FERC late Friday night accepted ISO-NE’s plan to remove its minimum offer price rule after a two-year transition period, putting an end, for now, to a twisting saga that has consumed the region’s policymakers in recent months (ER22-1528).
The order offered deference to the grid operator. While FERC’s Democratic majority expressed disappointment that the contentious rule will remain in place for another two years, they wrote that the plan met the Federal Power Act’s just-and-reasonable standard and that they had no other option but to accept it.
The outcome is a disappointment to renewable industry and environmental advocates in New England, who had hoped that the commission would step in and use its authority to order ISO-NE to immediately ditch the rule, which sets a price floor in the capacity market for state-sponsored resources.
“FERC’s decision today fails to end once and for all the reign of this harmful rule,” Melissa Birchard, director for clean energy and grid reform at the Acadia Center, said in a statement. “The last thing we need is more delays to decarbonization and reliable clean energy. FERC and ISO New England need to take decisive action now to show they’re behind state clean energy policy. They didn’t do that today.”
But the commissioners’ opinions in the order make clear they did not ultimately see that as an option, because the grid operator did not put it forward.
“Simply put, ISO-NE could have, and should have, done better,” Chairman Richard Glick wrote in a concurrence. “Nevertheless, ISO-NE submitted a different proposal — one that delays reform of the MOPR by two years — and we must evaluate the filing before [us].”
In fact ISO-NE had been, for months, working on a proposal to immediately get rid of the MOPR, before a late pivot to the transition proposal, fueled by a group of gas generating companies in the NEPOOL stakeholder process. (See In Late Twist, ISO-NE Calls for 2-Year Delay on MOPR Elimination.)
The Democratic commissioners pointed to a significant silver lining from their perspective: that the rule will be gone in two years.
“Ending the federal-state antagonism over the MOPR represents a significant step forward toward ensuring resource adequacy at just and reasonable rates, which is, after all, the entire purpose of a capacity market,” Glick wrote.
Writing jointly, Commissioners Allison Clements and Willie Phillips said ISO-NE’s filing “sets the region on course to eliminate the MOPR, a likely unjust and unreasonable tariff mechanism that, if left uncorrected, could force customers in New England to pay millions or even billions to prop up capacity that they do not want or need.”
Republican Mark Christie, who joined the Democrats in supporting the proposal, wrote separately that “RTO capacity markets … should attempt to accommodate the public policies of the states as long as the impacts, both in costs and reliability, of one or more states’ public policies are not being forced onto other states not sharing those public policies.”
While Christie opposed PJM’s proposal to narrow its MOPR, it was in large part to the opposition of Pennsylvania and Ohio. “Here, however … no state in ISO-NE has filed in this record opposing the MOPR’s reform in ISO-NE,” he said.
ISO-NE and supporters of the proposal praised FERC’s decision. The grid operator said in a statement that it was “pleased that the commission saw this proposal for what it is: a reasonable step forward on New England’s transition to a decarbonized future.”
The New England Power Generators Association applauded the order as well. “NEPGA appreciates FERC’s decision, keeping with the commission’s longstanding practice of encouraging compromise solutions that reflect the geography, politics and specific needs of a given region,” NEPGA President Dan Dolan said in a statement.
“I think that I’ll have a celebratory drink tonight,” tweeted Brett Kruse, a vice president at Calpine and a vocal proponent for gas generators in the NEPOOL stakeholder process.
Danly’s Dissent
Republican Commissioner James Danly was the lone opponent of the proposal.
“This scheme will fail,” he wrote in a dissent, which contains several exchanges dueling with Glick’s concurrence. “This order will compromise reliability. All-in ratepayer costs will increase substantially.”
Danly, a long-time proponent of the MOPR, wrote that “a market rate design cannot be just and reasonable if it is not competitive, and it cannot be competitive when it permits states to freely manipulate prices.”
The dissent also responded to comments Glick made at a press conference after the commission’s monthly open meeting May 20.
“Chairman Glick says that I am ‘prone to hyperbole’ when I warn that blackouts are the likely outcome of the majority’s misguided policies to prop up renewables at the expense of competitive markets and existing fossil resources,” he wrote. (See Summer Forecasts Spark Warnings of ‘Reliability Crisis’ at FERC.) “Chairman Glick appears to be confusing ‘hyperbole’ with ‘reality.’ California and Texas have already experienced blackouts. Over two-thirds of the nation faces ‘elevated [reliability] risk’ this summer. I prefer a policy correction before we have more blackouts. Today’s order makes blackouts in New England, and their grave attendant consequences, far more likely.”
[Editor’s Note: A previous version of this story incorrectly stated that the ISO-NE filing contains no binding commitment to remove the MOPR after two years. In fact, the changes to the tariff do include a binding removal of the MOPR.]