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Brattle Files CONE, VRR Reports For RPM Quadrennial Review, CONE Significantly Lower

April 23,2018



PJM has filed reports from the Brattle Group regarding the Cost of New Entry and the Variable Resource Requirement Curve developed in support of the Tariff required quadrennial review of certain RPM parameters.

The report says:

1. The updated estimate of Net CONE for CT plants—the current reference technology for the VRR curve as specified in PJM’s tariff—is 25-42% lower than PJM’s 2021/22 Net CONE parameters, depending on location. The decline is driven by increased economies of scale of new H-class CTs, a lower tax rate, and a slightly lower cost of capital.

2. The updated estimate of Net CONE for CC plants—the dominant technology of new generation in PJM for more than fifteen years—is 44-76% lower than PJM’s 2021/22 Net CONE parameters, and 25-63% below the updated CT Net CONE estimates, depending on location. CCs are more economic because their much higher net E&AS revenues more than offset slightly higher plant costs on a per-kW basis.

The report recommends anchoring the VRR curve on CC Net CONE, shifting the curve 1% left and reducing the alternative price cap to 0.7 × Gross CONE

VRR report

CONE report



Tags:
PJM   Capacity Markets  

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