PJM wants to delay capacity auction after environmentalists' complaint (updated)

Public Service Enterprise

11/10/2024 17:49

(Adds new details and context throughout)
       Oct 11 (Reuters) - PJM Interconnection plans to delay
its next annual capacity auction by about six months while the
largest U.S. grid operator addresses a complaint brought by
environmental groups, the biggest U.S. grid operator said in a
letter on Thursday.
    PJM's most recent auction, which resulted in payments to
power plants in its system that were 833% higher than the
previous year, set off concerns about spiking power bills. 
    That prompted the Sierra Club, Earthjustice and other
environmental groups to file a complaint last month with the
Federal Energy Regulatory Commission, alleging that PJM drove up
capacity prices partly by unjustifiably excluding certain power
plants.
    The grid operator makes capacity payments to power
generators to run during times of high demand and the payouts,
which are determined each year, depend largely on PJM's estimate
of available power supply and demand.
    The plants excluded from the auction have contracts, known
as RMR agreements, to operate beyond their planned retirement
dates. Including these plants would have reduced capacity costs
by approximately $5 billion annually over the next three years,
the complaint by environmental groups says.
    The complaint and another letter sent by the Organization of
PJM States, called for RMR agreements to be included in the next
auction.
    PJM said it plans to ask the FERC to postpone its upcoming
auction when it answers the complaint.
    "PJM does not take auction delay lightly," the letter said.
"However, this approach improves market certainty and provides a
path for resolution."
    If FERC declines the request, the auction will proceed in
December, PJM said.
    Potential changes to the market structure could negatively
impact PJM-operating Independent Power Producers, analysts at
Barclays and Jefferies said.
    IPPs Talen Energy  TLN.N , Constellation Energy  CEG.N , and
Public Service Enterprise  PEG.N  were down between 0.5% and 5%
on Friday.
    However, this could benefit transmission and distribution
utilities and may reduce tightness in the upcoming auction,
Barclays added. 
    

 (Reporting by Seher Dareen in Bengaluru and Laila Kearney in
New York; Editing by Tasim Zahid and Deepa Babington)
 ((Seher.Dareen@thomsonreuters.com; If in India call +91 74832
70128;))