May 24 U.S. power grid operator PJM said on Friday its capacity auction secured a record amount of new generation and record imports for the 2016/2017 delivery year at much lower prices.
PJM said it procured 169,160 megawatts of capacity resources at a base price of $59.37, down 56 percent from last year's base auction price.
Capacity markets provide future revenue for electricity resources to maintain grid reliability whether they are needed to generate power or not.
The resources include existing power plants and units to be built in the future as well so-called demand response programs that pay consumers to reduce energy usage when needed.
PJM's Reliability Pricing Model auction produced capacity prices above $59 for the Northern Ohio and Mid-Atlantic regions, but those prices were lower than the previous year's auction, except in New Jersey.
Capacity prices were pressured by a number of factors, said Andrew Ott, PJM's senior vice president for markets.
"Prices were generally lower than last year's auction due to competition from new, gas-fired generation, low growth in demand because of the slow economy and increased imports from other regions, primarily to the west of PJM," Ott said in a release.
PJM said the auction procured a record amount of new generation, 5,463 MW, up 11 percent from 2012. The new generation will help replace coal-fired units expected to retire in the next few years.
In addition, PJM said capacity imported from the Midcontinent ISO (MISO) more than doubled to 4,723 MW from 2,078 MW. Overall imports increased 72 percent to 7,483 MW, PJM said.
A megawatt is enough electricity to power 800 to 1,000 homes in PJM, a power region serving 60 million people in 13 states in the Mid-Atlantic and Midwest and the District of Columbia.
Last year, the auction secured 164,500 MW of power at a base price of $136 per MW.
In FirstEnergy Corp's northern Ohio territory, PJM said the capacity price dropped 68 percent, to $114 from $357 per MW in the 2012 auction.
For the Mid-Atlantic region, PJM said capacity will cost $119 per MW, down 29 percent, from $167 in last year's auction.
The Mid-Atlantic region includes utilities served by: Pepco Holdings Inc's Atlantic City Electric, Delmarva Power and Pepco; Exelon Corp's Baltimore Gas and Electric and PECO; FirstEnergy's Jersey Central Power and Light, Metropolitan Edison and Pennsylvania Electric; PPL Corp's PPL Electric Utilities and Consolidated Edison Inc's Rockland Electric.
In the New Jersey region served by Public Service Enterprise Group Inc's Public Service Electric and Gas, the capacity price rose 31 percent to $219 per MW from $167.
The auction also secured 12,408 MW of demand response, down from last year's record 14,833 MW; and 1,117 MW of energy efficiency, down 21 percent from the 2012 auction.
Citing the new record new generation procured, PJM President Terry Boston said the capacity auction results "reaffirm that well-designed, mature markets are a powerful tool for procuring new resources at competitive prices."
PJM's all-time peak demand is 163,848 MW.