May 16 Some coal-fired generators may have
boosted power prices to astronomical levels last winter, making
some plants too expensive to run, said the market monitor for
PJM, the biggest power grid operator in the United States.
Monitoring Analytics said PJM was competitive overall during
the first three months of the year, but noted that some
coal-fired generators lifted prices in January, though their
feedstock costs didn't rise. The monitor, which tracks the
market and can make recommendations to the U.S. Federal Energy
Regulatory Commission, didn't name the companies or identify any
The monitor is "investigating the offer behavior of several
units and will take appropriate actions" consistent with the
grid's operating rules, according to its quarterly report
PJM operates the grid serving 61 million people in 13
Mid-Atlantic and Midwest states from New Jersey to Illinois and
the District of Columbia.
The biggest coal-fired generators in PJM include units of
Duke Energy Corp, FirstEnergy Corp and PPL Corp
In January, on the highest demand days, the monitor said
several generators boosted offer prices for some of their
gas-fired units to the market's price cap of $1,000 per megawatt
hour due to the higher prices for gas at that time.
The average price of PJM power was $45 per MWh in 2013.
"That is expected behavior in a competitive market," the
monitor said in the report. "But some coal units also increased
their offer prices significantly, including offers at $1,000 per
MWh, in anticipation that their generation would be committed
regardless of their offer price," the monitor said.
"Given that coal costs did not increase," the monitor said,
"this behavior is consistent with economic withholding."
Officials at FirstEnergy and PPL were not immediately
available for comment. A spokesman at Duke declined to comment.
The monitor also recommended changes to PJM's capacity
market, which pays generators for keeping their plants
available, to reduce payments to units that are not able to run
due to lack of fuel during the peak winter demand months.
From Jan. 6-8, a polar vortex caused extreme cold in PJM's
region, forcing the grid operator to take several emergency
measures and pay extremely high prices to buy power to make sure
it had enough generation to keep the lights on.
On Jan. 7, when demand for power hit a winter record of
140,467 megawatts, the monitor said some 40,700 MW were out of
service, of which 38,500 MW were "forced outages." Lack of gas
caused about 10,400 MW of those forced outages at the peak hour.
(Reporting by Scott DiSavino; Editing by Jeffrey Benkoe)