Capacity market price cap still needed to protect customers from paying windfalls, OPC tells federal regulators
BALTIMORE – Federal regulators should extend a price cap for capacity market auctions covering two additional delivery years, given the continued inability of significant new generation to enter the market and compete—even when capacity market prices are high signifying new generation is needed, the Office of People’s Counsel said in a filing last week.
OPC’s filing supports the request of PJM Interconnection LLC, the regional electric grid operator, to extend the price cap of $325/megawatt-day, which the Federal Energy Regulatory Commission (FERC) approved for two earlier capacity market auctions. The auctions for generation capacity intend to ensure sufficient power generation is available to reliably meet energy needs when demand is highest.
FERC determined less than a year ago that the price cap was needed to address structural barriers preventing new supply resources from timely entering the market to compete with existing generators. Those structural barriers persist, OPC’s filing said. Without the price cap, consumers will simply be paying a windfall to existing capacity resources, the filing says.
PJM’s proposed price cap extension relates to FERC’s acceptance of the cap for the earlier auction years to settle a complaint filed by Pennsylvania Governor Josh Shapiro and PJM. The complaint was supported by other PJM governors, including Maryland Governor Wes Moore. See OPC’s website for more on OPC’s advocacy involving PJM and FERC and resource adequacy.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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