New Federal Rule Undermine Increases Ohio’s Energy Costs
COLUMBUS, OHIO – The Federal Energy Regulatory Commission today imposed rules on the 13-state PJM region that will reward fossil fuel generators with billions of dollars in unnecessary payments from consumers. The order could prevent power plants supported by state policies from competing in PJM’s capacity market, leaving consumers paying twice for power they don’t need.
The order could cost Ohio consumers as much as an additional $1.1 billion every year, according to research by Grid Strategies. The average residential bill could go up by as much as $6.00 a month as a result of today’s order.
The following is a statement from Dan Sawmiller, Ohio’s energy policy director for the Natural Resources Defense Council:
“Ohio needs to be investing in clean energy sources right here at home, creating jobs and helping our communities. Today’s order presents another hurdle that Ohio must overcome as we invest in our clean energy future. Our state leaders need to act swiftly to ensure Ohio-based clean resources are prioritized, and to protect our consumers from this broken regional electricity market.”
PJM, the grid operator for 13 states and the District of Columbia, proposed changes to its capacity market that would impose a Minimum Offer Price Rule (MOPR) on all capacity resources that benefit from state incentives. FERC approved a version of that so-called MOPR today.
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, or consumers pledge to reduce their electricity use when supply is tight and are compensated for that promise.
FERC's order threatens to force PJM customers to buy more capacity than necessary because it would subtract many state-incentivized solar, wind and nuclear plants from the equation. But those resources will still actually be running, so the proposed rules will, in effect, force consumers to pay twice for the same capacity. The result would be PJM buying capacity – most likely from gas-fired power plants – to serve customers that are already being served by the state supported resources.
The Natural Resources Defense Council (NRDC) is an international nonprofit environmental organization with more than 3 million members and online activists. Since 1970, our lawyers, scientists, and other environmental specialists have worked to protect the world's natural resources, public health, and the environment. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Bozeman, MT, and Beijing. Visit us at www.nrdc.org and follow us on Twitter @NRDC.