Court Rejects Anti-Renewables Challenge to PJM Rule

In a decision released today, the United States Court of Appeals for the Third Circuit upheld a ruling from the Federal Energy Regulatory Commission (FERC) that allows renewables to compete fairly with fossil fuel power plants in PJM.

In 2019, PJM proposed, and FERC approved, a harmful change to PJM’s capacity market that would have forced out many state-incentivized clean energy resources and driven up costs for all consumers. PJM made this change in response to fossil plant owners’ complaints that they could not compete with low-cost renewables. The rule protected fossil fuel plants from competition by requiring renewable and other power sources supported by state or local governments to offer into PJM’s capacity market at artificially high prices.

After widespread opposition, PJM reversed course in 2021, and allowed government supported resources to participate at their true costs. Today’s decision affirms that revised rule.

Statements from groups that intervened defensively in the case

Danielle Fidler, Senior Attorney, Earthjustice:
“The Third Circuit has finally put an end to the decades-long battle of incumbent fossil fuel utilities to use PJM’s tariff to thwart states from exercising their rights and responsibility to protect human health and the environment. A clean energy transition is necessary not only to bring justice to communities overburdened by the harms of our energy system and address the root causes of climate change, but to ensure that all Americans have just, affordable, and reliable energy now and in the future. Today’s decision was a monumental step toward meeting clean energy targets in the mid-Atlantic.”

Caroline Reiser, Senior Staff Attorney for the Sustainable FERC Project at NRDC:
“The rule upheld today eliminates the anti-competitive treatment of resources supported by state and local policies in PJM. With this rule in place, consumers will see the full benefits of state investments in clean power. Fossil Fuel interests were trying to use the courts to do something they could not do in the market: slow the clean energy transition. This order should close the door to polluters’ attempts to unfairly skew power market rules in their favor.”

Casey Roberts, Senior Attorney, Sierra Club Environmental Law Program:
“The court’s order finally puts to rest a harmful market rule that forces consumers to pay for unnecessary capacity from fossil fuel power plants, rather than relying on clean energy resources supported by state policies. PJM and states can now put this issue behind them and start working constructively on how to ensure an affordable and reliable clean energy transition.

Mike Jacobs, Senior Energy Analyst, Union of Concerned Scientists:
“The whole point of states enacting renewable energy standards is to get more clean energy on the grid. But clearly, the natural gas industry wasn’t happy that these policies were having their intended effect. I’m not surprised, but it’s still a relief, that the court saw through the plaintiff’s cynical arguments.”