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FERC Allows PJM to Retain Capacity Otherwise Due To Be Released, But Rejects (Without Prejudice) Additional Non-RPM Capacity Procurements

February 19, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

FERC approved PJM's request to retain 2,000 MW of capacity that would otherwise be released under the RPM incremental project, but denied a separate request from PJM for authorization to enter into contracts for capacity for reliability purposes outside of the centralized capacity market.

FERC will allow PJM to retain approximately 2,000 MW of capacity PJM would otherwise be required to release during the third incremental auction for the 2015/2016 delivery year, as FERC said that, "[t]he release of approximately 2,000 MWs of committed capacity could yield a reserve margin below the established installed capacity needed to assure reliable service to loads."

"Moreover, given PJM’s reliance on committed capacity resources, the poor performance of generating capacity resources last year, and the expected high level of generation retirements, absent granting the waiver, PJM would face increased risks of being unable to serve load," FERC said.

In contrast, FERC denied PJM's proposed tariff revisions granting PJM the authority to enter into out-of-market capacity contracts for all or part of the 2015/2016 delivery year.

PJM has sought authorization to procure, outside of the RPM Auction, agreements for capacity from planned or existing generation resources not otherwise committed for that delivery year to the extent such agreements are needed to help ensure that the PJM Region satisfies applicable reliability standards for resource adequacy

FERC noted that PJM's proposal, "contains no criteria or other method by which PJM will make the determination as to how much additional capacity it requires."

"Without the criteria for determining how much additional capacity PJM needs, the Commission would have no basis to determine whether the contracted capacity at the rate filed is necessary and is just and reasonable," FERC said. "[W]e find that PJM has not demonstrated, on the record here, that an out-of-market construct is necessary to address those concerns," FERC said.

FERC specified that its rejection of PJM's sought authorization for out-of-market procurements was without prejudice to PJM refiling a fully specified and justified proposal.

Dockets ER15-738, ER15-739

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