Maryland: Latest PJM Capacity Market Changes Restrict "Freedom," Are "Barriers to Competition"

Revisions to the price floor in PJM's Reliability Pricing Model capacity market filed with FERC on Friday (see prior story), "restrict[] the freedom with which prices are established by a competitive market," the Maryland PSC said in a statement.

As previously reported, revisions to the Minimum Offer Price Rule (MOPR) endorsed by PJM and capacity owners are meant to increase capacity prices paid by load.

"These modifications to PJM's tariff are highly controversial and, in the Commission's view, improper for several reasons," the PSC said.

"First, the MOPR is an administratively established minimum price designed to maintain or increase customer-paid capacity market prices, and thereby restricts the freedom with which prices are established by a competitive market and particularly that market's ability to reduce prices paid by end-use customers," the PSC said.

"Second, adjustment to the MOPR is appropriate only after a full and fair examination, which includes input from all stakeholders (industry and end-user groups), rather than the secret and exclusionary negotiations through which this proposal was formed," the PSC added.

"Third, and most importantly, the proposed revisions are designed specifically to restrict states from ensuring a reliable supply of electricity and from implementing important energy and environmental policies. This long-standing authority is integral to a state's ability to protect the health and welfare of its residents," the PSC said.

"This decision is designed to prevent state utility commissions like ours from fulfilling our historic duty to ensure a reliable, long-term supply of electricity. These revisions will, if allowed to take effect, protect existing generators -- whose plants were built by ratepayers before deregulation -- and erect new and higher barriers to competition, all to the detriment of the public interest," said PSC Chairman Douglas R. M. Nazarian.