Powering Strong Communities

FERC Allows PJM to Revise Schedules for Upcoming Capacity Auctions

The Federal Energy Regulatory Commission on June 9 issued an order accepting PJM’s proposal to revise upcoming Base Residual and Incremental Auction schedules for the 2025/2026 through 2028/2029 Delivery Years.

This action reschedules the June 14, 2023, capacity auction until June 2024 and realigns subsequent auctions every six months after that through May 2026, in accordance with a revised schedule to be submitted to FERC by June 26.

FERC’s order postpones capacity auctions beginning with the 2025/2026 Delivery Year through the 2028/2029 Delivery Year, which will first allow for Commission consideration of anticipated capacity market enhancements that PJM expects to file by October 1, 2023.

PJM and stakeholders are currently working toward crafting that package of proposals to improve resource adequacy, PJM said.

PJM said the capacity market reforms being fast tracked in the stakeholder process are designed to proactively address potential reliability concerns identified in the grid operator’s recent report, “Energy Transition in PJM: Resource Retirements, Replacements & Risks.” 

Commissioner Clements Dissents

In a June 9 dissent from the order, FERC Commissioner Allison Clements said that she would have voted “to approve a reasonable proposal from PJM to provide for a consistent, transparent modification of its auction timelines so as to hold all auctions closer in time to each relevant delivery year, provided such a proposal was accompanied by requisite evidentiary support.” 

But she dissented “because PJM did not put forth such a proposal, or back the proposal it did put forth with sufficient evidence,” wrote Clements.

“PJM instead proposed to delay only particular auctions for an indeterminate amount of time, without demonstrating that such particularized changes are just and reasonable, and without justifying the incredibly broad discretion that it proposed to grant to itself in scheduling the auctions whenever it sees fit,” she said.

Clements said that the order “sets a dangerous precedent that may essentially allow RTOs to schedule auctions according to their own whims, undermining certainty and stakeholder confidence in market rules and utility tariffs across the country.” 

If the “mere possibility of future market reforms constitutes grounds for delaying particular auctions, absent evidence that existing rules are in fact unjust and unreasonable, how can market participants have any confidence in auction schedules memorialized in their current tariffs?”

The FERC Commissioner said that in proposing a delay to its capacity market auctions, PJM carries the burden of demonstrating that delay to be just and reasonable. 

“PJM has not carried its burden in this case. PJM’s proposed delay is predicated on the need to wait until its current market rules are reformed, but PJM does not even specifically detail what those market reforms will be, let alone make out a legal case for why those reforms are necessary,” Clements argued.