The Federal Energy Regulatory Commission has accepted a PJM proposal addressing the unique set of circumstances discovered during the clearing process for the 2024/2025 Base Residual Auction. This order will allow PJM to complete the auction in a manner that ensures just and reasonable results consistent with the reliability requirements of each Locational Deliverability Area in PJM.
FERC found PJM’s proposed Tariff revisions to be just and reasonable and did not require PJM to reopen the bidding window.
As a result, PJM will post the Base Residual Auction results for the 2024/2025 Delivery Year on Feb. 27 after 4 p.m.
In the 2024/2025 Base Residual Auction, which closed Dec. 13, a large number of planned generation with signed interconnection service agreements did not offer in the auction in one small Locational Deliverability Area of Delmarva South (DPL South), resulting in a supply and demand condition that did not reflect underlying fundamentals. As a result, PJM estimated that customers in DPL South would be required to pay four times more for capacity for the 2024/2025 Delivery Year absent updating the Locational Deliverability Area Reliability Requirement.
In late December, PJM sought narrow Tariff revisions to ensure a just and reasonable outcome for consumers in DPL South for the 2024/2025 Base Residual Auction in particular. PJM’s proposal to update the Locational Deliverability Area Reliability Requirement would also apply to future RPM Auctions where the requirement increases by more than one percent from the prior auction.
PJM’s proposed Tariff revisions, prevent “consumers from being charged unnecessarily high capacity prices that do not reflect actual reliability needs or supply and demand fundamentals,” the FERC order stated. “That exorbitant price increase would not be the result of supply and demand fundamentals – or an actual reliability need – meaning that there is no economic or reliability justification for those additional costs.”
While accepting the PJM proposal, the FERC order directed the convening of a forum in the near future to consider generally the PJM capacity market and “how best to ensure that it achieves its objective of ensuring resource adequacy at just and reasonable rates.”