PJM's record high power capacity auction draws fresh scrutiny
NEW YORK, Sept 30 (Reuters) -U.S. state utility regulators and environmental groups are contesting the process grid operator PJM Interconnection used to determine the record high capacity payments it plans to make to power generators, according to separate filings made this month.
PJM Interconnection, which is the largest U.S. grid operator and covers 13 states and the District of Columbia, in July released the results of its annual capacity auction with prices that were 833% higher than the previous year.
The PJM market makes capacity payments to power plants to run during times of high demand, and determining the payout depends largely on PJM's estimate of available power supply and demand.
The Sierra Club, Earthjustice, National Resources Defense Counsel and other environmental groups filed a complaint with the Federal Energy Regulatory Commission on Friday, accusing PJM of driving up capacity prices partly by excluding certain power plants from its most recent auction.
"PJM is misrepresenting the current level of energy supply and costing consumers billions of dollars in energy bills," Justin Vickers, Senior Attorney with the Sierra Club, said in a statement.
PJM representatives said they were reviewing the complaint and plan to file an answer.
The plants that were not included in the auction have contracts, known as Reliability Must-Run agreements, to run past planned retirement dates.
Including such plants would have lowered capacity costs by roughly $5 billion annually over the next three years, the complaint said, citing a study by the Maryland Office of People's Counsel.
The Organization of PJM States, Inc., which is made up of state utility regulators representing more than 65 million power customers, expressed similar concerns in a letter to PJM, also filed on Friday.
The complaint and the letter called for Reliability Must-Run agreements to be accounted for in PJM's capacity market process.
The grid operator plans to hold another auction in December.
Reporting by Laila Kearney, Editing by Rosalba O'Brien
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