The Independent Market Monitor for PJM (IMM or MMU) issued a report analyzing the impacts of the creation of Fixed Resource Requirement (FRR) entities in Maryland.

Under a Fixed Resource Requirement, capacity obligations would be met by an LSE (or LSEs) and not satisfied through the PJM capacity auctions. How retail suppliers would be treated would be determined at the time of FRR creation

The IMM looked at various scenarios concerning the service areas included in the FRR and expected pricing

Of note is that under "Scenario 2", the IMM assumes that an FRR is established that includes all of Maryland and that the FRR procures the entire Maryland capacity obligation at a rate equal to the weighted average clearing prices in the 2021/2022 RPM BRA applicable to the LDAs in Maryland ($170.67 per MW-day).

The IMM concludes that under Scenario 2 the net load charges for Maryland under the FRR alternative would increase by $53.9 million or 6.1 percent compared to the results of the 2021/2022 RPM BRA

While Scenario 2 does include a cost increase, the state may find a "nominal" 6% cost increase palatable for being able to determine its resource mix (e.g. renewable subsidies), free from FERC authority, unlike reliance on the capacity auctions where subsidized resource are subject to a price floor

If the pricing modeled in Scenario 2 was instead priced at the weighted average net Cost of New Entry (CONE) times B offer caps applicable to the LDAs in Maryland ($198.53 per MW-day) for the 2021/2022 PJM Reliability Pricing Model (RPM) Base Residual Auction (BRA), the cost increase in Maryland would be 23%, the IMM said

See the IMM's report here

Tags:
Maryland   Capacity Markets   PJM   FRR  

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