Reliability Must Run (RMR) Contract

A Reliability Must Run contract is an agreement between a system operator and a generator to keep the plant online for grid reliability even when energy market revenues would not cover costs. RMR units are often aging thermal plants located near load pockets or weak transmission corridors that would face retirement without supplemental payments. The contracts specify availability obligations, cost recovery mechanisms, and termination rights once transmission upgrades are completed.

RMR arrangements typically shift the unit from merchant market participation to cost based dispatch, with regulators reviewing expense submissions to protect consumers. Operators periodically reassess whether alternative solutions such as transmission projects, demand response, or storage could replace the RMR obligation at lower cost.

Developers monitor RMR designations because the eventual retirement of these units can open capacity, ancillary service, and congestion opportunities for new assets. Conversely, RMR contracts can delay transmission access for renewables if the same corridors remain constrained until replacements arrive.

Transparency around RMR costs and timelines helps stakeholders plan for resource adequacy transitions and informs policy debates about market design. Investors acquiring legacy fleets evaluate the likelihood of RMR support when forecasting cash flows and end of life strategies.