FERC Staff Calls PJM Capacity Performance Proposal Deficient, Directs Further Filings

FERC Staff called PJM's filing of its capacity performance proposal "deficient" and directed PJM to respond to a series of questions.

Most notably, none of the questions related to the transition period, which would add incremental procurements of capacity performance for years during which Base Residual Auctions have already been conducted, and which would allow resources already clearing such completed BRAs to offer into the transition capacity performance auctions.

Retail suppliers have protested such design as contrary to the filed rate doctrine:

"With respect to the proposed transition auctions, PJM proposes to allow generators who already committed their resources in the particular Delivery Year (2016/2017 or 2017/2018) pursuant to the applicable RPM Auction, to voluntarily re-bid into the transition auction. If a resource is accepted in the transition auction, it will be released from its obligation to provide capacity pursuant to PJM's existing tariffs -- at existing filed rates -- and paid a different price for the provision of capacity. If it does not clear, it may remain in the BRA as a Base Capacity Resource and collect its already-cleared rate," the Retail Energy Supply Association has noted.

FERC Staff's deficiency question largely centered on the use of various administrative inputs in offer caps, and comparisons to mechanisms adopted in ISO-NE.

See Staff's specific questions here

Commissioner Philip Moeller issued the following statement on the deficient letter:

"Today, staff issued a deficiency letter in this proceeding. In future deliberations in this proceeding, I will of course consider the totality of the record, including all of the responses to staff’s deficiency letter. Nonetheless, I believe that this proceeding already contains sufficient information to permit the Commission to issue an order on the merits of PJM’s proposal in advance of the May 2015 Base Residual Auction. Markets provide the best prices for both buyers and sellers when participants know the market rules. Regardless of whether the Commission ultimately decides to accept or reject PJM’s capacity performance proposal, by failing to act, the Commission is creating market uncertainty on issues that need clarity now. For this reason, I believe that we should have acted today on the merits of PJM's filings. However, this five-member Commission can only move forward on an order when we have three votes for action."