Middle River Power intends to continue operating its 540-MW, gas-fired Elgin Energy Center in Illinois, instead of following through with plans to retire it by June 1, according to a notice released Tuesday by the PJM Interconnection.
The move comes amid tightening supply-demand conditions in PJM’s capacity market. In the grid operator’s last capacity auction held in July, prices for most of PJM’s region, including Illinois, jumped to nearly $270/MW-day from $29/MW-day in the previous auction.
Analysts expect the next capacity auction, set to be held in early December, will result in at least similar prices — and potentially as high as the $695/MW-day price cap.
The upcoming auction is for the capacity for the 12-month period, or delivery year, that begins June 1, 2026. That would give power plant developers only 18 months after the auction to bring new generation online.
As a result, market observers expect that the initial response to the high capacity prices will come from demand-response providers as well as power plant owners that can add capacity to their units or decide to continue operating units they had planned to retire.
After finding that retiring the Elgin power plant wouldn’t harm grid reliability, PJM said Middle River Power could shutter the plant on June 1 as requested, according to a Tuesday letter to the company.
PJM requires power plant owners to submit “deactivation” notices before retiring generating units. The grid operator then studies whether the retirements will lead to grid reliability violations. If they would, PJM can enter into “reliability must-run” contracts with the power plant owners to keep the units running until the reliability problems can be solved.
PJM is reviewing planned shutdowns totaling about 450 MW — almost all oil-fired generation that would retire on June 1, 2026. The grid operator has approved J-Power USA’s plan to retire its 1,350-MW, gas-fired Elwood power plant in Elwood, Illinois, on June 1, 2025.
Middle River Power declined to comment. The Chicago-based company, owned by private equity firm Avenue Capital Group, manages or is developing about 3 GW of natural gas, coal, geothermal and solar generation in California, Maryland, Virginia and West Virginia, according to its website.
Middle River Power bought the Elgin power plant and the 416-MW Rocky Road plant in East Dundee, Illinois, on Dec. 7 in the Lincoln Power bankruptcy process. It was set to pay about $26.3 million for the power plants, according to a July 7, 2023, filing at the Federal Energy Regulatory Commission.
