On May 27, 2022, in a 4-1[1] vote, the Federal Energy Regulatory Commission approved ISO New England’s (ISO-NE) plan to phase out its minimum offer price rule (MOPR) over two years.[2] A MOPR sets a floor price for bids in a capacity market to prevent resources from bidding artificially low prices. ISO-NE, which oversees grid operations in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, submitted the proposal to end its MOPR on March 31, 2022. ISO-NE proposed ending the MOPR in 2025. The transition will exempt up to 700 MW of qualified state-supported capacity (about 2,000 MW of nameplate capacity) from the MOPR over the next two capacity auctions. According to ISO-NE, adopting a two-year transition will help maintain reliability. The grid operator said that an immediate elimination of the MOPR could cause the retirement of existing capacity resources before state-sponsored resources are commercially available and able to replace the retiring resources.
FERC said the proposal “strikes a reasonable balance among the different considerations raised here, including efforts to ensure resource adequacy, minimize potential adverse effects on reliability that could result from an immediate change to the market rules, promote market certainty, and limit the costs associated with over-mitigation.” In his concurring statement, FERC Chairman Richard Glick said he wished the grid operator had proposed ending the MOPR immediately but stated that he understood that the New England states did not oppose ISO-NE’s proposal. He also urged ISO-NE to quickly develop “a capacity accreditation proposal to ensure that the [forward capacity market] is accurately valuing the capacity contribution of all resources.”
[1] Chairman Richard Glick (D), Commissioner Allison Clements (D), Commissioner Willie Phillips (D), and Commissioner Mark Christie (R) voted for the proposal. Commissioner James Danly (R) dissented.
[2] https://elibrary.ferc.gov/eLibrary/filedownload?fileid=8af6af9e-2c5f-c7bf-92cd-81084af00000
