The Federal Energy Regulatory Commission issued a ruling Thursday, July 25, directing PJM not to run its annual capacity auction for the 2022-2023 delivery year in August.
PJM issued the following statement in response to the ruling:
In its ruling today directing PJM Interconnection to postpone its capacity auction, the Federal Energy Regulatory Commission recognized that confidence in the auction and its results is vitally important to all of our stakeholders and the integrity of the market. We look forward to additional guidance from FERC on the design of PJM’s capacity market.
PJM has been pursuing changes to capacity market rules since early 2017 to accommodate public policy initiatives that result in some supply resources being subsidized. In April 2018, PJM proposed two alternatives to FERC to address the price-suppressive effects of these subsidies.
In a June 2018 ruling, FERC agreed that state subsidies distort the capacity market as currently designed, finding that the market is no longer just and reasonable. However, it rejected both proposals to correct the problem.
In its 2018 order, the Commission indicated PJM should revamp its Minimum Offer Price Rule and develop an alternative for subsidized generation and corresponding load to be carved out of the capacity market on a unit-specific basis.
FERC later granted PJM’s request to delay the capacity auction from May to August 14 in order to allow time for FERC to approve and PJM to implement rule changes.
PJM submitted a new plan on Oct. 2, 2018, but FERC has yet to rule, and has no deadline to do so.