Meanwhile, More “Power Market and the State” Battles in New Jersey and Maryland

Michael Giberson

And if Andrew Kleit thinks that the Pennsylvania state government is toying with a bad idea (see previous post), look what is going on next door in New Jersey and Maryland.

In New Jersey: “Utilities challenge New Jersey law while preparing to reap its benefits.”

In January the Governor signed a law which is intended to facilitate long-term capacity agreements between the state’s electric distribution companies and generators. As the linked story explains, PSEG is considering building power plants that would benefit from the law – the long term guarantees will help the utility secure lower-cost finance – and “allowing [developers] to build facilities or undertake projects that would not have been feasible otherwise.” At the same time, PSEG is among the members of a coalition of companies that have protested the state’s law at FERC and a member of another group which has filed a challenge to the law in federal court.

Dow Jones Newswire explains: “PSEG and other power producers say this program undermines the U.S.’s largest competitive-electricity market by skewing market prices. They are in the process of suing the state over the legislation in a U.S. District Court and filed a complaint with the Federal Energy Regulatory Commission. Just in case those efforts fail, PSEG is preparing to work under the program.”

Do they contradict themselves? Very well, they contradict themselves. PSEG is large, like one-time New Jersey resident Walt Whitman, they contains multitudes.

In Maryland: “PSC, generation firms debate auction rule.”

The Maryland Public Service Commission on Friday [March 4, 2011] filed a protest with the Federal Energy Regulatory Commission over efforts to do away with breaks at wholesale power auctions that given to new plants that are built with state subsidies. Two groups, P3 Power Providers Group and PJM Interconnection LLC, don’t want those subsidized plants to be allowed to bid less than an administratively set benchmark price.

In both the New Jersey and Maryland cases, among other things the generators are concerned that state involvement in subsidies or guarantees for new investment would undermine operation of the PJM capacity market.

Also see: Court Rules PJM Capacity Market Prices Adequately Protected from Seller Market Power, but Others Contend Not Protected from Buyer Market Power. (Energy Legal Blog).

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