The PJM Interconnection has released a paper that outlines PJM’s proposal to address the need for a Reliability Backstop Procurement.
“PJM’s proposal serves as a transitional mechanism to safeguard resource adequacy, support the Connect and Manage interim posture, and advance reforms to be discussed in the investment incentive work planned for later this year,” it noted in the paper.
PJM said it has received a tremendous amount of feedback from stakeholders on this topic. With that information, and consultation with Charles River Associates, PJM is putting forth a framework that will allow for bilateral contracting between direct parties followed by a proposed central procurement to acquire the remaining targeted megawatt amount.
PJM is viewing the Reliability Backstop Procurement as a one-time, transitional procurement of capacity designed to begin to address the unprecedented load growth in the region. PJM does not believe the Reliability Backstop Procurement is a long-term fix for its resource adequacy issues, it said.
"Therefore, in parallel with the Reliability Backstop Procurement, PJM is also undertaking a review of its markets as mentioned in the National Energy Dominance Council within the White House" and PJM Governors' principles that articulate a longer-range desire to “Return PJM to Market Fundamentals” and the PJM Board letter from January 16 that also instructs PJM staff to undertake a holistic review of investment incentives in PJM’s markets.
PJM said it is aligned that this one-time backstop procurement should not subsume this larger review of market fundamentals.
PJM believes this initial proposal for the Reliability Backstop Procurement is in-line with the White House and Governors' principles as it seeks to get net-new generation online in the PJM footprint, allocate costs to the load that is purchasing the capacity and has a strong focus on establishing a one-time procurement to allow for a broader review of investment incentives in PJM with a focus on returning to competitive markets for resource adequacy as soon as possible thereafter.
On April 8, the PJM Board of Managers issued a letter initiating a Critical Issue Fast Path process to engage stakeholders in the development of a Reliability Backstop Procurement proposal.
A series of meetings related to the proposal are schedule to take place starting on April 16.
