Several public interest organizations (PIOs) have filed a complaint with FERC contending that PJM’s capacity market is inflating consumer prices by not counting generators operating on reliability must-run (RMR) agreements as a form of capacity (EL24-148).

The complaint argues that RMR contracts already require units to be online and available to PJM dispatchers in the event of a capacity emergency, which positions them similarly to committed capacity.

The PIOs said consumers are being asked to pay for capacity twice: once for an RMR unit’s availability and again to procure the capacity the unit would have offered had it participated in the RTO’s Base Residual Auctions (BRAs).

The complaint was submitted by the Sierra Club, Natural Resources Defense Council, Public Citizen, Sustainable FERC Project and Union of Concerned Scientists.

“Failing to account for resource adequacy provided by RMR units produces capacity market price signals that are disconnected from the actual supply and demand balance on the grid,” the complaint says. “… [T]his distorted supply-demand balance is economically inefficient because it signals a degree of scarcity that does not exist. The result is artificially elevated prices that harm the markets by encouraging inefficient decisions by both supply and demand side market participants.”

The complaint argues also that PJM’s position on modeling RMR resource capacity is inconsistent because it does not include RMR units’ output when analyzing the amount of generation available within a locational deliverability area (LDA) when analyzing transmission capability during potential capacity emergencies.

The PIOs present two visions for how RMR resources could interact with capacity markets. The most straightforward would be requiring them to offer into the market at $0/MWh as price-takers; however, the complaint acknowledges the change could make generation owners wary of accepting an RMR agreement — which is a voluntary election in PJM. The alternative they propose would be to model RMR units when determining the reliability requirement and reduce the amount of capacity that must be procured through BRAs.

The complaint also requests that the commission delay the 2026/27 BRA, currently scheduled for December, to allow the changes to be implemented for that auction.

RMR Impact Set to Increase

The impact of RMR agreements on consumer rates is likely to substantially increase in the 2025/26 delivery year, when agreements take effect between PJM and Talen Energy to keep the 1,273-MW Brandon Shores and 702-MW H.A. Wagner generators online from June 1, 2025, through Dec. 31, 2028.

The complaint cites analysis from Synapse Energy Economics, on behalf of the Maryland Office of People’s Counsel, and a separate report from the Independent Market Monitor, which found that not counting RMR units as capacity could cost PJM ratepayers $4-$5 billion in 2025/26. (See Maryland Report Details PJM Cost Increases for Ratepayers.)

The terms of the Talen agreements are being negotiated through settlement judge proceedings the commission ordered in June. The company requested $175 million in annual fixed costs and $29.9 million in project investments for Brandon Shores and $40.3 million in fixed costs and $4.5 million in additional investments for Wagner. (See FERC Orders Settlement Judge Procedures in Two PJM Generator Deactivations.)

Stakeholders are also discussing changes to PJM RMR resources in the Deactivations Enhancement Senior Task Force (DESTF), which is set to open a vote on five proposals during its Oct. 2 meeting. The DESTF packages largely focus on extending the notice generation owners must provide PJM ahead of their desired deactivation dates and how compensation under RMR contracts is determined.

None of the DESTF proposals include a capacity must-offer requirement for RMR units, but a proposal from the Sierra Club would model the expected output of RMR resources that do not participate in the capacity market when determining the reliability requirement.

The parties to the complaint argued that even if a proposal passed that satisfies their concerns, changes are unlikely to be implemented in time for the December auction.  The PIOs noted also that the PJM Board of Managers rejected a request from six state consumer advocates in an Aug. 30 letter to launch a critical issue fast path (CIFP) process to require RMR units to participate in the capacity market. In its Sept. 19 response, the board wrote that doing so would undermine the capacity market’s price signals to replace the outgoing generator or make investments to keep units operational.

In the first of a series of reports on the 2025/26 BRA, the Monitor estimated that not including RMR units in the supply stack as capacity price takers would have increased the cost of capacity procured by over $4 billion, or 41.2%. The Monitor said this would recognize that RMR resources provide reliability while transmission upgrades to address their deactivation are constructed.

“There are times when a price signal for the entry of generation is not needed or appropriate, e.g. when PJM has committed to the construction of new transmission that will eliminate the price signal when complete,” the Monitor wrote.

Monitor Joe Bowring told RTO Insider that requiring an RMR unit to offer into the capacity market could also lead to costs for consumers, as generation owners would be more wary of entering into RMR agreements and would seek to recover the risk of being subject to capacity performance (CP) underperformance penalties. Instead, he suggested including them in the supply curve as a zero-cost offer.

Bowring said one of the issues with how generation deactivations are treated in PJM is the lacking ability for merchant generation to compete with transmission to address any identified reliability violations. He argued that an expedited interconnection process is needed to give new resources a chance to provide a solution to violations or when reliability issues are identified in general, such as the capacity shortfall PJM has been warning about in the 2029/30 delivery year. He has proposed a similar concept at the Planning Committee for allowing PJM to transfer capacity interconnection rights (CIRs) from a deactivating resource to resources which could resolve associated violations. (See “Voting on CIR Transfer Proposals Deferred to October,” PJM PC/TEAC Briefs: Sept. 12-13, 2024.)