On Friday, PJM announced it had submitted a proposal to the Federal Energy Regulatory Commission that would alter the capacity market, as a way to support grid reliability in the face of increasingly extreme weather and a changing generation fleet.
The company said its commitment to maintaining reliable electric service during its transition to lower-carbon power generation, coupled with recent extreme weather events, required it file the proposed market reforms.
“PJM and the PJM Board thank stakeholders for their focused consideration of market reforms designed to support resource adequacy and grid reliability,” said PJM President and CEO Manu Asthana. “The grid is evolving, and our markets must also adapt to facilitate the energy transition without sacrificing reliability.”
PJM is proposing to revise the rules governing Market Seller Offer Caps by establishing a standardized methodology to calculate Capacity Performance Quantifiable Risk, allowing capacity market sellers to participate in energy and ancillary service markets regardless of capacity commitment, allow segmented unit-specific offer caps, and provide more flexibility for PJM in approving a unit-specific market seller offer cap.
A second proposal would reform the Reliability Pricing Model and related rules to the PJM Open Access Transmission Tariff and Reliability Assurance Agreement Among Load Serving Entities to enhance the company’s resource adequacy risk modeling and capacity accreditation processes as well as enhance testing requirement of capacity resources, the company said.
“The proposal, while enhancing reliability, would maintain fundamental principles of competition that control costs for consumers as well as incentivize investment in new resources,” said PJM’s Adam Keech, Vice President – Market Design & Economics. “These proposed capacity market reforms will help PJM do what we do best – operating markets that attract critical investment in the resources we need to keep the lights on. Maintaining enough resources that can support reliability are crucial to PJM’s ability to serve demand through the transition to a less carbon-intensive grid.”
The proposals come after more than a year of meeting with stakeholders, and an accelerated and intensive stakeholder process, the company said.