The PJM Interconnection should include power plants with reliability must-run contracts in the grid operator’s upcoming capacity auctions, a move that could lower capacity prices, according to state ratepayer advocates.
Unlike grid operators in California, New England and New York, PJM doesn’t include RMR resources — power plants that have been given contracts to continue operating past planned retirements — in their resource procurement mechanisms, ratepayer advocates said in a letter to PJM on Friday.
“The absence of any requirement for RMR units to participate in the capacity market, or for PJM to consider RMRs in determining capacity needs, unreasonably forces consumers to pay twice for reliability — once to keep RMR units online and again in a capacity market that ignores these units’ continued operations,” the ratepayer advocates from Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Ohio said.
PJM should launch a fast-track stakeholder process to make the change and, if needed, delay the next auction set to take place in early December to avoid “unjust and unreasonable” prices, ratepayer advocates said. The following auction is scheduled for June.
In PJM’s just-held capacity auction, capacity in most of its footprint soared to $269.92/MW-day, up from $28.92/MW-day in the last auction, the grid operator said in a July 30 report. Prices hit zonal caps of $466.35/MW-day for the Baltimore Gas and Electric zone in Maryland, and $444.26/MW-day for the Dominion zone in Virginia and North Carolina. The auction’s total cost to consumers for the 2025/26 delivery year jumped to $14.7 billion from $2.2 billion in the last auction.
A study conducted for the Maryland Office of People’s Counsel found that including two Talen Energy power plants with pending RMR contracts in the capacity auction would have produced a $163.46/MW-day clearing price for the BGE zone, lowering overall capacity costs for PJM by about $5 billion.
The study found that Talen will receive an additional $360 million under the RMR contracts for its Brandon Shores and Wagner power plants compared to participating in the capacity auction.
With about 40 GW expected to retire in PJM’s footprint by 2030, there could be a wave of upcoming RMR contracts, according to the ratepayer advocates. “RMR generators may look in the future to exploit gaps in the capacity market rules by not bidding into the market, bringing about costly results for customers unless PJM takes swift action,” they said.
Further, failing to include power plants with RMR contracts in capacity auctions produces artificially high prices disconnected from supply-demand balances, according to the ratepayer advocates.
“These price spikes are unlikely to drive significant additional investment in new generation since developers would expect the prices to drop once the needed transmission upgrades are complete, and because of the well-documented delays in PJM’s interconnection queue,” they said.
The ratepayer advocates asked PJM’s board to address the issue by Sept. 20.
PJM will respond to the letter after it reviews it, said Dan Lockwood, a spokesman for grid operator, which runs the electric grid and wholesale power markets in 13 Mid-Atlantic and Midwest states and D.C.
After Talen said it planned to retire the H.A. Wagner and Brandon Shores generating units, PJM determined their shutdown would hurt grid reliability, without transmission upgrades that are expected to be completed in the 2027-2028 time range, according to Lockwood.
“PJM regards these [RMR] agreements as a last resort to bridge the gap between the scheduled retirement date of a generating unit and the completion of projects necessary to maintain the reliability of the system,” he said.
