PJM Testifies to Capacity Market Objectives, Outcomes and Reforms at FERC Forum

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PJM President and Chief Executive Officer Manu Asthana leads off the first panel of three at the Federal Energy Regulatory Commission’s June 15 PJM Capacity Market Forum.

“Panel 1: Objectives and Outcomes of PJM’s Capacity Market” also includes remarks by Joseph Bowring, President, Monitoring Analytics, PJM’s Independent Market Monitor; North American Electric Reliability Corporation President and CEO Jim Robb; Edison Electric Institute Executive Vice President Phil Moeller; and Greg Poulos, Executive Director, Consumer Advocates of the PJM States.

PJM welcomes the focus by FERC as it develops capacity market reforms through the stakeholder process, Asthana states in testimony (PDF) filed in advance of the June 15 event.

The PJM system today is reliable, with an adequate capacity reserve margin. For the first time in its history, however, PJM is faced with resource potential adequacy challenges unless the entry of new resources is accelerated or the retirement pace of legacy resources slows, he says. Asthana notes that this situation is not unique to PJM but is shared by market areas and non-market areas alike across the country. He further notes that NERC’s summer assessment found two-thirds of the country (but not PJM) to already be at increased risk of resource inadequacy this summer.

“PJM is diligently working on a range of initiatives to help achieve a reliable transition – most immediately, reforms to PJM’s capacity market,” Asthana says in his testimony.

During another panel, Adam Keech, PJM Vice President of Market Design & Economics, discusses the work PJM and stakeholders have undertaken to craft market design reforms to file with FERC this fall. Keech’s submitted testimony (PDF) notes the principles of these reforms, which include:

  • Enhancing modeling of winter risks and market rule changes to reflect those winter risks
  • Aligning accreditation with the contribution of various resources to the reliability needs of the system
  • Aligning of the capacity performance penalty risk with the Market Seller Offer Cap
  • Recognizing the seasonal differences between summer and winter to better address system needs and to allow for greater participation by resources that have differences in seasonal performance
  • Developing improved qualifications for capacity resources, including enhanced accreditation and testing

The capacity market plays a vital role in ensuring resource adequacy to attract required generation investments. At the same time, Keech says in his testimony, the capacity market is complementary to PJM’s Energy Market and ancillary services markets, and PJM foresees the need for targeted changes to its reserves markets.