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PJM Not Proposing Specific Cost Allocation To LSEs To Recover Compensation For Interim Resource Adequacy Service (IRAS); Matter Left To States
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PJM, in formally seeking FERC approval of an Interim Resource Adequacy Service (IRAS), is not proposing a specific PJM cost recovery mechanism for IRAS
IRAS would be a service required from new large loads that do not bring their own capacity. IRAS would subject such new large loads to interruption during times of grid emergencies due to resource inadequacy, and would set a maximum wholesale compensation level for such loads for their interruption
However, PJM does not propose a specific cost recover mechanism for the compensation provided to large loads under IRAS (as further discussed below, PJM is also delegating to states the specific level of IRAS compensation, while setting a wholesale cap on compensation)
Recovery of the cost for compensation for IRAS, "will be left to the Electric
Distributors that directed the specific load reductions to implement IRAS, consistent with
their state-approved program, and that can identify the beneficiaries in their zone/area of
such load reduction," PJM said
"Whether a specific New Large Load may be entitled
to compensation for provision of IRAS will be determined by state authorities under state
law or RERRA [a retail regulator, PSC, etc] as may be applicable," PJM said
Regarding compensation to entities providing IRAS, PJM states, "PJM’s
proposal imposes no obligation on any state to do anything."
"States are free to design retail
rate regimes that facilitate the recovery and allocation of wholesale IRAS rates through
generally applicable retail rate tariffs. Alternatively, if states decline to act generically,
they could negotiate specific retail filed rates with affected entities," PJM said
Notably, PJM said that if a state declines to direct cost recovery to fund compensation for IRAS, "Eligible New Large Loads could initiate regulatory proceedings to develop
retail pathways to recover wholesale IRAS rates".
PJM did propose a maximum wholesale rate for IRAS compensation, but PJM stressed that large loads may waive such compensation consistent with any large loads' signing of the ratepayer protection pledge
Specifically, PJM is proposing a rate for IRAS that is equal to 50% of the Non-Performance
Charge Rate (which will serve as a maximum rate), and PJM said that, "PJM’s proposal provides Electrical Distributors and states flexibility in the
applicable IRAS rate for its territory, and affords the New Large Load the ability to waive
compensation".
Large loads may avoid being obligated to provide IRAS if they bring new capacity
Additionally, PJM is proposing that, beginning with the 2029/2030 Delivery Year, PJM will
exclude from the capacity market demand curve (i.e., the VRR Curve used in RPM Auctions) the MW of
New Large Loads that have not entered into BYONC [bring your own new capacity] arrangements or do not have
Allocated RBP UCAP MW, over and above the MW of New Large Loads that were
included in the load forecast for the 2028/2029 Delivery Year
FERC Docket ER26-3515
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August 14, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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