FERC Ruling: PJM Can Retain 2,000 MW of Reserve Capacity

On December 24, 2014, PJM made two filings with FERC to address its resource adequacy issues for 2015/2016 (dockets ER15-738-000 and ER15-739-000). On February 20, FERC ruled on both filings. It accepted PJM’s request to retain 2,000 MW of generation for delivery in 2015/2016. However, it rejected the tariff proposal that would have allowed PJM to enter into capacity agreements secured outside its standard capacity market auctions. For retail customers, PJM’s retention of the reserve resources should help alleviate concerns about spiking electricity costs and grid reliability during periods of peak demand.

FERC’s order states that the 2,000 MW represents just over 1 percent of capacity for that year, and releasing that amount of capacity could yield an insufficient reserve margin and present reliability risks. The order rejected the tariff proposal to procure additional capacity as “vague and undefined.” Specifically, the proposal failed to identify specific procurement targets or explain the need to forego the competitive procurement process.

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