FERC Sued Over Unlawful Rule that Props Up Gas, Coal Plants

Earthjustice is representing NRDC (Natural Resources Defense Council), Sierra Club, Environmental Defense Fund, and the Union of Concerned Scientists in a lawsuit challenging the Federal Energy Regulatory Commission (FERC) over its de facto bailout of coal and gas power plants at the expense of state clean energy policies.

FERC’s order that grid operator PJM adopt a revised “Minimum Offer Price Rule” (MOPR) is likely to force 65 million customers in the Mid-Atlantic and Midwest to pay billions of dollars more for electricity. The case was filed late last night in the U.S. Court of Appeals for the District of Columbia Circuit.

Statement by Tom Rutigliano, senior advocate at NRDC’s Sustainable FERC Project: “FERC overstepped its authority with this rule, intruding on the congressionally-established power of states to determine their own energy priorities. Its order overrides the choices of millions of voters and threatens to corrupt our power grid into a tool for subsidizing fossil fuel plants.”

Comment by Casey Roberts, senior attorney with the Sierra Club: “FERC has overstepped its jurisdiction with its reckless MOPR decision, which will worsen the dangerous health impacts of fossil fuel combustion in communities from Virginia to Illinois. We plan to aggressively pursue FERC’s harmful orders through the courts, and to support states in exiting PJM’s capacity market so they can pursue the affordable clean energy policies needed to protect communities.”

Comment from Sarah Ladin, an attorney at EDF: “FERC’s orders will subject 65 million Americans to higher costs for energy and more dangerous air pollution. EDF strongly opposes this damaging federal action, which is unambiguously designed to undermine state authority to advance energy solutions that protect human health and the environment.”

Comment from Mike Jacobs, senior analyst at the Union of Concerned Scientists: “FERC’s choice to overlook numerous existing energy subsidies and attack states’ explicit efforts to reduce air pollution and carbon emissions is bad policy based on flawed and legally questionable reasoning. Every state in PJM has something to lose, and it’s a shame this must now be resolved in court.”

Statement from Danielle Fidler, an attorney for Earthjustice: “In the wake of millions who have lost their jobs or cannot work due to the pandemic, FERC says, ‘Let them eat cake.’ FERC’s decision to saddle families and small businesses with billions of dollars in unnecessary rate hikes is a failure in its primary duty to protect customers.”

Background

In December, FERC ordered changes to the capacity markets for PJM, the grid operator for 13 states and the District of Columbia. Those changes, called the Minimum Offer Price Rule or MOPR, impose an artificially high minimum price that power generators receiving state subsidies must meet in order to bid into the capacity markets.

FERC’s order is likely to limit or bar state-supported solar, wind and nuclear plants from participating in the capacity markets. Even as states build towards a carbon-free future, this rule will force consumers to keep paying for dirty, obsolete power plants. 

Capacity markets are used in PJM to ensure that enough power is available at all times. They differ from the day-to-day energy markets. In capacity markets, power generators pledge to provide electricity when needed at a time in the future.