PJM Responds to DoE Proposal

On Oct. 2, the Federal Energy Regulatory Commission started a proceeding inviting comments on a proposal by the U.S. Department of Energy on wholesale power markets.

The Department of Energy issued the proposal on Sept. 29, directing the FERC to require competitive wholesale power markets to “ensure that certain reliability and resiliency attributes of electric generation resources are fully valued.”

The proposal aims at cost-of-service plus a return on investment for nuclear and coal-fired generation.

Comments are due to the FERC on Oct. 23.

PJM’s Statement:

“For two decades, PJM Interconnection’s competitive wholesale markets have ensured reliable power supplies at the lowest reasonable cost across a region comprising both traditionally regulated and unbundled states. The pricing and fuel security objectives identified by the Department of Energy are best achieved through competitive markets in order to retain disciplining forces that work to prevent consumers from paying for unnecessary and inefficient resources.

“The Department of Energy’s interest in ensuring fuel security, resilience and proper pricing of reliability attributes aligns with the efforts underway between PJM and its stakeholders. Recent reform, including PJM’s Capacity Performance, for example, offer confidence that market design can evolve when needed to ensure secure fuel supplies and improvements to ensure generator availability.

“Accordingly, we hope that the process which the Federal Energy Regulatory Commission undertakes in response to the Department of Energy accommodates and advances price formation and fuel security efforts already underway at PJM. In particular, we believe the FERC, in considering the department’s proposal, should provide a path forward that expands the scope of the agency’s pending price formation efforts to include more accurate pricing for reliability attributes of all resource types.”