PJM, stakeholders hold last special session before capacity repricing plan due to FERC

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Stakeholders discussed PJM’s proposal and members’ input for reshaping capacity market pricing at the last scheduled special session of the Markets and Reliability Committee on this topic on Sept. 11.

The three meetings were designed to engage stakeholders in developing PJM’s response to the Federal Energy Regulatory Commission’s June 29 order directing the creation of new capacity market rules to justly account for out-of-market subsidies benefiting certain generation.

In its order, FERC indicated that PJM should revamp its Minimum Offer Price Rule (MOPR) to have as few exceptions as possible. FERC also suggested that PJM develop an alternative whereby subsidized generation and corresponding load could be carved out of the capacity auction on a unit-specific basis.

The definition of an “actionable subsidy” dominated discussion at the last meeting on Aug. 15. (See Actionable subsidies discussed in reshaping capacity market rules.) In response, PJM changed its proposal to address only subsidies that the capacity market seller is “entitled to” at the time the election for a resource carve out is due in determining if it is actionable.

FERC granted PJM’s request to delay its base residual auction for the 2022–23 delivery year from May to Aug. 14, 2019, in order to allow time to implement the rule changes. (See FERC grants PJM waiver to delay capacity auction.)

Attorney Matthew Estes, representing FERC’s Office of the General Counsel at the meeting, said stakeholders can expect to receive a document in the next few days tracking all of the members’ recommendations.

Also at the meeting, Joe Bowring of Monitoring Analytics, the independent market monitor, presented a sensitivity analysis. It indicated that the inclusion of a resource-specific carve out could result in several adverse impacts, including potential price suppression and the absence of efficient market entry and exit signals.