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Recent PJM Report Possible Precursor to Higher Prices

           US - Energy News

Currently in PJM, the Pool has addressed this issue by running some plants out of merit (not the next marginal MWh) and billing the extra cost (uplift) back to the users of the system. During 2017, PJM started charging this amount directly to customers through their suppliers. Chart 3 shows this concept/reality. PJM is arguing that the real price of power should be reflected as much as possible in the LMP.

 
Chart 3
 

The process for changing RTO rules can take some time and involves much regulatory discussion not only at the PJM level but also by the Federal Energy Regulatory Commission (FERC). FERC has also had discussions about similar issues in wholesale power markets. We have discussed this PJM study because potential rule changes, if implemented, represent a regulatory risk that is difficult to model but could cause power curves to have a very quick move higher without giving customers an opportunity to adjust their positions/exposures. We will continue to monitor the energy regulatory landscape as we move forward.

Analyst – David Mousseau
Source – PJM, Federal Energy Regulatory Commission (FERC), and Utility Drive


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