The PJM Interconnection recently presented stakeholders with an early outline of its initial proposal aimed at improving key aspects of the PJM capacity market construct.
At the request of stakeholders, in the March 15 meeting of the Resource Adequacy Senior Task Force, Markets personnel presented a preliminary Problem Statement and Issue Charge framing what they envisioned as key areas to be addressed. They noted that their drafts were based on the PJM Board of Managers Feb. 24 letter that launched the CIFP process and identified key areas to address.
The first stage of the CIFP begins with a presentation of PJM’s formal proposal on March 29. The work of the RASTF and related key work activities will be on hiatus pending completion of the CIFP process, PJM announced.
The PJM proposal focused on the following areas directed by the Board in its Feb. 24 letter:
- Reliability Risk Modeling: Enhancements to how PJM models risk for reliability aim to more accurately reflect the likelihood and severity of extreme weather events. Model improvements enhance how PJM determines procurement targets in future years;
- Capacity Accreditation: Inaccurate accreditation of resources, PJM said, artificially inflates supply, depresses clearing prices and risks premature resource retirement. Marginal accreditation accredits each resource to reflect its expected incremental contribution to system reliability.
- Winter Qualification Requirements: PJM proposed minimum requirements aligned with recommendations by other grid operators. These requirements are also informed by NERC requirements and ongoing study of extreme events, specifically Winter Storm Elliott.
- Performance Assessment Reform: PJM proposed to enhance varying levels of resource testing, assessment and compliance obligations to ensure committed capacity may deliver when needed.
- Market Power Mitigation Rules: This area focuses on reforms to the market seller offer cap in order to ensure needed investments are attracted for reliability.
The next annual capacity auction, or Base Residual Auction, covers the 2025/2026 Delivery Year and is scheduled for June.
PJM and stakeholders discussed risks and merits of delaying that and other capacity auctions so that any FERC-approved rule changes would be included in subsequent auctions.
Stakeholder feedback taken at the March 15 and previous meetings will help inform the Board’s final decision on a proposed auction schedule that is subject to FERC approval.