markets change in the wake of the recent FERC orders?
- Should states sponsor their own generation or rely entirely on market forces?
- How much will capacity markets change going forward?
- Is the debate on FERC's MOPR ruling over, or is it just beginning?
- Is there a better way than PJM's MOPR and if so, what is it?
- What other changes, in addition to the MOPR, could give states what they want?
Details about Restructuring Today’s "After FERC's MOPR Ruling: Predicting the Future of Capacity Markets" webinar is available at http://www.restructuringtoday.com/ferc-mopr-pr
About Restructuring Today: Our mission is to deliver exclusive news chronicling ongoing efforts to open competitive wholesale and retail energy markets with in-depth analysis on why some fail and others succeed.
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