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PJM Seeks Waiver From FERC To Delay Next Three Base Rate Auctions
PJM files waiver request seeking permission to delay its next three base capacity auctions by about six months each through the 2029/30 delivery year. The first one is set to begin December 4, 2024. It also plans to cancel two “incremental” capacity auctions. PJM asked FERC to decide by November 8, 2024.
PJM said it intends to file proposed market rule changes “in the coming weeks” to address the RMR complaint as well as issues raised by the Organization of PJM States and P3. The proposed six-month auction delay assumes FERC approves new market rules by mid-January.
In its request for delay, PJM said it “does not request auction delays lightly, as the schedule for these auctions [has] already been compressed several times due to various reform efforts,” the grid operator said. “However, PJM believes this delay is necessary given the significant market uncertainty that now clouds the 2026/2027 Base Residual Auction as a result of the complaint.”
PJM proposed delaying its upcoming capacity auctions and crafting new market rules in response to a complaint filed in September that challenged the grid operator’s failure to reflect reliability must-run power plants in its capacity auctions.
PJM’s waiver request was supported by the New Jersey Board of Public Utilities, Public Service Enterprise Group companies, the Sierra Club and other advocacy groups behind the RMR complaint, Constellation Energy Generation and the Public Utilities Commission of Ohio’s Office of the Federal Energy Advocate.
Also in support of delaying the auctions, P3 and EPSA said if the market rules aren’t changed, the upcoming auction will be run with an elevated offer cap — set at $695/MW-day — and a steep demand curve that will create volatility and eliminate the risk of penalties for power plants failing to perform across most of the grid operator’s footprint.
Talen Energy urged FERC to limit the auction delay to four months. “PJM has fallen into an untenable pattern of delay after delay after delay. Further delays will chill investment when the markets are sending clear signals that new generation is needed,” Talen said. “The best way to ensure such auctions are conducted in the future is to return to the three-year forward period as soon as possible and to refrain from watering the seeds of confusion sowed by non-market participants.”
The trade groups for power plant owners doubt there will be stakeholder consensus on the RMR issue. However, there are reforms PJM can quickly propose, and FERC can easily approve, such as switching PJM’s “reference unit” back to a combustion turbine from a combined cycle, according to P3 and EPSA. “The CT reference unit will lower the offer cap significantly, add much needed slope to the demand curve, and most likely result in a Net Cost of New Entry … above zero. This is critical in calculating performance assessment penalties,” P3 and EPSA said.
