PJM is hosting a set of workshops beginning this week aimed at discussing potential enhancements to its capacity market.

RTO officials announced the workshops at the end of January, saying they intend to share their thoughts on the current state of the capacity market while accepting stakeholder feedback to determine the best path forward to improve market design.

The workshops are not part of the formal PJM stakeholder process, the RTO said, but are meant to begin a discussion on whether members want to pursue any changes to the market.

The first workshop will take place Friday and is designed to frame the issue. PJM plans to discuss the historical elements of the market and provide its perspective on the scope of enhancements stakeholders should consider and the principles by which potential enhancements can be evaluated.

In the second workshop, scheduled for March 4, PJM will seek stakeholder feedback and discuss the appropriate framing of market enhancements. The RTO is particularly interested in feedback on three questions:

• What problem are we trying to solve through this effort?
• Do you agree with PJM that we should be attempting to advance this discussion at this time?
• What are the principles that possible enhancement should be built upon?

The third workshop, set for March 12, will feature stakeholders discussing specific market design proposals for consideration.

At a final March 26 workshop, PJM will provide feedback on the discussions from the second and third workshops and an analysis on the next steps to take for any changes.

Stakeholders have been debating changes to the capacity market since 2019 when the Base Residual Auction was first delayed over FERC’s expansion of the minimum offer price rule (MOPR).

According to the Independent Market Monitor’s third-quarter State of the Market Report for PJM released in November, stakeholder fears of the impacts of the expanded MOPR have driven discussions about overhauling the capacity market without first seeing the true impact of the MOPR on the BRA. The report did acknowledge “clear issues” with the market’s design, including an “overstated” market seller offer cap, the shape of the demand curve and the application of penalties for nonperformance. (See PJM IMM Warns Against Another Capacity Market Overhaul.)

The RTO reiterated the importance of continuing with its auction schedule approved by FERC in recent MOPR opinions. The long-delayed capacity auction for the 2022/2023 delivery year is set to start on May 19. (See PJM Sets BRA for May 2021 and FERC Partially Accepts PJM MOPR Offer Floor Filing.)

At least one key stakeholder applauded PJM’s decision to hold the workshops.

The American Clean Power Association (ACP) commended the RTO on the “important initiative” to examine long-term reforms to utilize the economic and environmental possibilities of renewable resources throughout the region.

“While the current capacity market construct and MOPR present challenges to renewable energy development and growth, these workshops will enable PJM and its stakeholders to examine options and facilitate making changes to allow states to meet their customer-inspired renewable energy goals,” said Amy Farrell, ACP’s senior vice president for government and public affairs. “The clean power industry looks forward to engaging with PJM and other stakeholders as this process moves forward and we collectively work to build a better, more efficient, more affordable and cleaner electric grid.”