Clean-energy advocates denounced a federal order issued by a regulatory agency led by an appointee of President Donald Trump, saying it will lead to higher prices for renewable-generated electricity and hinder efforts to curb carbon emissions.
On Thursday, the Federal Energy Regulatory Commission ruled that the nation’s biggest electric grid operator, PJM, must include electricity from state-subsidized renewable sources in its “capacity market,” a move designed to bring the price of clean power into line with that generated by fossil fuels.
The change is designed to address what FERC sees as a distortion of competition in the energy market as a result of state subsidies for clean fuels. PJM, which coordinates the movement of wholesale electricity in 13 states and the District of Columbia, plays an important role in the prices utilities pay for power.
The order was condemned by New Jersey’s energy regulator, the Board of Public Utilities.
“We are disappointed with today’s decision,” the BPU said in a statement. “The decision by FERC to favor fossil generation and reject a clean-energy future shows a callous disregard for the health and safety of the residents of New Jersey and the other impacted PJM states. Further, we anticipate it will make it more difficult for the state to affordably address climate change through the competitive markets.”
But the BPU, which provides subsidies or incentives for zero-carbon fuels including wind, solar and nuclear, said New Jersey “will not be deterred” in its efforts to hit Gov. Phil Murphy’s target of 100% clean energy by 2050 to curb climate change.
Advocates: Order hinders move to clean energy
Outraged environmental advocates said the new policy would result in rising prices for renewables, including solar power, at a time when many states are trying to decrease their use of emissions-heavy fossil fuels like coal and natural gas.
“The federal commission’s decision, nearly two years in the making, will tilt the market away from low-carbon sources to favor fossil fuel providers and effectively nullify state actions to decarbonize electricity,” said the Union of Concerned Scientists.
States such as New Jersey have taken steps to reduce carbon emissions from power generation by using measures such as renewable portfolio standards that set targets for how much of a state’s electricity is generated from renewable sources.
But FERC’s move means that many of the power plants supplied by those sources will now be stripped out of PJM’s capacity market, UCS said.
In explaining its decision, FERC said it expanded its so-called Minimum Offer Price Rule because it previously “failed to address the price-distorting impact of resources receiving out-of-market support” and led to a PJM tariff that was “unjust and unreasonable.”
“Out-of-market payments provided, or required to be provided, by PJM states to support operation of certain generation resources threaten the competitiveness of PJM’s capacity market,” the regulator said in a statement.
Fostering competitiveness in energy markets
FERC chairman Neil Chatterjee, one of two Republican commissioners on the three-person panel, said he respects states’ rights to make choices about the kinds of power generation they support, and said they can still do so under the modified rule. The commissioners voted 2-1 — along party lines — in favor of the rule.
But he said the regulator has a statutory obligation to ensure the competitiveness of the markets it oversees.
“An important aspect of competitive markets is that they provide a level playing field for all resources, and this order ensures just that within the PJM footprint,” said Chaterjee, an appointee of Trump who is an outspoken supporter of coal and other fossil fuels.
The modified order applies to new generation from renewables but not to existing resources that are part of state renewable portfolio programs. Also, the expanded rule applies to state-subsidized resources but not to federal subsidies, the agency said in its statement.
It gave PJM 90 days to comply. PJM said on Thursday afternoon that it hadn’t yet received the order but was aware of the compliance deadline.
“As we prepare our compliance filing, we will engage with our stakeholders and members to discuss the substance of the order and its impact beginning at the Jan. 8 Market Implementation Committee meeting,” the grid operator said.
Jeff Tittel, director of the New Jersey Sierra Club, said the rule change will increase fossil-fuel consumption while hindering the use of renewables.
“Coal and gas companies know that renewable energy is finally picking up and now they are trying to do everything they can to stop states transitioning,” he said. “This is a shameful giveaway to big coal, oil and gas at the expense of our environment.”
Tittel also said the change will prevent New Jersey from meeting its current clean-energy goals, like the 7500 megawatts of offshore wind recently announced by Murphy, and the short-term goal of reaching 20% of renewable energy by 2020.
The American Wind Energy Association also condemned FERC’s action.
“FERC’s split decision threatens states’ rights and hinders their ability to bring more clean energy to their communities,” the AWEA said. “It undermines Congressional authority established under the Federal Power Act. Going forward, AWEA will consider all available options to ensure that states’ clean-energy policies can be fully accommodated in PJM’s market.”