PJM Market Monitor Notes Reduction In Uplift Charges In State Of Market Report
March 12,2020
Monitoring Analytics, LLC, the Independent Market Monitor for PJM, released the 2019 State of the Market Report for PJM
Of note to retail suppliers, the IMM reported that total energy uplift charges decreased by $109.6 million or 55.3 percent, from $198.2 million in 2018 to $88.6 million in 2019.
Among the IMM's recommendations is that, "Capacity Performance resources be required to perform without excuses."
"Resources that do not perform should not be paid regardless of the reason for nonperformance," the IMM said
The IMM considers this a "high" priority.
The report also noted that, for the capacity market, "Participant behavior was evaluated as not competitive in the 2021/2022 RPM Base Residual Auction."
"Market power mitigation measures were applied when the capacity market seller failed the market power test for the auction, the submitted sell offer exceeded the defined offer cap, and the submitted sell offer, absent mitigation, would increase the market clearing price. But the net CONE times B offer cap under the capacity performance design, in the absence of 30 performance assessment hours, exceeds the competitive level and should be reevaluated for each BRA. In the 2021/2022 RPM Base Residual Auction, some participants’ offers were above the competitive level. The MMU recognizes that these market participants followed the capacity market rules by offering at less than the stated offer cap of Net CONE times B. But Net CONE times B is not a competitive offer when the expected number of performance assessment intervals is zero or a very small number and the non-performance charge rate is defined as Net CONE/30. Under these circumstances, a competitive offer, under the logic defined in PJM’s capacity performance filing, is net ACR. That is the way in which most market participants offered in this and prior capacity performance auctions," the IMM said
For the capacity market, the IMM said that, "Market performance was evaluated as not competitive based on the 2021/2022 RPM Base Residual Auction. Although structural market power exists in the Capacity Market, a competitive outcome can result from the application of market power mitigation rules. The outcome of the 2021/2022 RPM Base Residual Auction was not competitive as a result of participant behavior which was not competitive, specifically offers which exceeded the competitive level."