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PJM Capacity Market

PJM Capacity Market. Stu Bresler VP, Market Operations PJM. Pre-2005 Trends. Decreasing Prices / Increasing Generation Retirement. Installed Reserve Margin After RPM. Retired MWs. Decreasing Reserve Margin / Increasing Reliability Violations. Before RPM Projected Reserve Margin, %.

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PJM Capacity Market

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  1. PJM Capacity Market Stu Bresler VP, Market Operations PJM

  2. Pre-2005 Trends Decreasing Prices / Increasing Generation Retirement Installed Reserve Margin After RPM Retired MWs Decreasing Reserve Margin / Increasing Reliability Violations Before RPM Projected Reserve Margin, % Reliability Pricing Market (RPM)

  3. Foundation for RPM Structure • RPM Structure • Auction Structure • Market Power Mitigation • Performance Requirements • Self-Supply Alternative (FRR Option) Forward Procurement Resource Adequacy Requirement Locational Constraints

  4. RPM Performance Assessment – Independent Consultant (Brattle Group) - Primary Findings RPM has achieved resource adequacy RPM has attracted and retained sufficient capacity to meet or exceed reliability requirements in the RTO and every LDA Moderate capacity deficits occurred in some LDAs in early years due to pre-RPM conditions, but no shortages anywhere in the last 4 Base Auctions Prices have been consistent with market conditions Lower prices (below Net CONE) under excess supply conditions Higher prices under tighter supply conditions, but still below Net CONE in recent auctions RPM has reduced costs by fostering competition Generally level playing field has reduced costs by attracting investments in low-cost supplies from demand response, efficiency and uprates RPM has enabled cost-effective response to environmental rules Facilitated economically efficient tradeoffs among investment in environmental retrofits, retirement and replacement with lower-cost alternative supplies

  5. RPM Base Residual Auction Resource Clearing Prices (By Zone)

  6. Capacity Prices Prior to Reliability Pricing Market Implementation www.pjm.com

  7. Cumulative New Dependable Capacity 2007-2016 MWs

  8. Encouraging Demand Resources New Capacity Market (RPM)

  9. Current Issue:Development of Multi-Year Pricing Mechanism • Concern regarding lack of adequate long-term revenue assurances to support new entry • Currently evaluating several multi-year pricing mechanisms: • Introduce mandatory long-term procurement by PJM • Develop voluntary long-term capacity auction • Modify the New Entry Price Adjustment (NEPA) provision • Target: May 31, 2013 FERC filing www.pjm.com

  10. Current Issue:Integration with Transmission Planning www.pjm.com

  11. Current Issue: Demand Response (DR) Integration www.pjm.com

  12. PJM Capacity Market Thank You More information: www.pjm.com

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