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February 1, 2011

Christie Signs N.J. Capacity RFP Bill
As expected, New Jersey Gov. Chris Christie signed into law S2381, which requires the Board of Public Utilities to acquire 2,000 MW of new capacity for the delivery year starting June 1, 2014 or June 1, 2015 (see 1/11 for full discussion of the bill’s provisions).  The law requires cost recovery through a nonbypassable surcharge, and does not call for any change in the design of BGS pricing.  As noted by Matters yesterday (1/31), the RFPs are expected to reduce capacity costs paid by load through the centralized PJM capacity market by $2 billion annually.

FERC Eliminates Must-Offer Requirement for Capacity Additions to Existing PJM Resources
FERC has eliminated the must-offer requirement for capacity additions to existing resources with respect to the PJM Reliability Pricing Model, dismissing protests from the Independent Market Monitor (ER11-2287).  Under FERC's order, PJM will now treat any capacity increase, whether a new Generation Capacity Resource or a capacity modification to an Existing Generation Capacity Resource, as a Planned Generation Capacity Resource.  As such, a capacity modification will neither be subject to the must-offer requirement, nor will it be as strictly mitigated as an Existing Generation Capacity Resource.  FERC dismissed the IMM's concern that a generator could manipulate the PJM capacity market by offsetting capacity modifications with decreases in capacity made elsewhere, and that a capacity modification can be used to successfully manipulate the market through "hockey stick" bidding.


AES Deepwater Unit Submits Notice of Suspension
ERCOT has received a Notification of Suspension of Operations for AES Deepwater Inc., Applied Energy Unit 1 (APD_APD_G1), which is an approximately 140-MW, petroleum coke-fired cogeneration unit in Pasadena, Texas.


FERC Opens 206 Investigation of CAISO Virtual Award Charge
FERC has instituted a section 206 investigation of the California ISO Virtual Award Charge after determining that setting the charge as 9% of the Forward Scheduling Charge and Market Usage Charge - Forward Energy service categories is beyond the scope of a CAISO compliance filing.  The resulting Virtual Award Charge is to be assessed on dollars of cleared gross megawatt-hours from convergence bidding participants.  In the interest of assuring that convergence bidding begins on schedule, FERC accepted the proposed 9% Virtual Award Charge for filing, effective on February 1, 2011, subject to refund and further order by the Commission.  CAISO was directed to justify the 9% level in a filing in Docket ER11-2128 within 30 days.


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