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New Jersey energy regulators to examine alternatives to PJM capacity market

Highlights

Will determine if NJ can achieve clean energy goals

BPU staff charged with recommending best approach

New York — New Jersey utility regulators will explore whether the state's participation in the PJM Interconnection capacity market is the best way to ensure adequate electric generation resources for Garden State ratepayers.

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The Board of Public Utilities during a March 27 meeting told staff to investigate whether New Jersey can achieve its long-term clean energy and environmental goals under the current resource adequacy procurement paradigm. If not, staff are to recommend how best to meet resource adequacy needs in a way that lines up with those energy and environmental objectives yet keeps costs to customers low (BPU docket EO20030203).

The investigation comes in response to a December 2019 order from the Federal Energy Regulatory Commission directing PJM to expand a price floor in its capacity market to counter any price distortions caused by states' clean energy policies. A number of parties, including New Jersey, in January asked FERC to reconsider that directive.

The board thinks an expanded minimum offer price rule could disrupt New Jersey's efforts to shape its electric generation resource base, including the use of renewable energy certificates to support a renewable portfolio standard and a zero-emission certificate program that provides compensation to nuclear units.

"Taking control of our own resource mix may be the only way to stop the Trump Administration's attempts to prop up fossil fuels to the detriment of our clean energy program," board President Joseph Fiordaliso said in a statement about the new proceeding.

Carbon goals

New Jersey wants to have carbon-neutral electricity generation by 2050 and to electrify as much of the building and transportation sectors as possible. The state's ambitions include a goal of having 7,500 MW of offshore wind capacity online by 2035.

PJM recently made its compliance filing responding to the FERC order.

The New Jersey board order opening the investigation pointed to the state's energy master plan, which includes strategies designed to get New Jersey to Gov. Phil Murphy's long-stated goal of 100% clean energy by 2050. The plan noted challenges posed by the FERC order and options for the board to consider.

Those options include leaving the PJM capacity market through a fixed resource requirement or requiring load-serving entities to procure a higher percentage of clean energy through a clean energy standard.

To get the investigation started, board staff posted a request seeking written comments by April 29. The request asked for views on several topics, including whether the state can use the fixed resource requirement alternative to satisfy New Jersey's resource adequacy needs or to accelerate meeting the state's clean energy goals.

Staff has not set a deadline for concluding the investigation and making recommendations. But during the board meeting, a staff member told regulators that the matter likely could be concluded by the end of 2020.