Power Marketer: "Plainly" Unreasonable To Subject Customers To Higher Capacity Costs From Outdated PJM Load Forecast

NextEra Energy Resources, LLC filed comments at FERC in support of a petition from load interests to require PJM to use an updated load forecast methodology for upcoming capacity auctions, saying it is, "plainly unjust and unreasonable," to require load to pay $625 million in excessive capacity costs if the forecast is not corrected.

See RetailEnergyX.com for background on the load interest' petition

"As the Commission is well aware, PJM is embarking on a fundamental overhaul of its capacity market. In the course of the next few weeks, PJM will implement the capacity performance reforms approved by the Commission on June 9, 2015, resulting in billions of dollars in new costs for load. For the 2016/2017 and 2017/2018 Delivery Years in particular, the phasing in of PJM’s capacity performance proposal will increase payments by load of up to $2.8 billion and $2.4 billion, respectively," NextEra Energy Resources said.

"Notwithstanding the significant increase in costs caused by phasing in the capacity performance reforms, PJM has declined to mitigate those costs by using the New Specifications for the CP Transition Auctions. Joint Consumer Representatives estimate that failure to use the New Specifications in the CP Transition Auctions will result in PJM over-procuring by 6,900 MWs in the 2016/2017 Delivery Year and by 7,200 MWs in the 2017/2018 Delivery Year, with additional costs as a result for each auction at $113.6 million and $160.5 million, respectively. Although only a small portion of the larger cost of the CP Transition Auctions, this $274.1 million is significant and will unnecessarily exacerbate the impact of the capacity performance reforms on wholesale and retail load serving entities ('LSEs'). LSEs price their contracts in good faith that the capacity they would be purchasing would deliver the reliability required by PJM’s existing planning criteria. It is unreasonable to make the region pay more for capacity that is not needed," NextEra Energy Resources said.

"NextEra Resources urges the Commission to act expeditiously given the timing of the upcoming CP Transition Auctions to avoid saddling load with unnecessary, and unjust and unreasonable, costs. The Commission should order PJM to either incorporate the New Specifications in its auctions, or request that PJM propose a new schedule for this year’s auctions that allows PJM to fully incorporate the New Specifications in the PJM Region Peak Load Forecast for the TAs and the 2015 BRA. The Commission already has allowed PJM to delay its auctions once. It is appropriate to do so again in order to avoid consumers paying hundreds of millions of dollars for capacity that is not needed," NextEra Energy Resources said.