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April 13, 2018
NEM Upcoming Events

NEM’s 21st Annual National Restructuring Conference will be held April 30 – May 2, 2018, at the Hyatt Regency Capitol Hill Hotel, Washington, DC. A Draft Agenda is available here. You may register at this hotlink. The following Commissioners are confirmed to attend with additional invitations to state and federal regulators and legislators outstanding: Betty Ann Kane, DCPSC Chairman; Dallas Winslow, DEPSC Chairman; Tricia Pridemore, GAPSC Commissioner; John Rosales, ICC Commissioner; Odogwu O. Linton, MDPSC Commissioner; Upendra J. Chivukula, NJBPU Commissioner; Mary Ann Holden, Commissioner, NJBPU; Larry Friedeman, PUCO Commissioner; and Catherine Pugh, Mayor of the City of Baltimore.

PJM Capacity Market Proposals

PJM filed proposed tariff revisions to address the impacts of state supply-side subsidies on the PJM capacity market. PJM described the circumstances necessitating the filing: "an emerging trend in PJM is for owners of these legacy assets to seek out-of-market support from states to forestall retirement and defeat the design objective of PJM’s market, at the expense of their competitors and wholesale consumers. PJM recognizes that a state may have strongly held policy reasons (e.g., social, political or environmental public policy) for providing out-of-market support to specific in-state resources or resource types. But regardless of the state’s specific policy motivation, retaining or compelling the entry of resources that the market does not regard as economic, suppresses prices for resources the market does regard as economic. This in turn suppresses revenues for resources that depend on these prices to support their continued operation or their economic new entry. Eventually, unless these resources too are given a subsidy or (if they are essential to preserving reliability) a Reliability Must Run (“RMR”) arrangement, they will be crowded out."

As stated by PJM "the sole issue is how PJM and the Commission can ensure that the market can address these actions by states in a manner that does not undermine the fundamental purpose of the wholesale market."

PJM submitted two alternative proposals for "ensuring PJM’s wholesale capacity market can maintain just and reasonable price signals notwithstanding the potentially significant distorting effect of state subsidies." The alternatives are as follows:

"* Option A: Accommodate state subsidies in a way that avoids impacts on wholesale prices by repricing a subsidized offer after it has cleared at its subsidized level, so that all offers that clear are paid a competitive price (“Capacity Repricing”) or,
* Option B: Mitigate the impacts of state subsidies on wholesale prices by repricing subsidized offers through extension of the Minimum Offer Price Rule (“MOPR-Ex”)"

PJM expressed a preference for the Option A approach. The full text of the PJM Filing is available on the NEM website.

New Jersey
Click here to view all past updates.
Legislature Passes Nuclear Subsidy Bill

Both the Senate and Assembly yesterday passed S2313. S2313 requires the Board of Public Utilities to establish a zero emissions credit (ZEC) program to provide financial support to the state’s nuclear power plants. It is estimated that nearly 40% of all power generated in New Jersey comes from its three nuclear power plants: PSEG-owned Salem and Hope Creek nuclear generating stations; and the Oyster Creek plant owned by Exelon Generation. Exelon announced in February that it would shutter the Oyster Creek plant in October 2018.

Under S2313, a "ZEC" is a Board-issued certificate representing the fuel diversity, air quality, and other environmental attributes of one megawatt-hour of electricity generated by an eligible nuclear power plant selected by the Board to participate in the ZEC program. S2313 would require each "electric public utility" in the State to purchase ZECs on a monthly basis from each selected nuclear power plant. With respect to cost recovery, "The board shall order the full recovery of all costs associated with the electric public utility’s required procurement of ZECs, and with the board’s implementation of the ZEC program under this act, through a non-bypassable, irrevocable charge imposed on the electric public utility’s retail distribution customers. Within 150 days after the date of enactment of this act, each electric public utility shall file with the board a tariff to recover from its retail distribution customers a charge in the amount of $0.004 per kilowatt-hour which reflects the emissions avoidance benefits associated with the continued operation of selected nuclear power plants. Within 60 days after the tariff filing required pursuant to this paragraph, after notice, the opportunity for comment, and public hearing, the board shall approve the tariff, provided that it is consistent with the provisions of this subsection. No later than the date of the board’s order establishing the initial selected nuclear power plants to receive ZECs, each electric public utility shall implement the tariff and begin collecting from its retail distribution customers the approved charge."

The full text of S2313 is available on the NEM Website.

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