The Federal Energy Regulatory Commission (FERC) has accepted PJM Interconnection’s request to make changes to its FTR auction rules that FERC said will “result in reduced financial risk to PJM and its members.”
FERC ruled that the changes were just and reasonable and became effective April 15.
Endorsed by an overwhelming majority of stakeholders last month, and approved by the PJM Board of Managers, the FTR auction rules are central to a broader package of enhanced risk mitigation practices.
“FERC’s swift action is an acknowledgement of the hard work by stakeholders to approve these changes increasing auction frequency and thereby enabling PJM to incorporate the auction results into PJM’s credit and collateral management, all of which goes a long way to protect our market participants,” PJM President and CEO Manu Asthana said.
First, the revisions increase the frequency of PJM’s long-term FTR auctions from three times per planning period (June, September and December) to five times per planning period (June, August, October, December and March).
Second, the revisions reduce the amount of transmission system capability offered during each long-term FTR auction round from one-third (33.33 percent) to one-fifth (20 percent).
Third, the revisions modify the available periods for monthly FTR Balance of Planning Period auctions from any three individual months and any fully remaining quarter in the planning period, to any remaining individual month in the planning period.
FERC found that new FTR auction rules will allow PJM to:
- Conduct mark-to-auction valuations more frequently
- Enhance protection from potential defaults
- Provide more accurate information to market participants
- Provide opportunities for market participants to reconfigure FTR portfolios in response to emerging risks
In its order by letter issued April 14, FERC accepted PJM’s filing as requested. PJM and its stakeholder community proposed the changes in line with recommendations from an independent review of the FTR Market in the wake of a default by a market participant in 2018.