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PJM To Conduct 2022/23 Base Residual Capacity Auction In August Under Current Rules, Absent FERC Order

April 11, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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PJM said in a FERC filing that it intends to conduct the Base Residual Auction for capacity for the 2022-2023 delivery year in August as scheduled, under current market rules, absent a FERC order to the contrary

As previously reported, FERC has found the existing RPM tariff to be unjust and unreasonable, but has not ruled on tariff revisions. In response to FERC's prior finding, PJM last year filed with FERC proposed changes to its Reliability Pricing Model capacity market to accommodate a carve-out of state-subsidized resources from the market, along with the removal of an associated amount of load, after FERC suggested such mechanism in an order on other revisions that PJM had proposed to combat so-called price "suppression" (see prior story for background and details).

Given FERC has not yet ruled on the proposed tariff revisions, PJM sought confirmation from FERC that, to the extent the Commission has not established a replacement rate prior to the August 2019 BRA, any replacement rate FERC later establishes would be applied prospectively and would not require PJM to rerun the August 2019 BRA.

"[W]ithout a replacement rate, or any order of the Commission otherwise ... applicable law directs that PJM to operate under the existing Tariff," PJM said in the filing

"It is critical for all market participants - load, supply, states, consumer advocates, PJM, investors, et al. - to have confidence that the outcome of the auction is not subject to change. While critical for all market participants, uncertainty can be especially challenging to new entrants that must make material related commercial commitments in order to satisfy their capacity market obligations. Among any market design objectives, confidence in the finality of the auction results should be regarded as a necessary prerequisite. Accordingly, the PJM capacity market and the broader PJM community making commercial decisions based on this market, would benefit tremendously from any confidence the Commission can offer that outcomes and expectations settling with the close of the August 2019 BRA will not be subject to disruption or rerunning of results," PJM said

"Accordingly, the Commission should clarify that its intention under these unusual circumstances is to craft a prospective replacement rate and not make the results of the August 2019 BRA subject to refund. In any event, PJM wishes to make clear to the stakeholder community that even without Commission action on this motion (or denial of this Motion requesting clarification that the Commission would not order refunds of the results of the August, 2019 BRA based on its prior ruling in this docket), PJM will proceed under the current rules because, as noted, it is obligated to follow its filed rate," PJM said

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