The Federal Energy Regulatory Commission ordered PJM to provide more information in support of its proposed limits on capacity imports, as opponents said the proposal would unreasonably increase prices.

PJM proposed methodology that will limit external generation resources in this May’s base capacity auction to 6,200 MW — a 17% drop from the volume of imports that cleared in last year’s auction. (See Members OK Capacity Import Limit; Prices May Rise.)

The commission’s Jan. 28 order (ER14-503) came after the MISO Market Monitor and others called on FERC to conduct fact finding on the proposal, contending the reduced competition from imports will increase PJM’s prices. PJM’s Market Monitor and some PJM generators, meanwhile, say the limit doesn’t go far enough to protect reliability.

Among the issues on which FERC requested more information were:

• Protests by the PJM Market Monitor and the Indicated PJM Utilities, who contend that all external resources should be required to meet the standards set for resources exempt from the limits (firm transmission service, pseudo-tie, and must-offer requirement).
• How PJM planners decided on the five external zones for calculating the limits.
• How the methodology used to determine the capacity limits compares with that used to determine the installed reserve margin (IRM) for the capacity auctions.
• The contention of MISO’s Market Monitor, Potomac Economics, that PJM should remove the requirement for unit specific deliverability testing. The MISO Monitor contends PJM’s requirement is based on an unrealistic notion that when PJM needs firm capacity-backed energy “from an external resource in MISO that the energy will be sourced at that particular unit.”
• How the limit affects the MISO/PJM fact-finding effort on capacity deliverability across the RTOs’ seam.

PJM must respond to FERC’s questions within 30 days.

The PJM proposal won support from PJM generation owners, state regulators, the North Carolina Electric Membership Corp., the Electric Power Supply Association and others. Among those opposing the change in addition to the MISO Monitor are American Municipal Power (AMP) and the Illinois Municipal Energy Agency.

The Illinois agency contended the PJM proposal “grossly overreaches the problem claimed.”

AMP suggested the capacity import limits (CILs) were like “territorial allocations or refusals to deal, both of which can and often do run afoul of federal and state antitrust laws.”

AMP said it would be hurt by the limits because it owns generation in MISO that was planned when about half of its native load was in MISO. Less than 5% of AMP member native load remains in MISO as a result of the moves to PJM by ATSI in 2011 and Duke Energy-Ohio in 2012.

AMP says the value of its MISO generation “would be greatly impaired if PJM’s CILs were to prevent AMP from utilizing those resources to serve the capacity needs of its PJM-area members.” The company said it is already suffering from the “very substantial congestion charges AMP is assessed in bringing energy from MISO into PJM.”

The PJM Power Providers Group counters that the PJM proposal won more than 85% support in a sector-weighted vote by stakeholders.

The Maryland Public Service Commission staked out the middle ground, saying that while it “largely supports” the proposal, it has concerns that big reductions in imports from MISO could “significantly increase costs for end-users.”

It urged the commission to “fully utilize its evidentiary procedures” before ruling.