FERC Decision on PJM Capacity Market Undermines Competitive Markets and Clean Energy

(BOSTON, MA) After more than a year awaiting a decision, the Federal Energy Regulatory Commission (FERC) today issued an order that rewards inefficient, higher polluting power plants that are unable to compete, increasing consumer costs by billions in the PJM wholesale electricity market, which spans portions of 13 Mid-Atlantic states and the District of Columbia.

“Today’s decision sent shockwaves through the energy industry. Not only does FERC’s decision threaten to increase prices and ignore the value state clean energy resources provide to system reliability, it sets a bad precedent for the integrity of wholesale electricity markets across the U.S. Wholesale electricity markets should offer states a path to achieve environmental goals, not act as an impediment to them. EDF stands ready to engage with all stakeholders on holistic solutions that use competition to achieve sustainable environmental outcomes.”

• N. Jonathan Peress Senior Director, Energy Markets & Utility Regulation, Environmental Defense Fund

Today’s decision pertains to PJM’s capacity market, which is used to ensure there’s enough power reserves in the region to maintain reliability during extreme weather or other unplanned events. Many states within PJM have set aggressive clean energy targets, using rebates, credits and other incentives to encourage the deployment of clean energy and to compensate these resources for their environmental benefits to society. FERC’s decision today brings clarity to the role it believes state clean energy resources should play in a regional market that serves 65 million people.