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Five Governors Urge PJM To Reform Capacity Market Rules
In a letter from the governors of Delaware, Illinois, Maryland, New Jersey and Pennsylvania sent Friday to PJM. the Five governors are urging the PJM Interconnection to reform its capacity market rules and interconnection queue process to prevent “unnecessary” costs for electricity customers.
The letter indicates that PJM’s last capacity auction in July will cost consumers a “staggering” $14.7 billion.
“We remain concerned that the current years-long PJM interconnection process severely limits the ability of high-capacity prices to encourage the development of additional capacity,” the governors said. “If developers cannot expect to get through the interconnection queue before a reasonably near-term delivery year, then additional energy projects cannot be deployed in time – no matter how high prices rise.”
The governors said they support PJM’s plan to delay the upcoming auction by about six months so it can work with stakeholders to make changes to its market rules.
The governors asked PJM to include RMR units in upcoming capacity auctions, noting that OPSI, the market monitor and the groups behind the complainant say that making the change would save consumers between $3 billion and $5 billion in the next auction without undermining market competitiveness or necessary price signals.
Governors also seek:
- Eliminating the must-offer exemption for intermittent resources, while protecting them from performance penalties that discourage market participation;
- Lowering the capacity price cap to the level it was before PJM’s recent capacity market reforms;
- Reviewing recent effective load carrying capability accreditation changes and adjusting them to improve their accuracy; and,
- Adopting a sub annual capacity market designed to reduce risk on the transmission system as soon as possible.
The governors look forward to working on PJM’s Reliability Resource Initiative, including finding an appropriate role for states to help identify “shovel ready” projects for the potential accelerated interconnection review process, according to the letter.
