PJM Interconnection, which covers parts of the Mid-Atlantic and Midwest, received the directive from the US Federal Energy Regulatory Commission (FERC).
FERC said the move would protect alleviate price distortions in the “competitive capacity market… and address state-subsidised electric generation resources”.
Capacity markets ensure there is adequate electricity to meet peak demand and operating reserve requirements.
“An important aspect of competitive markets is that they provide a level playing field for all resources, and this order ensures just that within the PJM footprint,” said FERC chairman Neil Chatterjee.
In the US, states typically have ‘renewable portfolio standards’ to ensure that a certain proportion of electricity is clean.
The move was blasted by the Union of Concerned Scientists (UCS), which said it could mean $2-8 billion a year in extra costs for customers.
The decision will “tilt the market away from low-carbon sources to favor fossil fuel providers and effectively nullify state actions to decarbonise electricity,” it said.
Mike Jacobs, a senior energy analyst at UCS, said: “By agreeing to this proposal, FERC is not indifferent to state policies that address carbon emissions—they are actively attacking them.”
The decision “threatens states’ rights and hinders their ability to bring more clean energy to their communities,” added Amy Farrell, senior vice president of government and public affairs, at the American Wind Energy Association trade body.