Dive Brief:

• The capacity performance proposal put forth last month by PJM Interconnection has generators worried about what they see as uncertain incentive payments and far more likely and expensive penalties.
• The grid operator proposed the changes after a brutal winter stretched the system. The new rules were designed to ensure a more diverse bank of resources were available during peak periods.
• But some generators say the new system could actually force generation offline and could be especially costly to steam-fired generation.

Dive Insight:

PJM's system did not respond well in January, when temperatures plummeted down to -15 degrees Fahrenheit in some major cities. At the height of the Polar Vortex, PJM reported a forced outage rate of 22%.

Faced with the potential for another similar event, the operator proposed a significant overhaul calling for strong incentive payments during peak demand hours. The goal was to encourage a more fuel-diverse set of resources to avoid weather-related problems on the coldest days.

Comments are in, and Trib Total Media reports the responses range from "lukewarm to downright frigid," with very little agreement among stakeholders. Some companies complained the rule changes are moving too quickly, while Pennsylvania ​regulators want more rapid progress.

The news site reports that several environmental groups call the solution "overly broad" when taken in conjunction with other changes the operator is making. A group including FirstEnergy, American Electric Power and Dayton Power and Light Co. filed comments saying “the size and likelihood of increased penalties under the current proposal, matched with continued uncertainty in the capacity price, could easily result in a net revenue decrease for steam generation units."