The two-Republican majority on the Federal Energy Regulatory Commission has issued another set of decisions that will aid fossil-fuel power plants at the expense of renewable energy and energy storage — this time in New York.
On Thursday, FERC Chairman Neil Chatterjee and Commissioner Bernard McNamee voted to reject proposals from New York state agencies and its grid operator, NYISO, to allow up to 1,000 megawatts of renewable energy, and up to 300 megawatts of electrical energy storage resources per year, to be exempt from “buyer-side mitigation” rules.
The exemptions were sought last year to allow those resources to participate in NYISO’s capacity market without being forced to bid at an administratively determined minimum price instead of their true cost. New York, which has set a goal of 70 percent renewables by 2030 and 100 percent clean energy by 2040, argued that the rules are meant to prevent utilities that own generation from gaming the market, not to restrict new resources.
But Chatterjee and McNamee rejected New York’s requests, a move critics say could price those renewable and storage resources out of NYISO’s capacity market and provide an advantage to otherwise economically uncompetitive fossil-fuel-fired power plants.
FERC Chairman Chatterjee, previously a senior aide to Senate Majority Leader Mitch McConnell (R-Kentucky), wrote that the decisions would help “send accurate price signals to markets and to ensure adequate supplies for consumers.”
Richard Glick, the sole Democrat on FERC, voted against Thursday’s decisions. In his Thursday dissent, he excoriated the decision as an attempt by his Republican colleagues to “prop up prices, lock in the current resource mix, and attack state policies that promote clean energy.”
That critique has been echoed by clean energy groups and state policymakers who have grown increasingly frustrated with FERC’s recent decisions.
In particular, this week’s rulings on New York follow closely its December decision — again passed by Chatterjee and McNamee over Glick’s vehement objections — to force mid-Atlantic grid operator PJM to reconfigure its capacity market in ways that could bar almost all new generation resources, including renewables, energy storage and demand response, from participating at their true cost.
Instead, FERC’s ruling will force PJM to institute a minimum offer price rule, another construct designed to limit market-gaming by power plant owners, with the effect of weakening clean energy’s competitiveness against fossil fuel plants.
States in PJM’s service territory have attacked the decision as a blatant attempt by Republicans to undermine state clean energy mandates and goals. Illinois lawmakers are considering a bill that could pull its biggest utility out of PJM’s capacity market altogether, and other states with clean energy mandates, such as Maryland and New Jersey, may be considering similar moves.
NYISO differs from PJM in that it serves only a single state. But FERC’s decision this week could significantly undermine New York clean energy goals, by removing the potential for renewables, batteries and demand-side resources to earn capacity revenue. It could also drive up prices for New York electricity customers as those cheaper resources are replaced with more expensive capacity from power plants not subject to buyer-side mitigation.
NYISO, which had requested the energy storage exemption, issued a statement that it is reviewing the orders to determine if it would seek a rehearing. “Competitive electricity markets, which were originally designed to provide reliable service at the least cost, are now at an inflection point," Rich Dewey, NYISO president, said. "The wholesale markets must now accommodate state policies, not conflict with them."