FERC Delays PJM Capacity Auctions To Allow Demand Response Participation

PJM's correct interpretation of its capacity performance tariff that excludes demand response and other non-generation resources from upcoming capacity auctions during a transition period is nonetheless unjust and unreasonable, FERC ruled yesterday, as the Commission directed PJM to delay the transition auctions as necessary to accommodate the non-generation resources

Specifically, PJM shall, "allow non-generation resources technically capable of providing the capacity service to be procured through the Transition Auctions to participate in those auctions," FERC said

FERC agreed that the currently tariffed capacity performance provisions do not allow non-generation resources to participate in the Transition Auctions, but ultimately concluded that, "this exclusion of non-generation resources from the Transition Auctions is unjust and unreasonable and unduly discriminatory."

"PJM has failed to provide an adequate explanation, either in its original filing that is the subject of Joint Consumers rehearing request or in its response to AEMA’s complaint, as to how non-generation resources are not similarly situated to Generation Capacity Resources for purposes of providing the capacity services PJM plans to procure through the Transition Auctions," FERC said

"While PJM offered in its answer two alternatives to allow demand response and energy efficiency participation, neither of PJM’s proposals are sufficient because they prohibit participation in the Transition Auctions by demand response and energy efficiency resources that did not previously submit sell offers in an RPM auction for the applicable delivery year. PJM’s current OATT does not place such restrictions on Generation Capacity Resources, and the Commission finds that PJM has failed to support a disparate treatment of other Capacity Performance Resources in its proposed alternatives," FERC said

"Finally, we note that the deadlines for data submission for both Transition Auctions have passed. Thus, in order to grant meaningful relief on AEMA’s complaint, we direct PJM to submit a revised timeline to conduct both Transition Auctions, including any applicable revised deadlines for requests to submit sell offers in both Transition Auctions, thereby providing sufficient time for all qualified resources to participate in the Transition Auctions," FERC said.

In a concurring statement, Commissioner Philip Moeller observed, "If demand response, energy efficiency, or other non-generation resources satisfy the Capacity Performance Resource requirements, then there is no cognizable reason to bar them from auction participation merely because service will be rendered during the transition period. To do so would constitute undue discrimination based on technology type and could unnecessarily inflate auction prices."