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
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
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.