PJM’s Capacity Market: Where are we now?

PJM’s Capacity Market: Where are we now?

After simmering as an issue since 2016, and after the Federal Energy Regulatory Commission (FERC) in June 2018 made a finding on the alleged impact of state-sponsored resources on capacity prices, proposed changes to PJM’s capacity market structure remain in limbo. This Insights follows our initial assessment of FERC’s mandate to PJM in December 2019 to apply its Minimum Offer Pricing Rule (MOPR) to state-subsidized resources.

Here, we review the current status of the market rule changes, present a best case scenario for when capacity auctions might restart, and describe the litany of uncertainties that still face the market and market participants. We conclude that ambiguity is likely to persist around the Reliability Pricing Model (RPM) for some time, and market participants will need to carefully frame expectations and structure decisions to be robust for a range of possible future scenarios.

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