FERC directs PJM capacity market reforms: Progress but not certainty

On December 19, 2019, the Federal Energy Regulatory Commission (FERC) directed PJM to expand the Minimum Offer Pricing Rules (MOPR) to a broad range of subsidized resources, both new and existing. The Commission reasons that this will protect the PJM capacity market from the effect of state subsidies for preferred generation. Resulting market rules are likely to drive up capacity prices in the near term, shift dynamics in the energy market, and may drive states to further action. Now, FERC and PJM will begin interpreting and implementing the Commission’s directives – with the potential to resume capacity market operations as soon as late 2020.
In this Insights, the authors discuss key changes and outline some potential market impacts, including upward pressure on RPM prices, and how states may respond.