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PJM suspends base capacity auction deadlines until FERC order received

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PJM suspends base capacity auction deadlines until FERC order received

The PJM Interconnection updated market participants Sept. 26 that it suspended and will not move forward with any base residual auction deadlines for its capacity market until it receives an order from federal regulators.

"Without having a quorum at [the Federal Energy Regulatory Commission], we are in a situation we didn't think we'd be in at the end of September without a FERC order yet on the capacity reform filing we submitted last October," PJM Associate General Counsel Jennifer Tribulski said during a Markets and Reliability Committee meeting.

Until that order is received, "PJM suspended and is not going to move forward with any [base residual auction, or BRA]-related deadlines … until we can establish a timeline after that order," Tribulski said.

It is not efficient or effective to start running some of the deadlines under the current rules for future BRAs given FERC's directive to not event run the 2019 base auction, Tribulski said.

The decision is in line with FERC's July 25 order where the commission directed PJM not to run the 2019 BRA for the 2022-2023 delivery year and is consistent in that it makes sense not to run any pre-BRA deadlines, Tribulski said.

FERC issued an order in June 2018 that found PJM's existing capacity market tariff unjust and unreasonable, setting off a major rule-adjustment proceeding (EL18-178). FERC said the capacity market pricing model had become "untenably threatened by out-of-market payments provided or required by certain states."

Once PJM receives an order, it will work to establish a timeline consistent with the ruling, Tribulski said, adding that PJM will reach out to stakeholders and state agencies to ensure the timing works with their requirements.

Some states may need to enact legislative and regulatory changes to comply with whatever FERC decides is needed to fairly adjust the capacity market rules.

Market 'frustration'

Asked about the PJM capacity market situation on the sidelines of a clean energy forum Sept. 26, FERC Chairman Neil Chatterjee acknowledged the market uncertainty being caused by the delay.

"Look, I understand their frustration. They've been waiting for a long time. We continue to work hard at it," Chatterjee said.

"Commissioner [Richard] Glick has indicated that he is likely recused from that proceeding and is not seeking a waiver. But we will continue to do our work to ensure that once that quorum is restored, we can act as expeditiously as possible," Chatterjee added.

Glick must recuse himself from all proceedings in which his former employer, the energy holding company Avangrid Inc., and its affiliates and subsidiaries, were a party until Nov. 29, marking two years from the date of his appointment to FERC.

PJM's senior vice president of market services, Stu Bresler, clarified that PJM will continue running incremental auctions for BRAs that have already been run.

Asked about timeline compression as deadlines for preparatory work for the 2020 capacity auction could start mixing with those for the delayed 2019 auction, Tribulski said PJM has started looking at different scenarios, but it is all dependent on what FERC rules.

"To be clear, we are suspending all timelines for all BRAs, 2022-23, 2023-24, and anything in the future, until we have more clarity from FERC," Tribulski said.

Jared Anderson is a reporter for S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.