On March 11, 2019, PJM Interconnection, L.L.C. (“PJM”) made a filing informing FERC that it has begun advising Capacity Market Sellers to use both its existing capacity market rules, as well as its proposed Capacity Reform rules while it awaits a final order from FERC on the proposed reforms. PJM stated that this approach ensures that all Capacity Market Sellers will have satisfied both the existing and PJM’s proposed pre-auction requirements prior to the conduct of the August 2019 Base Residual Auction (for the 2022/2023 Delivery Year) in anticipation of a Commission order. The Capacity Reform rules include revised Minimum Offer Price (“MOPR”) rules and the “Resource Carve-Out” alternative.
PJM noted that, although it has previously conducted auctions with pending Federal Power Act (“FPA”) section 205 filings, and also during times in which there has been pending FPA section 206 complaints, it has not conducted an auction when there has already been a FERC finding that its existing capacity market rules are unjust and unreasonable with no established just and reasonable replacement rate in place, as is the case here.
In a June 2018 order, FERC determined that PJM’s existing rules relating to MOPR applied in the capacity market were unjust and unreasonable, due in part to the effect that state resource subsidy programs were having on capacity prices (see July 11, 2018 edition of the WER). FERC stated it had become necessary to address the price suppression resulting from resources receiving out-of-market support and established a paper hearing proceeding to address its proposal involving revised MOPR rules and the Resource Carve-Out Alternative. As part of the paper hearing proceeding, PJM proposed tariff revisions to implement FERC’s proposals, but the Commission has not yet issued a final order.
PJM’s informational filing noted that a comprehensive order from FERC was needed before its annual resource auctions begin in August. PJM explained that, absent any such order, PJM has begun advising Capacity Market Sellers to follow both its existing rules, as well as its proposed Capacity Reform rules, to help ensure that all Capacity Market Sellers will have satisfied both the existing and PJM’s proposed pre-auction requirements prior to the conduct of the August 2019. PJM’s filing contained a schedule of the upcoming auction dates, and stated that the full schedule is available on PJM.com. PJM asked FERC for expediency to provide certainty to Capacity Market Sellers.
A copy of the filing is available here.