On Thursday, Pennsylvania Sen. Gene Yaw (R-23) said the Pennsylvania Senate Republican Caucus had filed a brief in federal court to protect the state’s energy competition and reliability from regulatory overreach.
According to the brief, the caucus asked the federal court to vacate a regulation proposed by PJM – the agency managing the power grid for 13 states, including Pennsylvania – that would allow subsidized electricity generators to skirt the minimum offer price rule (MOPR) when committing to supplying energy in PJM’s forward-looking capacity market. This market ensures PJM will have enough energy to power the grid three years into the future and is a key measure of its reliability. The caucus said the proposed regulation would allow other states’ energy policy decisions to take precedence over Pennsylvania.
“Energy policy decisions in New Jersey or Illinois or Virginia should not take precedence over Pennsylvania’s policies or any other state in PJM,” Yaw said. “The minimum offer price rule ensured that no resource was favored over another based on a state subsidy and encouraged fair competition among resources in the interstate electricity market. The Federal Energy Regulatory Commission effectively eliminating this important protection undermines the federal government’s long-standing ‘fuel neutral’ approach to regulation, and we cannot let it go unchecked.”
Yaw said that FERC’s administrative inaction on the rule allowed it to lapse into effect without considering the merits of the rule itself.
Yaw’s office said that in states where state tax revenues subsidize electricity, certain types of electricity generation are produced to the exclusion of others, allowing states to pick winners and losers. Pennsylvania, Yaw’s office said, supports markets based on competition, not subsidies, and that those subsidies distort the market for various energy types.
Under the MOPR, the generator’s capacity market bid is based on the cost to provide that capacity before subsidies are applied, putting all states supplying electricity to the PJM grid on the same footing. PJM’s proposed regulation ignores the market distortion created by subsidies.
“This unprecedented change to the operation of our power grid’s wholesale market undermines decades of successful competition and increased reliability achieved in Pennsylvania as a result of our sensible energy policies,” Yaw said. “Our caucus cannot and will not allow federal negligence to supplant the progress we’ve made through lowered electricity rates and decreased emissions with conflicting policies adopted by other states in our grid.”