Dive Brief:
- Make-whole payments PJM made to generators whose costs exceeded a $1,000/MWh cap should not have included a 10% adder aimed at mitigating for uncertainty, FERC determined.
- Because the make-whole payments will be calculated by documenting the cost and volumes of natural gas needed to generate electricity, FERC said there was no uncertainty in the cost.
- FERC's decision grants a rehearing request by PJM's Independent Market Monitor (IMM). The commission rejected IMM's request to grant make-whole payments to non-capacity generators as well.
Dive Insight:
In January, as temperatures plummeted and fuel prices spiked, PJM requested a waiver allowing it to compensate generators whose costs exceeded the $1,000/MWh cap. But the grid operator's market monitor asked federal regulators to disallow a 10% adder typically included to mitigate uncertainty, and federal regulators agreed.
Resources subject to the January waiver will receive make-whole payments by documenting the cost and volumes of natural gas needed to generate electricity, FERC said. "This type of ex post determination does not contain any inherent uncertainty that would warrant an adder whose purpose in ex ante offers is solely to enable resources to recover uncertain or difficult-to-quantify costs," the commission determined in its order.
PJM's market monitor also asked FERC to allow make-whole payments to non-capacity generation, worried about possibly deterring them from future participation. Regulators rejected that request, along with protests by the Maryland Public Service Commission and the PJM Industrial Customer Coalition over high prices. RTO Insider reports that the PSC rejection was largely procedural, however.