Capacity prices cleared PJM Interconnection LLC’s (“PJM”) most recent auction for the “rest of RTO” region of PJM at $76.53 per megawatt-day (“MW-day”) for the PJM delivery year beginning June 1, 2020. The “rest of RTO” region represents all of the unconstrained zones of PJM and makes up the majority of the PJM footprint. This is the second consecutive auction where capacity prices have declined in the unconstrained PJM zones, while at the same time PJM was implementing more stringent capacity rules under the “capacity performance product.” The clearing price for the 2018/19 and 2019/20 delivery years was $164.77/MW-day and $100/MW-day, respectively.
For the first time, the Duke Energy Ohio and Kentucky zone (“DEOK”) was constrained with capacity clearing at $130/MW-day. The Mid-Atlantic Area Council (“MAAC”), Eastern MACC (“EMAAC”), and COMED Load Delivery Areas (“LDAs”) were also constrained with capacity clearing at $86.04, $187.87, and $188.12/MW-day in those LDAs, respectively. The higher price in the EMAAC LDA was driven in part by 2,300 MW of generation retirements. The MAAC LDA includes Potomac Electric Power Company, Baltimore Gas and Electric Company, Metropolitan Edison Company, Pennsylvania Electric Company and PPL Electric Utilities. The EMAAC LDA is a subzone of MAAC and is comprised of Atlantic Electric Company, Delmarva Power and Light Company, Jersey Central Power and Light Company, PECO Energy, Public Service Electric and Gas Company, Rockland Electric Company.
In addition to decreased capacity prices, PJM cleared a record high reserve margin of 23.3%, representing a 6.7% increase over PJM’s target reserve margin of 16.6%.
Overall the supply and demand balance in PJM remained largely unchanged from the prior auction, with a 2,196.7 MW reduction of cleared capacity (165,109.2 MW vs. 167,305.9 MW) offset by a 2,800 MW decrease in PJM’s reliability requirement driven by lower forecasted peak demand (153,915 MW vs. 157,188 MW). Notable changes for supply side resources clearing the auction included year-over-year increases in new generation (2,389.3 MW), capacity imports (121.3 MW), and energy efficiency (195.1 MW), and uprates to existing generation (434.5 MW). Notable year-over-year decreases included a reduction of cleared demand responses (2,527.6 MW), wind (81.3 MW), and solar capacity resources (209.7 MW).
PJM will conduct up to three additional incremental capacity auctions for the delivery year beginning June 1, 2020. However, in the past the incremental capacity auctions have had little impact on the overall capacity price.