PJM won’t delay capacity market order despite FERC impasse over rule changes RSS Feed

PJM won’t delay capacity market order despite FERC impasse over rule changes

PJM’s decision to move forward with its capacity market auction this August reflects an extended impasse at FERC over how to handle renewable energy and nuclear subsidies put in place by states.

Last June, FERC threw out PJM’s current rules because they allow subsidized resources to bid into the capacity market, lowering the clearing price for unsubsidized plants.

PJM responded with a two-pronged proposal in October to remove the subsidized resources from the market, and — if FERC assented — raise the clearing price for the remaining resources. The plan would institute a strict price floor, called the Minimum Offer Price Rule, for unsubsidized resources and allow the subsidized plants to operate outside the market.

FERC had urged PJM to devise its proposal quickly so as not to delay its 2019 capacity market auction, which has already been pushed back from an original scheduled date in May. The federal regulators, however, have been unable to find a majority to approve the rules or turn them back yet again.

Last month, PJM warned that delay could force it to postpone the auction once again. At the time, PJM said it informed market participants that “existing capacity market rules could still be regarded effective” — an argument it reiterated in its Wednesday filing at FERC

“Simply, without a replacement rate, or any order of the Commission otherwise, as demonstrated below, applicable law directs that PJM to operate under the existing Tariff,” the grid operator wrote. “PJM already has begun the pre-auction processes as those processes leading up to the auction require preparation and submittals beginning months in advance.”

On April 16, participants must file exemption requests to PJM’s Must Offer rules, as well as submit information about the Market Seller Offer Cap, which PJM has warned “under the proposed rules covers more resource types than the current rules.”

Read full article at Utility Dive