PJM Senior Counsel Chen Lu on Thursday presented stakeholders with an overview of the recent Federal Energy Regulatory Commission order largely approving PJM’s plan to implement an expanded Minimum Offer Price Rule in its annual capacity auction.
In a presentation to the Oct. 29 meeting of the Markets and Reliability Committee, Lu outlined remaining compliance requirements, and said that PJM would set an auction date as soon as FERC rules on a related issue. That ruling, regarding changes in the PJM Energy and Ancillary Services markets that PJM filed with the Commission in August, is expected in coming weeks. The ruling will impact the capacity market, because it determines how future income in the PJM Energy and Ancillary Services markets is factored into offers made into the capacity auction.
Pre-auction activities are pegged to the date of the capacity auction, formally known as the Base Residual Auction, so no deadlines may be set at this time, Lu said. However, PJM is evaluating which activities may begin on a voluntary basis and is encouraging market sellers to begin preparing certain pre-auction activities voluntarily. PJM will discuss this further with stakeholders at the Nov. 5 meeting of the Market Implementation Committee.
PJM relied heavily on stakeholder feedback in crafting its earlier compliance filings, submitted in March and June of this year. One outcome of this collaboration was that FERC accepted exemption of state default service auctions from the expanded MOPR, as long as they met PJM’s criteria that deem them competitive and non-discriminatory.
“We think this order results in a workably competitive outcome for the markets,” Lu said.
The next compliance filing, due Nov. 16, is highly prescriptive, Lu said, giving PJM little if any discretion to modify the compliance language directed by FERC. Therefore, additional stakeholder meetings may not be needed to complete the filing. PJM intends to set the next Base Residual Auction date for about six and a half months after FERC issues an order allowing PJM to proceed with the next auction, Lu said. If that ruling comes by the end of the year, the auction for the 2022/2023 Delivery Year could be held in early summer of 2021. Subsequent auctions would be condensed, and PJM hopes to be back on schedule with the auctions – which are meant to be forward-looking three years – in 2024.
Original source: PJM