FERC Approves PJM’s Stated Rate Proposal

The Federal Energy Regulatory Commission issued an order yesterday approving PJM’s stated rate proposal to be effective Jan. 1, 2017, as filed with no conditions or additional reporting requirements. PJM filed with the FERC at the end of October.

The updated stated rate structure is a composite rate of 36 cents per megawatt-hour for two years and then 2.5 percent annual increases to 41 cents in 2024. The proposal calls for a formal review process by the Finance Committee after five years.

The rates, which recover PJM’s administrative costs for managing the grid and wholesale electricity markets, have remained the same since 2006. PJM has taken on a number of additional responsibilities in operations, markets, compliance and external relationships since stated rates were first implemented.

PJM’s structure for recovering administrative costs was credited recently by Moody’s Investors Service as a driver for upgrading PJM’s and PJM Settlement’s issuer ratings to Aa2 from their previous Aa3. Moody’s cited the anticipated revised tariff’s ability to support the maintenance of an operating reserve and credit metrics at or above their current levels as another reason for the upgrade.

With stated rates, PJM uses fixed, long-term capped rates for the administrative costs of managing the grid and wholesale electricity markets.