Consumer groups target contested PJM capacity market demand curve in new lawsuit

摘要

A coalition of consumer advocacy agencies and the Sierra Club on June 15 sued the Federal Energy Regulatory Commission over a pair of orders they allege will cost ratepayers in the PJM Interconnection possibly billions of dollars annually. At issue is PJM's variable resource requirement, or VRR, curve, an administrative pricing mechanism that the grid operator uses to clear its multibillion-dollar capacity market. The D.C. Circuit Case is Delaware Division of the Public Advocate v. FERC (No. 20-1212). Following a quadrennial review, PJM in October 2018 proposed a set of revisions (FERC docket ER19-105) to the curve but sought to retain a greenfield gas-fired combustion turbine as the reference resource used to determine what is known as the net cost of new entry, or Net CONE. Net CONE represents the estimated cost to build and operate a new generator in a specific area minus the revenue it could expect to earn in the energy and ancillary services market. PJM's proposal drew a protest from the Sierra Club and consumer advocacy agencies in Delaware, Maryland, and the District of Columbia, who noted that analysis by the Brattle Group — an independent consulting firm hired by PJM — showed that using a combustion turbine as the reference resource would produce a VRR that will over-procure capacity. Specifically, the coalition noted that Brattle's analysis showed that using a combined cycle gas-fired plant as the reference resource under various parameters would have saved PJM's consumers between $200 million and a little more than $2 billion in its most recent capacity auction.