During a presentation on the status of PJM’s 2024/2025 Base Residual Auction on December 21, 2022, Stu Bresler, Sr. Vice President of Market Services, stated that the grid operator plans to ask the Federal Energy Regulatory Commission (FERC) to approve a rule that would allow it to change a capacity auction parameter that led to anomalous results in its auction.[1] In the case of a small locational deliverability area (LDA) like Delmarva Power South, additions of large and/or intermittent units can lead to an increase in the area’s reliability requirement because capacity transfers are needed to account for times when the resources are not available. According to Bresler, when PJM determined how much capacity it would need, it assumed a mix of generators would offer about 1,000 MW in the Delmarva Power South area[2] because they had signed interconnection agreements. However, those generators didn’t bid into the auction, resulting in the LDA being short and the market clearing at an unjustly high price because of the increased reliability requirement.

Through a Section 205 filing[3], PJM plans to ask FERC to approve a rule change that would allow it to lower an area’s reliability requirement during the auction process if generators don’t bid into the auction as expected. PJM intends to ask FERC to make a decision on the proposal within 60 days. The grid operator expects to issue two sets of auction results on January 3, 2022. One set will show the results under existing rules, while the other will show results under the proposed rule. PJM will wait for FERC approval before clearing the auction. Joseph Bowring, President of Monitoring Analytics, PJM’s Independent Market Monitor, expressed his support for PJM’s actions.

[1] https://insidelines.pjm.com/pjm-updates-members-on-2024-2025-capacity-auction-results/

[2] Delmarva Power South covers part of Delaware, Maryland, and Virginia.

[3] In a Section 205 filing, the gird operator submits a new document containing or affecting a rate, term or condition of a FERC-jurisdictional service or charge with FERC for approval.