PJM asked FERC on Tuesday to delay its next four Base Residual Auctions to give the RTO time to incorporate rule changes to address reliability concerns (ER23-1609).
The RTO initiated an accelerated stakeholder process in February to respond to concerns that the region could fall short of resources because of increased demand from electrification and a “timing mismatch” between plant retirements and new entries. It has promised to file the changes by Oct. 1. (See PJM Presents Alternative Capacity Auction Schedule.)
PJM’s Reliability Pricing Model (RPM) calls for the BRA to be held in May, three years prior to the start of the delivery year. But the schedule has been suspended since 2018 as the RTO has considered repeated changes to its capacity market rules.
The 2026/27 BRA currently is scheduled to open on June 14, 2023.
“While further delay of the upcoming RPM auctions is not ideal, continuing to conduct the auctions under the existing rules further exacerbates the challenge of procuring the necessary resources to facilitate the imminent energy transition while maintaining reliability,” PJM said. “In short, since the current tariff provisions … may be unjust and unreasonable and require change, it does not appear reasonable to continue to lock in resources on a forward basis to such provisions, particularly when they exacerbate the reliability issues that PJM has identified.”
The RTO requested to hold a BRA every six months through delivery year 2028/29.
PJM proposed the following “illustrative” BRA timeline, assuming the commission approves its proposed tariff revisions without material changes by Dec. 1, 2023:
- 2025/26: June 2024
- 2026/27: December 2024
- 2027/28: June 2025
- 2028/29: December 2025
The three-year forward schedule would resume for the 2029/30 BRA in May 2026.
PJM also proposed continuing its current practice of maintaining all third Incremental Auctions for each delivery year and canceling all IAs that fall within 10 months of the associated BRA.
“It is reasonable to cancel those Incremental Auctions that are within 10 months of a Base Residual Auction in these limited delivery years because there would be little, if any, need for such auctions under a compressed Base Residual Auction schedule, as very little time would pass between the Base Residual Auction and Incremental Auctions,” PJM said. “Moreover, market participants will always have the opportunity to buy back and offer additional capacity in the third Incremental Auction before the start of the delivery year under this proposal.”
Board’s Directive
The PJM Board of Managers called for action to enhance the modeling of winter risk and correlated outages; ensure sellers can reflect nonperformance risk in their offers; improve capacity accreditation for all resources; and ensure synchronization between capacity and fixed resource requirement rules. (See PJM Board Initiates Fast-track Process to Address Reliability.)
“That does not mean that the other topics PJM and stakeholders have been examining since April 2021 in the Resource Adequacy Senior Task Force may not be included in the upcoming enhancement filing,” the RTO told FERC.
