The PJM Interconnection plans to delay its upcoming base residual capacity auction for about six months to give it time to craft reforms to its capacity market, the grid operator said in a notice issued on Thursday.
“PJM does not take auction delay lightly, as the schedule for these auctions has already been compressed due to previous reform efforts,” the grid operator said. “However, this approach improves market certainty and provides a path for resolution before the next Base Residual Auction.”
A delay would affect at least three upcoming auctions set to be held in six-month intervals. PJM is preparing to hold a capacity auction in early December to buy capacity for the 2026/27 delivery year. The grid operator has also planned to hold auctions in June and December 2025 to buy capacity for the 2027/28 and 2028/29 delivery years, respectively. PJM uses its capacity market to help make sure it has enough power supplies to meet its needs.
Late last month, the Sierra Club, Natural Resources Defense Council, Public Citizen, Sustainable FERC Project and Union of Concerned Scientists filed a complaint at the Federal Energy Regulatory Commission, challenging PJM’s failure to reflect reliability must-run power plants in its capacity auction. The groups asked FERC to order PJM to make changes to its rules before the next auction.
The complaint is supported by PJM’s market monitor, the Organization of PJM States, Inc., or OPSI, and the Maryland Public Service Commission.
OPSI estimated that not including two Talen Energy power plants with pending RMR contracts in the next auction would boost capacity costs by roughly $14.5 billion, compared with the last auction’s total cost of $14.7 billion. The most recent capacity auction could increase electricity bills in Maryland by 2% to 24%, depending on location, according to the state’s ratepayer advocate.
Last month, OPSI urged PJM to address what it said were a series of flaws in its capacity market rules, including the failure to include RMR resources in the auctions. The PJM Power Providers Group, which represents independent power producers, also called for market changes, noting that recent changes to the demand curve used to set capacity prices increase the likelihood of “boom/bust” auction results.
In its notice, PJM said it intends to respond to the Sierra Club complaint in defense of its existing market rules by an Oct. 17 deadline.
But the issues raised in the complaint are complex and affect other aspects of the capacity market design, PJM said. The grid operator said it is concerned that FERC could address the RMR issues without considering other aspects of the market design.
Delaying the upcoming auction by about six months will give FERC time to consider the complex issues raised by the complaint, PJM said. It will also allow PJM to discuss with its members, stakeholders and board the possibility of other capacity market reforms, the grid operator said.
PJM said it will need to ask FERC for permission to delay the auction and set new dates and that it will consult with its members in advance of that filing.
PJM plans to continue preparing for the December auction in case FERC rejects the request to delay it, according to the notice.
PJM refutes market monitor report
Meanwhile, on Friday, PJM refuted key elements in a report from its market monitor, alleging the grid operator’s capacity market includes flaws that drove up prices in its last auction.
For example, the market monitor’s allegation that power plant owners used market power by withholding certain resources lacks adequate evidence and analysis, PJM said in its response.
Also, the market monitor’s recommendation on including RMR resources in the capacity supply curve is inconsistent with its recent positions, according to PJM. “PJM remains concerned that forcing RMR units into the supply stack as a matter of policy could put downward pressure on the capacity price signal at the very time that new capacity is needed,” the grid operator said.
PJM said it is committed to working collaboratively with the market monitor and all stakeholders to refine and improve the capacity market. “As we look ahead to future auctions, PJM will continue its efforts to increase transparency, refine risk modeling and resource accreditation approaches, and ensure competitive outcomes that support long-term resource adequacy,” the grid operator said.
