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PJM seeks possible delay of annual capacity auction amid push for big changes

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PJM seeks possible delay of annual capacity auction amid push for big changes

The PJM Interconnection asked U.S. federal regulators for permission to potentially delay its next annual capacity auction as the electric grid operator mulls changes to its market tariff to account for the impacts of renewable and nuclear energy subsidies on the region's power markets.

In particular, PJM on Aug. 14 said it filed a request with the Federal Energy Regulatory Commission the previous day to push back its May 2019 base residual auction, which will cover the 2022-2023 delivery year, by three months if necessary.

The Aug. 13 request came after a divided FERC in late June rejected two PJM proposals aimed at addressing the impacts of state-sponsored resources, including some renewable and nuclear generation, on the grid operator's capacity market. As part of that order, FERC also directed PJM to adopt the commission's own plan for mitigating those subsidies, which included expanding the region's minimum offer price rule, so it would apply to most new and existing resources that receive out-of-market payments (FERC docket EL18-178). The commission is aiming to issue a final order on the replacement rules by Jan. 4, 2019.

Although the timeline is tight, PJM said it would only need to delay its next annual auction if FERC grants a request from the Organization of PJM States Inc. for an extension of deadlines for initial and reply testimony on a paper hearing regarding the replacement rate for PJM's existing minimum offer price rule. Currently, initial feedback on the paper hearing is due Aug. 28, with reply comments due Sept. 27, but the organization asked to push those deadlines back to Oct. 11 and Nov. 26, respectively.

If the commission grants those extensions, delaying the next annual auction until Aug. 14-28, 2019, will allow more time for PJM to form replacement market rules and conduct the auction in an "orderly manner," the grid operator said in its request to FERC.

Should FERC extend the deadlines for feedback on the paper hearing, PJM said it also should push back the existing Feb. 1 due date for posting certain auction parameters to May 1, 2019. The grid operator further asked FERC to allow sellers seeking exceptions to the region's minimum-offer requirement in order to facilitate resource retirements to file those requests until March 17, 2019, beyond the usual deadline of Sept. 1 of the preceeding year.

PJM emphasized that it was only seeking one-time waivers of the deadlines and that the delays would not have any undesirable consequences.