Dive Brief:

• The Electric Power Supply Association (EPSA), which represents competitive generators, is urging PJM Interconnection to move "expeditiously" to hold its  annual Base Residual Auction (BRA) for the 2022/23 delivery year — once federal regulators have approved new auction rules.
• The Federal Energy Regulatory Commission in July directed the grid operator to delay the BRA, as regulators work to incorporate aggregated distributed energy resources into markets and address the impact of state clean energy subsidies and policies.
• Once FERC issues new rules for capacity markets, there is a question of how much time will be required to incorporate changes and hold the auction. Several PJM members have cautioned the grid operator to move deliberately as states will need time to respond to new rules as well. 

Dive Insight:

It remains unclear when FERC will act on capacity market reforms, leaving PJM in limbo with regard to its annual auction. And some market participants have warned that even with new rules in place, there are still myriad details that must be addressed before the auction can be held.

Once FERC approves revisions, PJM will need to make a compliance filing to revise its own rules.

In a Sept. 4 letter to PJM leadership, American Electric Power, Exelon, Dominion Energy, FirstEnergy and Public Service Enterprise Group all called for PJM to allow states "time to react" once FERC issues new rules, "by redesigning their own clean energy programs and utility procurement programs."

The companies noted the "significant reserve margins" in PJM and "the fact that no impending reliability concern exists" as reasons to wait for clarity from state policymakers.

Avangrid Renewables, Dominion Energy, EDP Renewables and other members previously suggested PJM leadership push the 2022/23 BRA into mid-April 2020, with the 2023/24 auction held six weeks later.

But EPSA leadership, in a Nov. 14 letter to PJM, said "it is disingenuous for certain parties to lean on the current reserve margin level in the region as somehow sufficient indication that open-ended delay of multiple RPM auctions poses no problem or threat for market participants or a reliable regional system. This is simply not the case."

In May, ahead of the 2019 summer, PJM officials said the operator's summer reserves were more than 28% compared with a 16% requirement. PJM had 183,454 MW of installed generating capacity available.

While EPSA officials stress they understand the need for "a reasonable amount of time" for PJM to make a compliance filing, they want the grid operator to move "expeditiously" once FERC rules.

“The importance of PJM’s timely auction for reliability services cannot be overstated,” EPSA President and CEO Todd Snitchler said in a statement. “Our members are not supported by out-of-market subsidies. The three-year forward price signal and capacity commitment provide the certainty needed to sustain and enhance current investments."

EPSA acknowledged in the letter that PJM may have discretion to set the timeline for conducting the 2022/2023 and 2023/2024 auctions, but said it is the grid operator's responsibility "to do so as soon as possible to restore just and reasonable markets for the region."