PJM monitor recommends market changes for competitiveness
In the PJM Interconnection’s latest 2016 Quarterly State of the Market Report, released Thursday, the independent market monitor made three new recommendations and two modified recommendations to enhance the competitiveness and efficiency of PJM markets.
The energy uplift, capacity market and demand response sections of the report each have one new recommendation, while the capacity market also has two modified recommendations in the report, which covers the first nine months of 2016.
Monitoring Analytics serves as PJM’s independent market monitor and concluded in the report that the energy market, capacity market and regulation market results were competitive.
However, the report makes the following new suggestions:
–If PJM needs to change its energy uplift price-setting logic, it should establish a stakeholder process “to create transparent and consistent modifications”;
–Discontinue the practice of retroactively replacing capacity transactions;
–In relation to demand response, PJM should not remove any defined load subzone and “maintain a public record of all created and removed subzones.”
Monitoring Analytics also recommended that energy efficiency resources be excluded from the supply side of the capacity market and that, if PJM releases capacity in incremental auctions, it should offer that capacity at the Base Residual Auction clearing price.
The report notes that the load-weighted average real-time locational marginal prices for the first nine months of 2016, at $29.32/MWh, were the lowest they have been since the first nine months of 2000, and were 24.7% lower than the first nine months of 2015.
“Energy prices were lower as a combined result of lower fuel prices and lower demand,” the report said. “If fuel and emission costs in the first nine months of 2016 had been the same as in the first nine months of 2015, holding everything else constant, the load-weighted LMP would have been higher, $31.67 per MWh instead of the observed $29.32 per MWh. PJM average real-time load in the first nine months of 2016 decreased by 1.4 percent from the first nine months of 2016, from 91,857 MW to 90,599 MW.”