FERC Rejects IMM Request to Limit Sellers' Ability to Justify Capacity Price Below Price Floor

FERC has rejected a request from the PJM Independent Market Monitor for "clarifications" to the PJM Minimum Offer Price Rule in the capacity market, as FERC found the request to be an untimely request for rehearing.

On February 17, 2012, the IMM filed a pleading, which it called a motion for clarification of FERC's April 12, 2011 and November 17, 2011 orders, regarding the ability of sellers to justify capacity offers below the Minimum Offer Price due to sellers' competitive advantages, or market expectations, which deviate from those used to model the Minimum Offer Price.

Specifically, the IMM requested that FERC should, among other things, bar sellers seeking to justify offers below the Minimum Offer Price from using any levelization method other than nominal levelization. The IMM further asked that FERC generally bar sellers from altering any of the "modeling assumptions" embedded in the benchmark unit, regardless of the justification provided for such a departure from the benchmark.

"While the IMM denominates its pleading as a motion for clarification, it is, in fact, a late-filed request for rehearing of a specific Commission determination. In the November 17 Order, the Commission determined that, during the unit-specific review process, PJM had to consider methodologies other than the nominal levelization methodology if the applicant could justify the use of the alternative. Moreover, the Commission accepted PJM's tariff provisions, which required the IMM and PJM to consider individual evidence presented by the applicant if it is consistent with a competitive market," FERC said.