FERC Approves PJM Capacity Auction Delay
June 19, 2023
FERC has approved PJM’s request to delay capacity auctions for 2025-2029 to accommodate an upcoming market enhancement filing to fix potential reliability problems. Rather than this month, the next auction is June 2024. The following subsequent three auctions would be held at six-month intervals.
PJM said in its filing that "a potential mismatch between when new resources go into service and when segments of the existing generation fleet retire, along with expected load growth," could threaten its ability to maintain resource adequacy.
A mismatch did occur when approximately 1,000 MW of planned new generation resources, which are not required to participate in capacity auctions, did not offer into the 2024/2025 auction as PJM had expected.
Due to the lack of participation, Delmarva Power South (DPL-S) delivery area fell short of the 1,505 MW reliability requirement PJM had calculated. According to PJM estimates, the cost of capacity in DPL-S would clear at a price cap of $426.17/MW-day, or an amount about six times higher than the prior auction's clearing price of $69.95/MW-day, if the results of the 2024/2025 auction were allowed to take effect.
Prices are higher in some regions due to transmission constraints and reserve requirements. The number of constrained areas increased from three in the 2023/2024 auction to five in the 2024/2025 auction.
An increase in the number of constrained regions, and a decline in offered megawatts for the third consecutive auction, indicate the need for additional resources in certain areas. Prices were higher than the overall PJM price in five areas: MAAC (Met-Ed, Penelec, Pepco, PPL); EMAAC (Atlantic City Electric, Delmarva Power North, Jersey Central Power & Light, PECO, PSE&G, and Rockland Electric); DPL-S (Delmarva Power South); BGE (Baltimore Gas and Electric ); and DEOK (Duke Energy Ohio and Duke Energy Kentucky).
For more:
FERC’s Clements blasts agency decision to approve PJM capacity auction delays | utilitydive.com
FERC Order Delays Capacity Auction To Allow for Consideration of Resource Adequacy Reform | insidelines.pjm.com
FERC Allows PJM to Revise Schedules for Upcoming Capacity Auctions | publicpower.org