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Washington, DC; August 31, 2011
– This week the National Rural Electric Cooperative Association (NRECA) filed comments with the Federal Energy Regulatory Commission (FERC) following the testimony of David Mohre, NRECA’s Executive Director, Energy and Power Division, at the technical conference held on July 28, 2011. The comments oppose the elimination of the guaranteed clearing for self-supply resources from the Minimum Offer Price Rule (MOPR) in PJM Interconnection, LLC’s Reliability Pricing Model (RPM).
“NRECA is not challenging the RPM construct. NRECA is not challenging the MOPR as it stood prior to the Commission’s April 12 Order in these proceedings or the use of the MOPR to adjust Sell Offers appropriately. What we are challenging is the Commission’s decision to put at risk load-serving entities’ (LSEs) right to use their own resources to meet their own needs and to meet any tariff or regulatory obligations,” NRECA’s comments assert.
The co-ops argue that eliminating the guaranteed clearing of self-supply resources in PJM’s RPM auctions will severely undermine the ability of cooperatives and other LSEs to make long-term investment decisions. If self-supply resources are not guaranteed to clear the RPM, LSEs are opened up to the risk that they might have to pay twice for new resources to meet their capacity needs—once for the bricks and mortar and again for unneeded replacement capacity in the RPM.
The result would be unnecessary costs to consumers, more difficulty in securing financing for new capacity resources, and a threat to long-term reliability. By inhibiting the ability of LSEs to invest in new self-supply resources, the decision has “converted the RPM from a residual market to the only game in town.”
The solution, the co-ops say is to return to the MOPR as it existed before the April 12 Order. “The original MOPR design was properly negotiated for all stakeholders and approved by FERC. It does not involve an arbitrary, administratively-set over-collection of costs from consumers, ensures favorable financing, does not inhibit the growth of needed new capacity and observes the fundamental premise that RPM must remain residual to self-supply.”
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.