Direct Energy: Granting FirstEnergy Complaint on Demand Response Participation in Already Run Capacity Auction Would Result In "Windfall" for Existing Generators

Granting a complaint from FirstEnergy which seeks to exclude demand response from participation in the PJM capacity market, including re-running, without demand response, the already cleared May 2014 capacity auction, "would create a windfall for existing generators," Direct Energy said in a protest at FERC.

Citing an Appeals Court order which vacated FERC's compensation mechanism for demand response in the energy market, FirstEnergy has filed a complaint with FERC asking FERC to remove demand response from participation in the PJM capacity market, arguing that the court's conclusion that FERC lacked jurisdiction over demand response compensation (since it is a retail rate) in the energy market equally applies to the capacity market.

Direct Energy argued that FirstEnergy failed to meet its burden showing that its requested relief would be just and reasonable, and in particular objected to FirstEnergy's sought resettlement of the May 2014 capacity auction with the removal of demand response.

"FirstEnergy has provided no legitimate support for its proposal to re-run the May 2014 BRA for the 2017/2018 delivery year with demand response resources excluded. Re-running those auction results would create uncertainty in the PJM capacity market that would exacerbate the price increases that FirstEnergy's proposal will produce by constraining supply. This uncertainty can be easily avoided by letting the competitive outcome of those auctions stand," Direct Energy said.

"Re-running the May 2014 BRA by removing demand response resources would create a windfall for existing generators. This windfall would be at the expense of customers and CSPs. The proposed re-run would disrupt the contractual arrangements between these parties and their related investments in hardware, software, intellectual property, workforce training and customer relationships," Direct Energy said.