UPDATE: 2024/2025 Capacity Auction

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Jan. 5, 2023 Update: PJM has notified stakeholders that, following consideration of the stakeholder feedback received, PJM will not post indicative results of the 2024/2025 capacity auction at this time. On Dec. 23, after consulting with stakeholders, PJM submitted Section 205 and Section 206 filings with the Federal Energy Regulatory Commission proposing narrow Tariff revisions to ensure just and reasonable results consistent with the reliability requirements of each Locational Deliverability Area. PJM will review feedback submitted during the 28-day comment period in determining next steps as it awaits a FERC decision.

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PJM made a presentation on the status of the 2024/2025 Base Residual Auction at the Members Committee meeting Dec. 21. 

Stu Bresler, Sr. Vice President – Market Services, addressed stakeholders and said that, while conducting the auction, PJM found a narrow set of circumstances that impacted a small Locational Deliverability Area (LDA), Delmarva South (DPL South).  

Specifically, the Reliability Requirement, which determines how much supply an LDA will require, increased in DPL South due to several factors, including planned generation with signed interconnection service agreements that did not offer into the auction. Without the planned units offering in the auction, the increased Reliability Requirement artificially inflated the price in a manner that is not reflective of supply and demand fundamentals.

In consultation with the Independent Market Monitor, PJM determined that this potential outcome was not just and reasonable for residents in that region.

“This is not a step that we take lightly. This is what we believe to be a serious issue, one that would have been extremely difficult to foresee,” Bresler said. “It’s really a very unique set of circumstances that would result in unjust and unreasonable auction clearing if we were not to address it before we finalized the results.”

To resolve the issue, PJM is planning to submit an emergency Section 205 filing with the Federal Energy Regulatory Commission. PJM will also likely submit a companion Section 206 filing.

In its filings, PJM will ask FERC to allow PJM, in the case where the Reliability Requirement has increased by more than 1% due to the addition of new resources in the LDA, to exclude planned and intermittent resources that did not offer into the capacity market.

Joseph Bowring, President of Monitoring Analytics, PJM’s Independent Market Monitor, expressed his support for PJM’s analysis of the problem and the solution.

PJM is required to consult with the Members Committee and Transmission Owners, pursuant to its governing documents, when proposing changes to the Tariff and the determination of the Locational Deliverability Area Reliability Requirement.

Bresler said preliminary outcomes will likely be released Jan. 3, 2023, and PJM will wait for FERC approval before clearing the auction. He added that while the issue is with DPL South, the resolution would only have minor impacts on the parents of the LDA.