PJM Responds to Market Monitor

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Monitoring Analytics, PJM’s independent market monitor, this week issued its quarterly State of the Market Report and found PJM’s wholesale electric energy market produced competitive results during the first six months of 2018.

The IMM said, “Energy prices in PJM in the first six months of 2018 were set, on average, by units operating at, or close to, their short run marginal costs, although this was not always the case. This is evidence of generally competitive behavior and resulted in a competitive energy market outcome.”

In the report, however, the IMM also questioned the results of PJM most recent base residual auction and how the auction was conducted.

While PJM respects the market monitor’s opinion, the facts regarding the 2021/2022 Base Residual Auction are clear. In a statement, PJM said that the auction was conducted in accordance with all Tariff-specified requirements and rules, including those rules related to the application of offer caps, and the offers were in concurrence with those rules.

The PJM Tariff codifying these rules has been approved by FERC as just and reasonable, and as such, the results of the auction conducted according to those rules are also just and reasonable. The market monitor expresses an opinion of what the offer cap should be; the proper forum for such concerns about competitiveness of offers is the Federal Energy Regulatory Commission.