MRC OKs Energy Market Offer Cap Clarifications

At the Markets and Reliability Committee meeting Thursday, stakeholders approved energy market offer cap conforming language for the PJM Tariff and operating agreement.

The language concerns the exclusion of the 10 percent adder from cost-based offers above $2,000 a megawatt-hour in the tariff. The MRC passed the proposal with one abstention and zero objections.

On Dec. 11, 2015, the Federal Energy Regulatory Commission accepted a PJM proposal to modify various provisions related to the energy market offer cap, except for the 10 percent adder. The commission found the 10 percent adder is unjust and unreasonable as applied to documented costs, because the costs are no longer uncertain.

The language that PJM presented on Thursday clarifies what FERC has already ordered; it does not change the implementation and will remain effective until superseded by commission action. The FERC recently issued a notice of proposed rulemaking on the energy market offer cap.

The MRC meeting also featured lively discussions on problem statements/issue charges about seasonal resources and distributed resource storage, both of which were approved. The committee did not approve the cost allocation methodology proposal for the Reliability Pricing Model and Capacity Performance to include winter peaks.

In other actions, the MRC approved:

The MRC deferred a proposed problem statement and issue charge regarding physical commitment of units and the Day-Ahead Market. PJM committed to holding an educational session for stakeholders on the day-ahead process.


PJM General Counsel Vince Duane (pictured, left, with Dave Anders, director – Stakeholder Affairs and Chief Operations Officer Mike Kormos) updated stakeholders on the recent decision by the U.S. Supreme Court which upheld the Federal Energy Regulatory Commission’s jurisdiction over demand response in wholesale electricity markets.

The Market Monitor gave an informational presentation on potential credit risks associated with the FERC’s up-to-congestion proceeding.