NEW JERSEY – Attorney General Gurbir Grewal and Board of Public Utilities (BPU) President Joseph Fiordaliso announced Monday that the state has appealed a federal order that undermines New Jersey’s support for renewable clean-energy resources while incentivizing fossil-fuel resources that contribute to climate change.
In a Petition for Review filed today with the D.C. Circuit Court of Appeals, New Jersey challenges orders by the Federal Energy Regulatory Commission (FERC). At issue is the requirement that state-subsidized energy resources enter the capacity market auction at an administratively established “minimum offer” price – which makes clean-energy resources less competitive and undermines the impact of the State’s program subsidizing those renewable energies. In addition to undermining the subsidies, these market rues will negatively affect ratepayers in New Jersey because a set percentage of capacity in the State must come from clean-energy resources.
The State’s argument is that FERC overstepped its authority by imposing its so-called Minimum Offer Price Rule (MOPR) – FERC is regulating in an area that is under the State’s jurisdictional control. The State also argues that the MOPR will discourage clean-energy resources from entering the capacity market, and that it will cost consumers in New Jersey and elsewhere significantly more money – something FERC was required to consider, but did not.
“From day one, the Murphy Administration has prioritized building New Jersey’s renewable energy programs, which we all recognize are critical to the State’s economy, to building clean energy jobs and to fighting back against climate change,” Grewal said. “But now the federal government is trying to undo those efforts, and stack the deck in favor of fossil fuel companies instead. The federal government’s order is as unlawful as it is illogical, and today we’re challenging that action in court.”
“For too long, FERC has ignored the impact of climate change and the importance of moving to a clean energy economy,” Fiordaliso said. “Further, FERC’s decision to define the Board’s annual Basic Generation Service auction as a state subsidy is a direct attack on electric competition and is an unwarranted intrusion into how states manage their retail electricity markets,” President Fiordaliso said. “The Murphy administration remains committed to implementing its clean energy vision, including a robust program of offshore wind and solar so that we might take the prudent steps of fighting the climate crisis and providing a healthier environment for New Jersey residents. We will continue to fight the FERC Order and we are confident that the courts will reverse this significant overreach by the FERC majority.”
New Jersey is part of the PJM Interconnection — a power grid manager serving approximately 65 million electricity customers in New Jersey, parts of 12 other states and the District of Columbia. The PJM Interconnection markets ensure that power generation is available to meet demand on an hourly and daily basis, and ensures that sufficient capacity is planned to meet future requirements.
In June 2018 and December 2019, FERC issued orders tipping the scales in PJM’s capacity market away from newer clean-energy resources and towards existing, primarily fossil-fueled power plants. It did so by requiring that all new energy resources receiving “state subsidies” – a term that encompasses the majority of planned renewable and zero emission resources in New Jersey – to bid into the capacity market at a pre-established “minimum offer” price. On April 16, FERC denied New Jersey’s request for a rehearing and instead reaffirmed its order MOPR.
New Jersey contends the rule and its accompanying financial disincentives for clean energy sources works against states, like New Jersey, that have taken a progressive approach to meeting future energy needs, combating climate change and encouraging a more diverse, robust and competitive PJM capacity market. At the same time, the rule offers competitive advantages to fossil-fueled generators despite the pollution, greenhouse gas and other negative environmental impacts they impose.
Discouraging clean energy sources from entering the capacity market, the State contends, will ultimately lead to unnecessary higher prices while perpetuating the current, heavily polluting reliance on fossil fuels.
Earlier this year, Grewal joined with the Attorneys General of Maryland and Delaware in authoring a guest op-ed article published in D.C.-based The Hill that argued against the FERC order.
“By erecting barriers to the participation of state-supported clean energy resources, FERC’s order violates the law and discriminates against state-preferred resources,” Grewal and the other Attorneys General wrote. “It will cost our residents billions of dollars, and delay our progress towards a clean energy economy.” The Attorneys General concluded by vowing to fight what they termed FERC’s “reckless and heavy-handed approach.”