Contact:
Tracy Warren, NRECA
Phone: (703) 907-5746
Mobile: (703) 517-3411

Co-ops File Request for Rehearing or Clarification on FERC April 12 Order Regarding PJM Interconnection

Washington, D.C.; May 12, 2011 – The National Rural Electric Cooperative Association (NRECA) today filed a request for rehearing or clarification of a Federal Energy Regulatory Commission (FERC) April 12 Order, which attempts to address a complaint by PJM and the PJM Power Providers Group (P3) that PJM's Minimum Offer Price Rule (MOPR) is ineffective in deterring buyer market power. The Order makes a change to the Reliability Pricing Model (RPM) that would dramatically shift its purpose.

"This pleading challenges a minor step that could, without clarification or in the alternative rehearing, take the PJM market over a precipice that fundamentally changes the nature of the electric industry in the PJM region and potentially throughout the United States. NRECA asks the Commission to pause before taking that last step, rethink its approach, and find a way to address the concerns raised by PJM and P3 in a manner that has less drastic impacts on the industry,” the NRECA pleading argues.

The Commission can avoid this precipice on clarification or rehearing of the Order, the Co-ops say, by reinstating the requirement that self-supply resources must be committed in the capacity auctions regardless of price and directing PJM to address concerns about buyer-side market power through the PJM stakeholder process. Alternatively, the Commission could clarify that, for the purposes of the MOPR, PJM is entitled to include as Affiliates parties which sponsor and effectively control the participation of other parties in the PJM capacity markets.

Without such action, the Commission will brand traditional vertically integrated utilities with an obligation to serve as inherently suspect and will declare both the regulatory compact and bilateral market revenues to be unlawful subsidies.

In effect, the Order would force the industry away from long-term planning to meet consumer needs, force the industry out of bilateral markets, and drive capacity acquisitions into the short-term centralized market.

The National Rural Electric Cooperative Association is the national service organization that represents the nation's more than 900 private, not-for-profit, consumer-owned electric cooperatives, which provide service to 42 million people in 47 states.