PJM Reverses Policy Designed to Stymie Clean Energy
Public interest coalition succeeds in effort to curtail the Minimum Offer Price Rule in the largest U.S. regional transmission organization, PJM, reining in fossil fuel bailouts
In a significant victory for clean energy and customers’ pocketbooks, PJM’s proposal to minimize the controversial Minimum Offer Price Rule (MOPR), which artificially raises prices on state-supported energy resources, went into effect today. The revised rates represent a significant victory for the 65 million PJM customers who will no longer face higher energy bills that prop up aging and dirty fossil fuel power plants.
PJM is the nation’s largest grid operator and accounts for about one-fifth of the nation’s total electricity consumption. The MOPR was expanded by the Federal Energy Regulatory Commission (FERC) in 2019, giving protection to legacy coal and gas power plants from competition with newer, cleaner energy sources. The MOPR was predicted to cost consumers nearly $2 billion every year in payments to unneeded fossil fuel power plants. Getting rid of the expanded MOPR gives clean energy generators a fair chance of operating in the 13-state PJM region and will save customers billions of dollars.
A coalition of clean energy advocates, including Sustainable FERC Project, Natural Resources Defense Council (NRDC), Sierra Club, Union of Concerned Scientists, and Earthjustice fought back against this federal overreach into state clean energy policy. The reversal will make it easier for states to achieve ambitious clean energy goals, which are needed to prevent the worst effects of climate change and create a resilient, affordable electric system.
“Over 90% of electricity demand in the PJM system comes from consumers in states with clean energy requirements. The expanded MOPR would have forced them to subsidize the fossil fuel energy they are paying to replace,” said Danielle Fidler, Earthjustice senior attorney. “The expanded MOPR also took money from customers particularly hard hit by the economic and health impacts of the Covid-19 pandemic and gave it to fossil fuel companies whose emissions exacerbate Covid impacts that fall disproportionately on many of those same communities. The new policy is a big win for environmental justice.”
“States across the mid-Atlantic and Midwest are promoting clean power, and today’s decision ensures that renewable energy sources like solar and wind have a fair chance to replace obsolete and dirty fossil fuel plants,” said Tom Rutigliano, a senior advocate at NRDC. “The energy transition is upon us, and it’s time to accelerate progress. It’s heartening that PJM is helping to lead the way.”
“States and cities have a right to shape their energy mix to respond to their residents’ desire to reduce carbon and other destructive emissions. The Expanded Minimum Offer Price Rule was designed to undermine clean energy, and the decision to eliminate it will undo the harm it caused to state and local clean energy policies,” said Casey Roberts, a senior attorney for the Sierra Club’s Environmental Law Program. “The anti-clean energy price rule pushed by fossil fuel plant owners would have subsidized the continued operation of uneconomic fossil fuel resources, forced valuable renewable resources out of the capacity market, and hurt consumers financially. With this failed policy behind us, PJM, states and cities must work cooperatively to steer us into an affordable and reliable clean energy era that relies on renewable technologies and better efficiency, not expensive and unnecessary coal and gas plants.”
“We appreciate that this change came from PJM and its stakeholders working together, and rescued this policy with a win for every consumer in every state and district in PJM,” said Mike Jacobs, a senior analyst for the Union of Concerned Scientists. “The poorly-conceived MOPR threatened every state’s ability to choose its own energy mix and the ability of numerous co-operatives and municipalities to provide service under century-old laws providing democratic control of electric energy supplies.”
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