PJM Proposes New Capacity Auction Schedule

PJM Interconnection LLC on Jan. 24 filed a new schedule for its capacity market auctions and associated pre-auction deadlines with the Federal Energy Regulatory Commission, proposing to hold the auction for 2023/2024 delivery year on June 8. The proposal is in response to a December 2021 order directing the grid operator, which operates across 13 states and the District of Columbia, to revise its reserve market rules, a move that necessitated a delay in the auction that was set to take place on Jan. 25.

The December order directed PJM to return to a historical energy and ancillary service offset that is used to calculate certain capacity offers. The grid operator said that the new deadlines for pre-auction activities for the 2023/2024 auction are impacted by the use of this offset and the general delay of the auction necessitates that an updated load forecast is used. The new deadlines would provide market participants enough time to prepare and submit information for pre-auction activities that are affected by delay.

The proposed schedule would delay the upcoming auction by about four-and-a-half months and continue to shorten auction timing and pre-auction activities, so that PJM can ultimately return to its three-year-forward auction, beginning with the capacity auction associated with the 2027/2028 delivery year proposed for May of 2024. Also, PJM proposes a month and year only for the impacted auctions, instead of a specific date, to avoid the potential need to seek future waivers.

PJM’s capacity auction is designed to obtain generation capacity or demand reduction commitments three years ahead to meet peak load projections and ensure adequate power supplies. The long-awaited capacity auction for the 2022-2023 delivery year, originally scheduled to be held in May 2019, was delayed until May 2021 as federal regulators considered new market rules pertaining to the Minimum Offer Price Rule, or MOPR.