Delay Of PJM 2022-23 Capacity Auction Already Impacting Default Service Procurements

FERC's previously reported decision directing PJM not to conduct the 2022-23 base residual auction for PJM's capacity market during August as PJM had planned is already impacting default service procurements

As previously reported, PJM had proposed to conduct the 2022-23 BRA using the existing tariff since FERC has not yet ruled on a replacement tariff in a pending proceeding concerning RPM changes. However, FERC directed PJM not to hold the auction under the current rules

Duke Energy Ohio informed PUCO of FERC's action and noted that the capacity rate for 2022-23 won't likely be known at the time of Duke's upcoming SSO auction in September 2019 which includes a procurement for 36-month contracts starting June 1, 2020 (with 2022-23 being the final year of such term).

In response, PUCO issued an order modifying Duke's default service procurement to replace the 36-month contracts currently in the program with 24-month contracts, for the September 2019 procurement

"In light of the recent FERC Order, it is evident that PJM’s rates for 2022-2023 delivery year will be unknown when Duke conducts the auction in September 2019. We affirm that such uncertainty could have significant effects on the auction process, including limiting participation, altering bidding strategies, and increasing bid prices. Therefore, the Commission determines that it is reasonable to adjust the auction schedule to provide greater certainty for the market. Instead of a 36-month product, Duke should offer a 24- month product covering the period of June 2020 to May 2022," PUCO said

Supply for the unfilled June 2022 to May 2023 term will be addressed once a final PJM capacity rate is established (Case 17-1263-EL-SSO)

Separately, Pepco in the District of Columbia noted the uncertainty caused by the auction delay

Pepco said that, "In consultation with Commission Staff, Pepco will to convene a Working Group and SOS supplier meeting the week of August 5th, 2019 to discuss options to address the uncertainty of the 2022/2023 capacity prices and suggest a recommendation to remediate the possible effect on SOS prices." (FC 1017)