PJM: Exit at your own risk

Source: BY KELSEY TAMBORRINO, Politico • Posted: Thursday, May 14, 2020

States like New Jersey, Maryland and Illinois that are considering pulling out of the PJM capacity market are risking increasing power prices for their consumers, according to a trio of reports prepared by the independent market monitor for the 13-state electricity market. As Pro’s Gavin Bade reports , those states may exit the long-term capacity market after FERC approved rule changes in December that limit the participation of subsidized nuclear and renewable energy resources, and they are instead considering using an existing provision in PJM rules that allows them to determine their own power needs outside of the capacity market.

But Joseph Bowring, head of Monitoring Analytics , PJM’s independent market monitor, says such actions may raise electricity prices for consumers in those states. “[Fixed resource requirements] are not a panacea and would create a nonmarket process, with influence from generators with market power, with no clear rules, to set prices,” said Bowring, who supported FERC’s changes to the market. “There is a significant chance that FRRs will result in cost increases to FRR customers.” According to a new report from Bowring’s firm , removing all of New Jersey from the capacity market could raise power prices in the state by as much as $386.4 million, or nearly 30 percent.