PJM Interconnection, the nation’s largest wholesale electricity market, on Friday (Oct 13) proposed major changes to its troubled capacity market to make sure it has enough power to distribute during weather emergencies. The regional transmission operator made two massive filings at the Federal Energy Regulatory Commission (Docket No. ER24-98-000 and Docket No. ER24-99-000 totaling over 1,000 pages) to implement the long-awaited changes to the capacity market.
PJM had long been aware that its once-vaunted capacity market, which holds periodic auctions to determine payments to generators that agree to be available when conditions threaten to bring the PJM system to its knees. But Winter Storm Elliott, which slammed the eastern two-thirds of the U.S. over the Christmas 2022 holiday, and nearly brought rolling blackouts to the system that serves 65 million people in 13 states and the District of Columbia, concentrated the attention both at PJM and FERC on a market that had been showing problems.
PJM began looking at capacity market reforms in October 2021, forming the Resource Adequacy Senior Task Force. As that organization was contemplating a range of reforms, Elliott started banging on PJM’s transmission grid. In February 2023, PJM put its reform process in overdrive, and was spurred on by criticism from FERC, where Commissioner Mark Christie at the agency’s March 16 meeting said, “The markets are not right. Specifically, the capacity markets are not right.” PJM, he said, is failing to offer competitive capacity markets.