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PJM Says it Plans to Support Delay of Base Residual Auction for Six Months

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The PJM Interconnection recently said it will be supporting a delay of the PJM 2026/2027 Base Residual Auction for approximately six months. 

On Sept. 27, 2024, the Sierra Club, Natural Resources Defense Council, Public Citizen, Sustainable FERC Project, and Union of Concerned Scientists filed a complaint against PJM with the Federal Energy Regulatory Commission (Docket No. EL24-148).

This complaint is related to specific aspects of PJM’s capacity market, the Reliability Pricing Model.

“We understand the membership is closely following the developments in the complaint, including specifically the Commission’s Oct. 4 notice, wherein it directed that PJM answer the complaint regarding the treatment of Reliability Must-Run (RMR) units, and further that PJM address the complainant’s request to delay the upcoming 2026/2027 Base Residual Auction. Such answer is due by Oct. 17,” PJM said in a recent message to its members.

PJM said it intends to answer the complaint in defense of its existing market rules. “However, the issues raised in the complaint are complex and affect other aspects of the RPM market design,” it said. 

PJM said it has concerns with FERC addressing in isolation the RMR-related issues raised in the complaint prior to the 2026/2027 auction without consideration of other aspects of the market design.

Some of these related issues, for instance, have been raised in recent letters submitted to the PJM Board of Managers by the Organization of PJM States, Inc. and the PJM Power Providers Group.

“Thus, in its answer, PJM will be supporting a delay of the PJM 2026/2027 Base Residual Auction for approximately six months. PJM does not take auction delay lightly, as the schedule for these auctions has already been compressed due to previous reform efforts,” PJM said.

“However, this approach improves market certainty and provides a path for resolution before the next Base Residual Auction. This additional time will allow the Commission to deliberately consider the complex issues raised by the complaint,” it said.

“Further, this delay will allow PJM to discuss with its Members, stakeholders and the PJM Board of Managers the possibility of other capacity market reforms that could occur through a Federal Power Act section 205 filing.”  

PJM said it will also need to submit a filing to effectuate the delay in the auction schedule and to set new dates, and will consult with Members in advance of such filing.

Preparations for the December auction will continue in the event that FERC does not accept the request, in which case PJM will proceed with the December auction as scheduled.

PJM Responds to IMM Report

Meanwhile, a PJM report published on Oct. 11 refutes a PJM Independent Market Monitor report on the Base Residual Auction for the 2025/2026 Delivery Year.

Specifically, PJM concludes that the IMM’s recent report presents contradictory, incomplete, and unsupported or incorrect conclusions.

PJM said in its response that:

  • The IMM’s analysis of the impact of Effective Load Carrying Capability implementation fails to differentiate between the effects of the changes in risk modeling framework and the change in accreditation framework. The move to marginal ELCC accreditation is becoming an industry standard approach that aligns capacity valuation with marginal reliability contributions.
  • The IMM’s allegation of market power exercise through withholding of exempt resources lacks sufficient evidence and analysis. PJM urges the IMM to provide supporting data for this serious claim if it is available.
  • While PJM agrees there may be additional winter thermal capacity available, the IMM’s analysis of this issue oversimplifies the matter and fails to account for important limitations including deliverability constraints.
  • The IMM’s recommendation on including Reliability Must-Run (RMR) resources in the capacity supply curve is inconsistent with their own recent positions and fails to consider critical issues around RMR agreement obligations. Further, PJM remains concerned that forcing RMR units into the supply stack as a matter of policy could put downward pressure on the capacity price signal at the very time that new capacity is needed.

Finally, PJM said its analysis shows that the recent auction would have cleared at the market cap across the PJM footprint (rather than in only two areas within the footprint) if core market changes recommended by the IMM had been implemented less than a year ago. In contrast, the IMM’s report on auction results ignores some of its own recent recommendations.

“These contradictions pose a serious credibility challenge,” PJM said.

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