FERC
NRECA Seeks Clarity on Self-Supply
NRECA has asked regulators to reverse themselves on a controversial order it warns could have substantial regional—and potentially national—effects on construction of new generating capacity.
NRECA has asked regulators to reverse an order it warns could have a “chilling effect” on construction of new generating capacity. (Photo By: iStock Photo)
The association joined several co-ops, munis, industrial customers and the American Public Power Association in the request for rehearing of the Federal Energy Regulatory Commission’s Nov. 17 order.
The order [Dockets EL11-20 and ER11-2875] calls into question whether load-serving entities such as electric co-ops can self-supply the power needed to meet their capacity obligations in the PJM Interconnection regional transmission organization. It followed an April issuance intended to address potential market power in PJM.
FERC’s initial order mandated major changes in the annual auction process through which co-ops and other load-serving entities have been required to demonstrate they will have sufficient generating capacity to reliably meet the needs of their consumers in three years.
The follow-up order set up a unit-specific review process for load-serving entities seeking an exemption from the crux of the controversy, the minimum offer price rule. The new process replaces the previous blanket exemption for new self-supply capacity resources.
But according to NRECA and the other rehearing requesters, while the blanket exemption provided load-serving entities with a guarantee self-supplied resources could be used to satisfy their capacity obligation, its successor would not. The new case-by-case approach would have a “chilling effect” on new generation investment, the association cautioned.
Why? Because there is no guarantee, or even a presumption, that load-serving entities’ self-supply bids would clear the regional capacity auction and thus be eligible to satisfy their capacity obligation, NRECA and the other petitioners asserted.
This will present “a serious impediment to the actual exercise … of the self-supply option that PJM and the commission claim an interest in protecting,” they concluded. It could force load-serving entities away from long-term planning and make them more dependent on short-term centralized markets for capacity.
To correct this situation, the joint petitioners asked FERC to reinstate the previous blanket clearing exemption for load-serving entities such as electric co-ops.
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