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1 1 (May 20, 2020)

handle is hein.crs/goveazd0001 and id is 1 raw text is: Congressional ____ *.Research Service PJM Minimum Offer Price Rule Impact on Future Renewables May 20, 2020 On December 18, 2019, the Federal Energy Regulatory Commission (FERC) issued an order directing the PJM regional transmission organization (RTO) to expand its Minimum Offer Price Rule (MOPR) as a move to address subsidies to electric power generation resources by states, with certain exemptions. FERC stated that it acted to protect the competitive capacity market administered by PJM by requiring PJM to expand its MOPR to apply to any new or existing power generation resource that receives, or is entitled to receive, a state subsidy, unless a FERC-determined exemption applies. FERC stated that resources that do not otherwise qualify for an exemption may seek a unit-specific exemption. FERC also clarified that the MOPR applies to state-subsidized resources (and not resources with federal subsidies). In April 2020, FERC denied requests for rehearing. Background RTOs and independent system operators (ISOs) manage the electric transmission systems and the competitive wholesale electric energy markets, under FERC's oversight. RTOs essentially operate as a broker between generation companies that offer to sell power into the wholesale markets, and distribution companies that submit bids to buy power from the markets. RTOs generally run several markets (including a capacity market) to ensure that enough generation is available to reliably meet peak power demands. Some RTOs use forward capacity markets to ensure that sufficient generation will be available years in the future. As RTO developed these markets, some participants and observers raised concerns that new generators could undermine competitiveness by submitting artificially low offers. In response, some RTOs, including PJM, added the regulatory concept of Cost of New Entry (CONE) to represent the estimated cost of building and connecting a reference power plant (typically, a natural gas-fired combustion turbine serving peak loads) to the grid in a particular location. CONE values can help provide a screen for possible exercise of buyer-side market power under an RTO MOPR. MOPRs provide a process for RTOs to determine whether low offers from new projects are consistent with a project's costs, and are not, therefore, anticompetitive. MOPRs require new resources to offer at, or above, a floor price (equal to the net CONE for the asset generator type and location), and therefore prevent an artificial depression of capacity market prices. Congressional Research Service https://crsreports.congress.gov IN11412 CRS INSIGHT Prepared for Members and Committees of Congress

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