Dive Brief:

• The Federal Energy Regulatory Commission should order the PJM Interconnection to rerun its last base capacity auction, a move that could lead to more than $5 billion in consumer refunds, according to a complaint filed Monday at the agency by ratepayer advocates from Illinois, Maryland and New Jersey.
• PJM’s base residual auction for the 2025/2026 delivery year, which starts June 1, produced “unjust and unreasonable” results reflecting the omission or withholding of existing capacity, nonprice barriers to new entry and a failure to mitigate supplier market power, the Illinois Attorney General’s Office, Maryland Office of People’s Counsel and New Jersey Division of Rate Counsel said.
• The ratepayer advocates asked FERC to review the complaint using fast-track procedures. If the commission grants the complaint after the next delivery takes effect, FERC should order refunds, they said.

Dive Insight:

In PJM’s last capacity auction, held in July, total capacity costs jumped to $14.7 billion from $2.2 billion in the previous auction.

The auction results sparked three complaints at FERC asking the agency to change PJM’s capacity auction rules, the ratepayer advocates said, noting the next capacity auction is set to be held in July. PJM has submitted five filings to put in place some changes the complainants are seeking and to try to reduce interconnection-related barriers for new generating resources, they said.

FERC’s approval of some of the PJM proposals — such as one dealing with reliability must-run contracts, which PJM excluded from the last capacity auction — shows that the grid operator’s rules for the last auction were unjust, according to the complaint.

The ratepayer advocates contend the capacity price jump was driven by flawed market rules, not a sudden lack of power supplies. “It occurred because defective market rules either ignored or allowed market participants to withhold thousands of megawatts of existing capacity, while interconnection delays, a compressed auction forward period, and other entry barriers prevented the participation of new supply capable of disciplining incumbent market power,” they said.

“The commission and the courts have made clear that high prices are unjust and unreasonable if they do not reflect market fundamentals or cannot induce a market response,” the ratepayer advocates said.

FERC should order PJM to re-clear the 2025/26 auction but include previously excluded capacity from the Wagner and Brandon Shores power plants in Maryland and certain generating resources that did not participate because they had must-offer exemptions, according to the complaint. Or PJM could re-clear the auction by simply adding back the nearly 1,600 MW of reliability-must run capacity from the Wagner and Brandon Shores power plants owned by Talen Energy, the ratepayer advocates said.

Implementing all the changes the ratepayer advocates called for would reset the clearing price for the 2025/26 delivery year in most of PJM to about $143/MW-day, down from $269.92/MW-day, according to the complaint. Just rerunning the auction with the RMR resources would reduce the clearing price to about $177/MW-day, the ratepayer advocates estimated.

If FERC approves the complaint, the average Baltimore Gas & Electric customer could see the bill increases anticipated from the last auction reduced by about 65%, from $16 a month to about $5.50 a month, with residential customers of other Maryland utilities also likely to see bills reduced by more than 50%, according to the Maryland OPC.

PJM is reviewing the complaint and had no immediate comment, according to Jeff Shields, a spokesman for the grid operator, which runs the grid and wholesale power markets in 13 mid-Atlantic and Midwestern states and the District of Columbia.

PJM CEO to step down

Separately, Manu Asthana, PJM president and CEO, plans to step down from his job at the end of this year, PJM said Monday.

He will serve as senior advisor to the PJM board through June 2026. “The time has now come for my wife and me to move back to be closer to our family and friends in Texas,” Asthana said in a statement.

Asthana became PJM CEO in January 2020. Before joining PJM, he had various roles at Direct Energy and at TXU Energy, according to his LinkedIn page.

The PJM board has formed a CEO search committee and has hired Korn Ferry to help with the search. The PJM board intends to seek input from PJM members and stakeholders as part of its search process, which it aims to finish later this year. The grid operator said it will consider internal and external candidates.