In the next few years, customers in PJM, "will see significantly higher capacity costs," Direct Energy Business said in a blog post concerning PJM's capacity performance proposal.

In the blog post, Direct Energy Business notes that, "PJM plans to transition to its new Capacity Performance structure by introducing an additional procurement of up to 10,000 MWs in 2015-16 and then continue to procure a percentage of additional MWs that would meet the 'Capacity Performance' MWs for 2016-17 and 2017-18 for incremental auctions for those delivery years."

"Yet customers have already paid for capacity during these delivery years because the base residual auction has already cleared. In essence, a nuclear plant owner that cleared the 2016-17 auction will be able to re-offer in the same exact MWs, but at the higher Net CONE cost," Direct Energy Business notes

"Many stakeholders question the need to transition to the new structure, particularly because the transition is likely to impose costs of up to $4B," Direct Energy Business notes

"Stakeholders are concerned that the new construct throws too much money at generators that won’t have to make any additional investment to receive that money (nuclear plants), or to generators that may or may not firm up their fuel supplies. The problem PJM appears not to appreciate is that a gas generator may have a firm fuel contract, but if it doesn’t nominate in a timely manner, it may not be able to access the fuel anyway," Direct Energy Business notes

"Furthermore, stakeholders are concerned that the penalties are so high that justifiable risk premiums will increase costs exponentially. The end state of Capacity Performance may increase costs to consumers up to $14B over what they paid in 2014-15," Direct Energy Business notes

Direct Energy Business said, "Fundamental changes need to be made to PJM’s capacity market," but said that PJM must, "ensure that customers pay for what they receive and do not double pay."

See Direct Energy Business's blog post for more

Tags:
PJM   Capacity Market   Direct Energy  

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
Energy-Regulatory-Specialist -- Other -- Other
More Stories on RetailEnergyX.com:
FERC Orders $230 Million In Penalties Against GreenHat, Related Parties '
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
Direct Energy Business Signs Long-Term Agreement For 25 MW Solar Project
Shell Seeks FERC Relief From Claim Entering Bilateral FTR Data Into PJM Creates Separate Contract