By Rich Heidorn Jr.
CAMBRIDIGE, Mass. — PJM’s 2016/17 transition auction results were released shortly after the stock market closed at 4 p.m. Monday — coincidentally during an EUCI conference in Cambridge, Mass., that attracted PJM Market Monitor Joe Bowring, PJM Senior Economic Policy Advisor Paul Sotkiewicz and Jim Wilson, a consultant to consumer advocates in the RTO.
Wilson, a featured speaker, reported — critically — on the results shortly after they were released, sparking a lively debate with Sotkiewicz. Bowring, uncharacteristically, declined to offer an opinion.
“Unfortunately, the way [PJM] ran the auction, instead of paying people $10, $20, maybe $30 [per MW-day] to upgrade their capacity commitment to Capacity Performance, they created a new clearing price of $134/MW-day, paid to everybody,” Wilson said.
“Of the 95,000 MW that cleared, almost all of it was in the RTO region and not in [MAAC], and they were able to go from $60 their previous clearing to $134. They basically get a $60 windfall — or about $1.7 billion,” Wilson said, concluding: “Very inefficient.”
That sparked a response from Sotkiewicz, who had appeared on an earlier panel with Bowring — both of them already aware of the results but sworn to secrecy until their release.
Sotkiewicz said that during the January 2014 polar vortex, “a lot of [the high generator outages were] coal resources in the west, gas generators in the west who were behind the [local distribution company] city gate who had no firm transportation to the city gate. Even if they did, they could be curtailed by the LDC. [They] also didn’t have dual-fuel capability.
“So, quite to the contrary, a lot of the problems that we did see were in the west during January. So to say that [the CP acquired was] in the west and it’s useless I think is disingenuous and incorrect.”
Asked for his opinion on the “efficiency” of the auction after the conference ended, Bowring seemed uncharacteristically tongue-tied, pausing and exchanging glances with Sotkiewicz.
“We’ll be doing a report on it fairly soon and have a detailed analysis,” he said finally. “It’s hard to tell just looking at the prices. We reviewed the outcome. The outcome was consistent with the rules.”
