Understanding PJM’s Capacity Performance
As the second largest component of electricity supply cost, it is important for customers to understand why PJM’s Capacity Performance is important and how it will impact electricity supply prices going forward.
On June 10, 2015, the Federal Energy Regulatory Commission (FERC) approved PJM’s Capacity Performance proposal to reform the capacity markets. The reform established a new capacity product called “Capacity Performance” which is designed to strengthen the electric grid reliability in PJM.
What to Expect
Under the approved Capacity Performance rules, PJM has added a “performance payment” to the final adjusted Zonal Capacity Price, and the results of these recent auctions indicate higher capacity costs for all consumers in the PJM region. The new Capacity Performance rules will affect all future capacity years starting with the 2016/ 2017 capacity year which begins on June 1 and goes through May 31.
It is important to understand that the electric utilities in PJM are also subject to collecting the same capacity costs as retail electric providers and the increased capacity costs are not avoidable by returning back to the electric utilities for generation/supply service. The higher capacity costs will be included in rate cases that the utilities are expected to file with the public utility commissions.
Energy Me Customers in the PJM Service Area
If you are a current Energy Me customer in the PJM service area (DC, DE, IL, MD, NJ, OH and PA) your contract price with Energy Me will increase due to FERC ruling with changes in capacity and be reflected in your electricity supply price effective June 1, 2016.