On September 6, 2024, PJM Interconnection asked federal regulators for permission to stop including energy efficiency resources in its capacity auctions, hoping that the plan would take effect before a December auction. [1] PJM asserted that there is no evidence that capacity market payments for energy efficiency resources directly spur efficiency projects and that the plan to remove such resources from its auctions was approved last month in a stakeholder process. Consumers who install energy efficiency measures also already benefit from reduced capacity costs through a lower peak load obligation. PJM includes the effects of energy efficiency in its peak load forecasts, which helps determine how much capacity it buys. They suggest that additional compensation to energy efficiency resource sellers through capacity auctions for the same underlying energy efficiency is duplicative, causing energy efficiency to participate in both the supply and demand side. PJM is set to pay $144 million in capacity payments for energy efficiency resources in 2025-2026, up from the previous year’s $128 million. If FERC approves the proposal, it would resolve pending complaints at the agency by the market monitor and a group of state ratepayer advocates, which operates the grid and wholesale power markets in 13 states and the District of Columbia.

[1] https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20240906-5122