FERC Adopts Higher CONE Values for PJM Capacity Market

FERC accepted without modification a contented settlement to establish new Cost of New Entry (CONE) values for the PJM capacity market, to take effect for the May 2013 base residual auction.

FERC dismissed protests from the Independent Market Monitor and Maryland PSC, which opposed parts of the settlement.

Under the approved settlement, the PJM Tariff shall be revised to state the following Gross CONE values (in $/MW-yr) for the combustion turbine Reference Resource for the 2015-16 Delivery Year for each indicated CONE Area:

PS, JCP&L, AE, PECO, DPL, RECO (CONE Area 1): $140,000

BGE, PEPCO (CONE Area 2): $130,600

AEP, Dayton, ComEd, APS, DQL, ATSI, DEOK (CONE Area 3): $127,500

PPL, MetEd, Penelec (CONE Area 4): $134,500

Dominion (CONE Area 5): $114,500

Furthermore, the settlement provides that the PJM Tariff shall be revised to state a value of $128,000/MW-yr for the Gross CONE value for the PJM Region for the 2015-16 Delivery Year.

Additionally, the settlement provides that the PJM Tariff shall be revised to state the following gross CONE values (in $/MW-yr) for the combined cycle asset class for the 2015-16 Delivery Year for each indicated CONE Area:

CONE Area 1: $173,000

CONE Area 2: $152,600

CONE Area 3: $166,000

CONE Area 4: $166,000

CONE Area 5: $147,000

The CONE values stated in the settlement agreement are to be applied in the Incremental Auctions that are yet to be conducted for the 2015-16 Delivery Year, and the settlement values will be adjusted in accordance with the tariff to determine the Gross CONE values to be used for subsequent Delivery Years, including the Base Residual Auction for the 2016-17 Delivery Year held in May 2013.

FERC did not condition acceptance of the Settlement CONE values on PJM's immediate commencement of a new CONE filing, as sought by the IMM.

Docket ER12-513