The Federal Energy Regulatory Commission should order the PJM Interconnection to stop making capacity payments for energy efficiency resources and recoup past payments, according to a complaint filed at the agency by the grid operator’s market monitor.
Under rules not included in its tariff, PJM has been paying ineligible energy efficiency resources the capacity auction clearing price since 2016, Monitoring Analytics said in the July 10 complaint. The payments total $126 million for the 2024/25 delivery year, according to the market monitor.
“The rationale for continuing to pay [energy efficiency] resources as if they were capacity resources was and is unclear,” the market monitor said. “PJM never stated that rationale clearly. [Energy efficiency] resources are already compensated through the PJM markets to the extent that they actually reduce customer payments for energy and capacity.”
The issues raised in the complaint are similar to ones raised in a complaint filed by a group of consumer advocates on June 20. Monitoring Analytics said it supports consolidating the complaints.
The complaints center on PJM’s use of an “addback” mechanism for energy efficiency resources, which leads to capacity payments for energy efficiency resources even though they aren’t considered capacity resources, according to the market monitor.
The market monitor last month filed a separate complaint challenging capacity payments to specific energy efficiency providers such as Exelon and FirstEnergy utilities. Comments are due July 22.
Affirmed Energy faces bankruptcy
Separately, Affirmed Energy, an energy efficiency provider, contends it faces bankruptcy because PJM is illegally withholding $93 million in collateral the company needs, according to a July 5 “emergency” complaint filed at FERC.
The American Efficient subsidiary said it cannot stay in business without the money and has begun laying off employees as a result of PJM’s decision to withhold the collateral. “At this point, with its collateral embargoed by PJM, Affirmed lacks access to credit and therefore cannot secure capital necessary to continue to run its business, including future participation in capacity auctions,” the company said.
Affirmed, which has participated in PJM markets since 2014, posted the collateral in 2022 for the completed 2023/24 delivery year, according to the complaint.
In May 2023, PJM approved Affirmed’s post-installation measurement and verification report for the 2023/24 delivery period, confirming the capacity value of the company’s resources and that Affirmed can be paid for delivering those resources, the company said. “At that point, there was no longer any basis for holding Affirmed’s collateral,” the company said.
In part, PJM appears to be withholding the collateral because of an investigation by FERC’s enforcement office into Affirmed, which the grid operator contends poses a credit risk, according to the complaint. Affirmed contends the enforcement office’s investigation is without merit.
“Affirmed has fully performed for the 2023/24 delivery year, and PJM cannot hold collateral to protect from illusory losses arising from an obligation that has been completed,” the company said.
