PJM BRA 2023/24 Rule Changes and Auction Parameters: Capacity Price Forecast | Capacity Watch Blog
Published November 23, 2021 | capacity-watch
For Investors, Developers and Generation Owners making investment decisions in the PJM RTO it’s imperative to be up to date on the market fundamentals, latest regulatory updates, and other rule changes that may impact pricing moving forward.
In ESAI’s latest Capacity Watch report, we analyze the three major rule changes that will impact pricing in the upcoming PJM Base Residual Auction (2023/24 BRA) and the subsequent influence on clearing prices out to 2030. Here are a few highlights from the report:
- ELCC – FERC’s approval of PJM’s revised proposal to implement capacity accreditation using an effective load carrying capability (ELCC) approach. The ELCC rules will result in changes, both higher and lower, in the qualified capacity of some intermittent resources in PJM. For example,
- ELCC rules are expected to facilitate additional participation by battery storage assets, that previously had an 8-hour requirement.
- Longer-term, the ELCC approach is expected to limit the growth in qualified capacity from some renewable technologies, particularly grid-level solar.
- MSOC – FERC approved a default Market Seller Offer Cap (MSOC) based on the Net Avoidable Cost Rates (Net ACR) for resources, which is more restrictive than both the MSOC that was in place for the 2022/23 BRA and the replacement approach proposed by PJM.
- MOPR – A deadlocked FERC failed to reach a majority decision about PJM’s proposed revisions to the Minimum Offer Price Rule (MOPR), resulting in the proposed changes taking effect by law. Under the new MOPR, offer floors will be imposed only for resources from suppliers deemed to have the ability and incentive to exercise buyer market power. Mitigation will not be triggered by subsidies used to advance state policy objectives or by new merchant entry. Although the rule change is expected to apply for the 2023/24 BRA in January 2022, the filing was met with significant pushback from stakeholders and rehearing requests pending.
The Capacity report also discusses how the 2023/24 BRA clearing prices will be affected by the updated PJM auction parameters, including:
- Net CONE values for the RTO and each LDA.
- Updated RTO-wide Reliability Requirement and VRR Demand Curve.
- CETL values for each LDA, including changes to MAAC, COMED, and ATSI.
ESAI’s updated forecast, reflecting the PJM BRA parameters and rule changes, is discussed in the latest issue of Capacity Watch published recently to our subscriber base. For more information about our Capacity Forecasts, see our Capacity Market Coverage.
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