Federal regulators will soon decide the fate of the so-called MOPR, a controversial rule in the New England energy market. Here's what you need to know about the rule, and why renewable energy advocates say it's gotta go:
The feds, who told New England to adopt the rule in 2013, want it gone.But it's still here, and might not go away until 2025.Welcome to the world of the Minimum Offer Price Rule, or MOPR , a complicated pricing formula that critics say is harming the ability of New England states to meet their climate goals and making your monthly electricity bill higher.
In New England, the grid operator holds an annual auction for the “on-call" market to lock in the capacity it thinks the region will need three years in the future. For example, the power generators that won a spot in this year’s auction are on stand-by beginning June 1, 2025. Once those bids are submitted, the grid operator determines the"clearing price." In golfing terms, this is par. If you come in above par, you lose. In our example, if the auction clearing price was $3 per kilowatt-month, and Project A bid $4, it wouldn’t get a spot in the capacity market. If Project B bid $2 it would get in, and it would get paid at the clearing price.
In this scenario, the MOPR prevented the new natural gas plant and the new offshore wind farm from bidding with a price that will clear the auction.A project that’s stymied by the MOPR can make a case to the grid operator about why it should be allowed to bid at a lower price. These discussions are confidential, but given that several new gas plants have gotten into the capacity market in recent years, it’s clear that their attempts worked.
“States like Massachusetts are passing laws to create incentives [for renewables] not to manipulate the market price, but to address climate change and create other economic benefits,” said Bruce Ho, deputy director of the Natural Resources Defense Council’s Climate and Clean Energy Program. “And these policies are getting caught in the MOPR trap.”
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