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FERC Approves PJM Plan To Omit Energy Efficiency Resources From Capacity Auctions
Federal Energy Regulatory Commission (FERC) approves PJM’s plan to omit efficiency resources from capacity auctions concluding that the grid operator’s current load forecasting methodology “reasonably accounts for energy efficiency measures on the demand side.”
Federal regulators have accepted the PJM Interconnection’s proposal to stop including energy efficiency resources in its capacity auctions, concluding that the move will reduce retail electricity bills while continuing to account for efficiency-driven load reductions on the demand side.
“It is not necessary for PJM to also include Energy Efficiency Resources in the capacity market on the supply side to achieve just and reasonable rates,” FERC said. Removing them “will benefit consumers by reducing capacity payments without adversely affecting resource adequacy or undermining the demand-side benefits that energy efficiency measures can provide to load.”
The change should “reduce resulting wholesale capacity market costs, without any effect on the total amount of capacity that PJM must procure to meet its resource adequacy requirement,” the commission concluded.
As background, PJM began making capacity payments for energy efficiency resources in 2009, but the grid operator’s market monitor filed a complaint this summer with the Federal Energy Regulatory Commission asking for the practice to be stopped.
