PJM drops plan to supplement capacity next winter

OREANDA-NEWS. The PJM Interconnection has dropped efforts to procure extra capacity for winter 2015-16 as it concluded it would have more capacity than originally expected and after federal energy regulators rejected the idea.

The operator of the largest US power grid last year considered procuring as much as 10,000MW in additional capacity for winter 2015-16 in response to grid reliability concerns prompted by poor performance of generators in winter 2013-14. But those plans were scaled back and have now been dropped entirely, in part because next winter no longer appears so dire.

PJM West peak winter 2016 assessments are \$61/MWh, climbing down from a high of \$74/MWh reached last year.

PJM yesterday confirmed nearly 500MW of coal capacity it thought might have to deactivate to comply with federal limits on air toxics will stay operational for another year, after the plants received waivers to keep operating. The plants are the East Kentucky Power Cooperative's 150MW Dale units 3 and 4 power plant and Dominion's 323MW Yorktown units 1 and 2 in Virginia.

PJM will be able to retain 2,000MW of capacity it would have had to release from capacity obligations under its tariff after receiving a waiver from the Federal Energy Regulatory Commission (FERC) last week. PJM also now expects 1,800MW of future generating capacity will come on line earlier than expected, with some units providing energy for part of the 2015-16 winter season.

PJM yesterday said it reserves the right to try to procure extra capacity for next winter, but doing so would require making another tariff filing. FERC last week rejected the grid's initial proposal to have the authority to procure additional capacity after it found the plan was "unreasonably vague and ill-defined."

PJM did not elaborate on what could cause it to revive its capacity procurement plan, but legal uncertainty about the future of its 11,000MW of demand response resources is likely weighing heavily on its plans.

The US Supreme Court will decide in the next few months whether to take a case determining the role of demand response in wholesale power markets.