Published on AlJazeera.com, David Cay Johnston examines how the single clearing price nature of the capacity market rewards capacity owners for not clearing units which are otherwise economic and could have lowered the capacity clearing price.

Citing certain Exelon nuclear plants which failed to clear the latest PJM BRA, Johnston alleges that, "Exelon will get almost exactly double the capacity market payments than if it had placed winning bids for its entire fleet of generating plants, utility rate consultant Paul Chernick estimates."

"Had Exelon not priced its two Illinois plants out of the market, Chernick estimated, the price would have fallen to $50. Those two plants provide less than 3 percent of total capacity PJM says it needs, illustrating how even tiny differences in capacity can have a huge impact on prices," Johnston alleges.

"The math is simple: collecting $120 for 83 percent of your fleet of electric power plants produces 99 percent more revenue than getting $50 for 100 percent of the fleet," Johnston says.

We find it amusing that certain power traders are wasting time assailing ERCOT's small-fish-swim-free rule in the energy market, which allegedly allows similar "withholding," when load can simply walk away from the energy market if pricing is non-competitive, and no one has to pay the non-competitive prices.

Yet in the capacity market, where load is compelled to participate and cannot escape government-mandated obligations, we do not see the same concern from these same power traders, even though customers in the capacity market have no recourse against any potential economic withholding which may be exercised.

See  AlJazeera.com for Johnston's entire review