Stakeholders participated in the first of several presentations on the Quadrennial Review of the Variable Resource Requirement (VRR) curve that PJM uses in its capacity market, the Reliability Pricing Model (RPM), at a special session of the Market Implementation Committee April 25.
PJM commissioned The Brattle Group to conduct the review, which PJM is required by its Tariff to conduct prior to the May 2019 RPM Base Residual Auction.
The review includes the shape of the VRR curve, the Cost of New Entry (CONE) for CONE areas used in the VRR curve and the methodology to determine the net energy and ancillary services revenue offset for the PJM footprint and for each zone.
The VRR helps determine the quantity and price of capacity procured. Periodic reviews of VRR curve parameters help ensure that the RPM continues to support reliability objectives cost-effectively, even as market fundamentals and technologies change. This review will inform PJM’s filing establishing the VRR curve for the next four capacity auctions, subject to annual updates.
There will be four additional special MIC meetings on the Quadrennial Review – May 25, June 22, July 6 and July 27. PJM must file Tariff changes resulting from the review process with the Federal Energy Regulatory Commission by Oct. 1.