MOPR Is NOT Someone Who Sulks – TMT

Video Transcript

Hello, I’m Michael DeCaluwe, Senior Vice President at Nania Energy. Have you heard the term “MOPR” recently in energy conversations?

In this week’s Two-Minute Tuesday, we’re going to be talking about what exactly MOPR is and what it means for you.

What is MOPR?

As the title mentions, MOPR is NOT a pessimist who sulks. MOPR stands for “Minimum Offer Price Rule.” 

It’s a new rule created by FERC, the Federal Energy Regulatory Commission, which regulates our regional electricity grids. MOPR only applies to PJM, the electrical grid that includes northern Illinois, Ohio, Pennsylvania, New Jersey, and Maryland.

This rule covers how capacity costs are set in this market. As we’ve mentioned in previous videos, capacity is a reliability cost that is set to make sure that the grid has enough power to cover periods of peak energy use. Think summer days when it’s hot and everyone’s AC is on.

Over the past few years, some states have enacted renewable energy mandates that have provided subsidies for certain types of power generators such as wind, solar, and even nuclear.

Some generators have complained to FERC that the existence of these state subsidies have given an unfair advantage to some in competitive capacity auctions.

In response. FERC ruled that the current model for capacity auctions in PJM is unfair and decided to change it. This new model is MOPR.

What does MOPR do?

Under MOPR, PJM will set resource-specific prices floors for capacity bids, meaning that each type of generation resources (nuclear, solar, coal, etc.) will have a minimum price that they must place in the capacity auction.

The first new auction under MOPR will likely take place next spring for the 2022/23 planning year.

What does this mean for you?

For electricity consumers in these areas, this will likely mean higher capacity prices due to the price floors set by MOPR. Capacity currently makes up about 25 percent of electricity costs in PJM but could be much higher going forward.

What can you do about it?

The best way to avoid these higher capacity costs is to limit your peak demands in the summer, starting in 2021. Enrolling in a peak day notification program or doing energy efficiency projects to lower your electricity usage and demand are two ways you can reduce your peak demand values and offset some of this coming price increase.

So although MOPR might make you sulk, there are things that you can do now to help you prepare for its effects.

Hope that you found this week’s information helpful, and please be sure to like or comment on this video.

Thanks for watching!

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