PJM presented its Planning Committee with revisions to the 2023 Reserve Requirement Study (RRS) to reflect the marginal effective load-carrying capability (ELCC) analysis approach the RTO uses for most resource accreditation.
During the July 16 special meeting, PJM’s Patricio Rocha Garrido said the results of the reanalysis recommend increasing the installed reserve margin (IRM), which sets the targeted capacity level above expected loads, to 18.6%, up from the 17.6% stakeholders endorsed in the original study last year. The forecast pool requirement (FPR), which accounts for generator accreditation, would decrease from 11.65% to 9.37%. (See “Stakeholders Endorse Reserve Requirement Study Values,” PJM PC/TEAC Briefs: Oct. 3, 2023.)
The majority of resource classes saw a relatively minor change between their 2025/26 ELCC ratings and the 2026/27 target year for the 2023 RRS, with most increasing or decreasing within 2%. Gas combustion turbines saw the largest change, increasing 6% due to the number of CTs that have announced their deactivation. The overall impetus for rating changes across resource types was a small shift toward risk being concentrated in the winter.
The new values are being brought to the July 24 Markets and Reliability Committee and Members Committee meetings for a same-day first read and endorsement vote.
The marginal ELCC approach was one of several capacity market redesigns drafted through the Critical Issue Fast Path (CIFP) process last year and approved by FERC in January 2024. (See FERC Approves 1st PJM Proposal out of CIFP.)
The CIFP filing also revised three formulas central to the RRS analysis, including:
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- calculating the IRM by reducing total installed capacity (ICAP) by the capacity benefit of ties (CBOT);
- determining the FPR by multiplying the IRM by the pool-wide average accredited unforced capacity (UCAP) factor, rather than forced outage rates; and
- making the average accredited unforced capacity (UCAP) factor the ratio of UCAP to installed capacity (ICAP).
Stakeholders endorsed an earlier round of revisions to the RRS to reflect the impact of those design changes earlier this year. (See “Revised Reserve Requirement Study Values Endorsed,” PJM MRC/MC Briefs: March 20, 2024.)
Garrido said PJM also updated the assumed resource mix to include planned resources that submitted a notice of intent to offer into the 2026/27 Base Residual Auction. Gas generators that submitted dual fuel attestations were sorted into the corresponding ELCC classes, and resources that are scheduled to deactivate prior to the start of the delivery year were removed from the analysis. Generators expected to operate on reliability-must-run (RMR) contracts through the delivery year were included in the resource mix.
Paul Sotkiewicz, president of E-Cubed Policy Associates, said some RMR contracts do not require the generator to respond to PJM capacity deployments and should not be included in the resource mix.
“I think we’re actually overstating the amount of capacity that’s going to be there,” he said, adding it would distort market signals.
Sotkiewicz also questioned the assumption that outside capacity could be available for import during emergencies, saying that PJM has been exporting consistently during “emergency events and high load days.”
Garrido said PJM aims to model the system as it’s expected to exist in the target delivery year and that RMR resources should be included if they’re contracted to remain in operation. He stated any impact on the reliability requirement would be small.
