Dive Brief:

• A group of cooperatives and municipal power providers will propose a broad reassessment of PJM Interconnection's capacity structure, following years of arguing they could meet their capacity needs in less expensive ways on their own, RTO Insider reports. 
• While the "Problem Statement" has little chance of resulting in immediate market reforms, RTO Insider points out American Municipal Power is working to build a broad coalition in support of the investigation.
• The problem statement argues that the capacity model needs to be reconsidered because each state has its own environmental, political and policy goals impacting the Reliability Pricing Model (RPM), with the Clean Power Plan potentially bringing even more changes.

Dive Insight:

PJM's RPM went into effect in 2007, the result of lengthy negotiations between grid stakeholders and a settlement in front of federal regulators. It has since been modified two dozen times in the intervening years as market conditions changed, and now a group of public power suppliers want to undertake a broad reconsideration of how it functions.

"PJM and the stakeholder community need to embark on a comprehensive and holistic assessment of RPM and alternative resource adequacy constructs that, in concert with the energy, ancillary services markets and shortage pricing, would be more resilient in the face of constant change," according to American Municipal Power's problem statement.

According to RTO Insider, the coalition supporting the statement includes AMP, Delaware Municipal Electric Corp., Old Dominion Electric Cooperative, the PJM Public Power Coalition, and the Public Power Association of New Jersey. Importantly, Dominion Virginia Power and retail provider Direct Energy have also signed on.

Actually getting tariff changes approved is a high bar, requiring two-thirds of members to agree. RTO Insider points out the coalition includes 31 of 43 provider members, but in other sectors the group is not represented well. It comprises just one of 13 transmission owners, one of more than 35 suppliers, and no customers or generation owners.

Co-ops and municipal utilities are not the only entities questioning PJM's capacity market structure. In July, a group of environmental organizations sued the grid operator over new capacity market rules that require resources to be available all-year round — a stipulation they argued disadvantaged demand response and other clean energy sources. 

The lawsuit came on the heels of 2019/2020 capacity auction in May, which netted lower prices and less demand response than some clean energy advocates had hoped. 

This post has been updated to include information about the PJM capacity market lawsuit and the 2019/2020 capacity auction.