Sierra Club and solar advocates urge Maryland PSC to mitigate MOPR

Sierra Club and solar advocates urge Maryland PSC to mitigate MOPR

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In a letter addressed to Maryland Governor Larry Hogan, Senate President Bill Ferguson and Speaker of the House Adrienne Jones, the Sierra Club, the Utility Scale Solar coalition, Exelon and other groups ask for the Maryland Public Service Commission to mitigate the FERC ruling on MOPR they say will stifle solar growth in the state.

The letter reads as follows:

On December 19, 2019, two members of the Federal Energy Regulatory Commission (FERC) voted to force Maryland families and businesses to pay higher electricity prices because we support clean energy. The Senate Finance Committee and House Economic Matters Committee have taken this issue very seriously, creating the FERC Order Working Group and holding a joint briefing to explore potential state responses, and we appreciate this response from the General Assembly. The Maryland Legislature can act this year and create structures to ensure we don’t pay higher bills for dirty power plants we neither want nor need. We, the undersigned organizations representing a diverse group of Maryland voters and businesses, urge you to direct the Public Service Commission (PSC) to work with electric companies to ensure Maryland can meet its electric needs reliably and affordably with clean energy.

If this egregious decision to undermine states’ rights is left unchecked Maryland ratepayers could pay hundreds of millions in higher electric bills in the coming years to dirty power plants. The clean energy the Legislature voted to deliver last year via the Clean Energy Jobs Act could cost more too, and we may even get less of it. Instead the PSC should be acting to lower costs for customers.

FERC’s destructive order impacts the “capacity market” used by our regional electric system operator, PJM, to pay power plants to be able to operate three years in advance. This “market” already forces Marylanders to pay for more power plants than we need — the PJM grid has an excess of approximately 13 gigawatts or more of capacity that is being unnecessarily borne by customers — and FERC just made it much worse. As described by PJM directly at the most recent FERC Order Working Group: 

  • PJM’s capacity market requires the procurement of capacity beyond what would be necessary should Maryland utilities purchase capacity independently, therefore charging Maryland ratepayers more than possible alternatives, like through the execution of a Fixed Resource Requirement (FRR).

  • One of the Round 1 offshore wind projects slated to come online will be subject to Minimum Offer Price Rule (MOPR), as well as any project awarded ORECs during Round 2. That means these projects will be harmed in their ability to generate revenue in every auction that takes place through the capacity market before the state takes action. Such a disincentive could inhibit that state’s ability to complete new projects. 

  • Similarly, utility-scale solar and battery storage projects will face tougher paths to economic viability in Maryland as a result of MOPR and will be harmed in every capacity market auction that takes place before the state takes action.

  • There is flexibility for utilities that execute a FRR. While there is a five year minimum commitment, PJM permits termination of an FRR if a state regulatory change affects procurement of capacity.

But Maryland can explore the FRR as a capacity market opt out approach through a PSC-led process.  The PSC has already asked for analysis of what that option could mean for customers. The Legislature can help by creating the structure and authority to implement it, and ensure it delivers the clean energy you voted for last year and the zero-carbon future we need. The Legislature does not have to order such implementation this year, simply set up the process and authority for the PSC to be able to act to protect Maryland customers. 

We respectfully urge you to direct the PSC to work with electric companies, other important stakeholders, and the public to evaluate resource options and costs for zero-carbon capacity, and give the PSC the authority to move forward with FRR for one or all of the eligible electric companies in Maryland if the results are in the public interest. The PSC is frequently entrusted with the authority to make decisions that are in the best interest of Maryland ratepayers while meeting state goals and laws.  Granting the PSC additional authority with respect to FRR would be consistent with this trust subject to any parameters that the legislature may determine, including assurance that the costs and benefits of an FRR election be allocated in a non-discriminatory fashion across Maryland consumers. 

Directing the PSC to conduct a well-structured analysis of options, potentially including requests for capacity proposals in line with Maryland clean energy and customer interests, and granting authorization to the PSC to act on those proposals by electing an FRR or continuing in the capacity market, is a no-regrets option to make sure Maryland families and businesses are protected from the Trump administration’s disastrous attempt to bail out dirty power plants. 

We appreciate your consideration and stand ready to work with you to get this right.

Sincerely,

Maryland Sierra Club

Chesapeake Climate Action Network (CCAN)

Maryland League of Conservation Voters

Utility Scale Solar coalition

Exelon


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