The PJM Markets and Reliability Committee and Members Committee endorsed the RTO’s recommended installed reserve margin (IRM) and forecast pool requirement (FPR) for the third 2026/27 Incremental Auction (IA), scheduled to be conducted Feb. 24.
The vote is advisory to the Board of Managers, which determines the values to be used in the auction.
The IRM would fall from the 19.1% used in the 2026/27 Base Residual Auction to 18.6%, while the FPR would increase from 0.9170 to 0.9291. (See “Stakeholders Endorse IRM and FPR for 2026/27 Capacity Auction,” PJM MRC/MC Briefs: March 19, 2025.)
The inputs for the parameters were based on the 2026 load forecast, which predicted lower load in the long term and shifted the concentration of reliability risk toward the summer, though the majority still lies in the winter at a 55.9% loss-of-load expectation. (See Pessimistic PJM Slightly Decreases Load Forecast.)
Most resource classes would see a modest increase in their effective load-carrying capability (ELCC) ratings, with four-hour storage resources seeing the largest benefit, going from 50 to 54%. Owing to its stronger winter performance, offshore wind generation would see a decrease from 69 to 64% and onshore wind from 41 to 38%.
Paul Sotkiewicz, president of E-Cubed Policy Associates, said the influence load has on the amount of supply that resources can offer creates a dynamic that runs contrary to economic logic. The volatility of class ratings undermines the ability for investors to make sound decisions, particularly because the control they have over their assets’ ratings is limited. Pointing to the contributions solar made in maintaining reliability during the heat waves of summer 2025, he argued ELCC is making the RTO look shorter than it is.
“This calls into question the validity of PJM’s ELCC model because if we see load decreases continue in the future … as the load increases, capacity accreditation falls and the IRM goes up,” he said.
PJM’s Patricio Rocha Garrido said the relationship between load uncertainty and the IRM has always been present, including under the previous PRISM modeling software.
“What we’re trying to do here is determine what are the risk hours” and determine resource performance at those times, he said, adding that was also the goal under the equivalent forced outage rate demand (EFORd) accreditation paradigm.
Gregory Poulos, executive director of the Consumer Advocates of the PJM States, said several consumer advocates will abstain from votes on the IRM and FPR values because it seems stakeholders have little sway on the values the RTO is proposing. He said staff put in good work developing the values, but if it’s going to be more than a check-the-box exercise for stakeholders, there needs to be more of a process around how the numbers are produced and presented.
Responding to stakeholder questions on what the vote means to the board, PJM Senior Vice President of Market Services Adam Keech said he views the vote as pertaining to whether staff followed the process for determining the IRM and FPR values. If stakeholders feel those processes should be revised, that should be pursued through a separate process.
