An updated study from the American Public Power Association found that, "Only 6 percent of all capacity constructed in 2013 was built within the footprints of one of the regional transmission organizations (RTOs) with mandatory capacity markets."

Link to APPA Report: Power Plants Are Not Built on Spec: 2014 Update

"The new capacity built in the RTOs with mandatory capacity markets represents only 6 percent of the total capacity, yet just over one-fourth of the nation’s electricity customers reside in the states in those RTOs — PJM, ISO NE and the NY ISO," APPA noted

“It’s evident that the mandatory capacity markets are not delivering benefits to electricity customers. They are not even markets,” said APPA President and CEO Sue Kelly. “Billions of dollars are flowing from the pockets of bill-paying customers to generators and capacity providers, and our study shows that the vast majority of these dollars are being spent to prop up a market structure that does not work. At some point, we just have to stop the music.”

APPA said that, "The APPA study underscores the central flaw in the mandatory capacity markets — that they do not support the stable long-term financial arrangements required to build new power plants. As the electricity industry faces new challenges from environmental regulations, baseload retirements, and an increased reliance on natural gas, it is crucial that the RTOs and the Federal Energy Regulatory Commission (FERC) revisit the mandatory capacity markets paradigm."

APPA noted that, "The results of the last two capacity market auctions in PJM, held in May 2013 and 2014 [for operations starting in 2016/17], appear to indicate a trend towards more merchant construction of new capacity for direct sale into the markets. But the extent to which the capacity that cleared these auctions will actually be built is uncertain at this time."

This is a concession made by even merchant power executives, who repeatedly said during the summer of 2013 that not all of the new capacity in PJM is expected to show up.

See: Calpine Exec Says Not All New Capacity Clearing PJM Capacity Market Likely to Get Built

Tags:
Capacity Market   FERC   APPA  

Comment on this story


ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com
TPV-SALES-EXECUTIVE -- Back Office Provider -- Other
Sr-Market-Risk-Analyst -- Wholesale Supplier/Trader -- New York - New York City Metro
Head-of-Retail-Operations -- Wholesale Supplier/Trader -- Other
Energy-Regulatory-Specialist -- Other -- Other
More Stories on RetailEnergyX.com:
FERC Orders $230 Million In Penalties Against GreenHat, Related Parties '
FERC Issues Show Cause Order To GreenHat With Proposed $229 Million Fine For Alleged 'Manipulation'
SPP, MISO Institute Rotating Outages, Showing ERCOT 'Energy-Only' Market Design Not Cause Of Outages
FERC Rules That Entering Bilateral FTR Data Into PJM System Does Not Create A Separate Contract
Danly Named FERC Chairman