OREANDA-NEWS. The PJM Interconnection wants to delay its next forward capacity auction by one to three months to give federal energy regulators a chance to review a major market overhaul that would penalize generators that fail to go on line when dispatched.

The grid operator requested the delay yesterday after the Federal Energy Regulatory Commission (FERC) last week unexpectedly asked for more information about PJM's "capacity performance" proposal, rather than deciding if it should go into effect in time for a capacity auction next month. Coal and nuclear resources were expected to get the greatest benefit from higher capacity prices caused by the proposal.

PJM plans to respond to FERC's information request this week. But even if FERC quickly decided whether to approve the changes, that would not provide enough time to put them in effect before the start of PJM's forward capacity auction on 11 May. The grid operator as a result wants to delay the auction by 30 to 75 days after FERC decides on the capacity performance proposal.

PJM filed its waiver request to figure out soon if it should run the capacity auction with no market reforms, or if it makes more sense to wait for an actual decision on the capacity performance proposal.

"Effectively, what we are doing is trying to get a signal from FERC on which approach to take," PJM markets executive vice president Andy Ott said today during a meeting of its market implementation committee.

The grid operator now expects the auction to start in June or July, with the latest possible start of the auction on 11 August. The delay likely will prove controversial because market participants rely on the auction to decide whether to start construction on new power plants or improve the performance of existing resources. The timeline for new power plants can be three-six years. The forward capacity auction this year covers the June 2018-May 2019 period.

The request is the first time PJM has attempted to delay the auction, which has run on time for the past eight years and last year paid \$7.3 billion to procure enough capacity for the 2017-18 delivery year. The grid operator said under almost all other circumstances it would not ask for the delay but decided to do so because of the importance of the pending market reforms.

PJM said it would run the auction on time without any reforms if FERC declines to approve its delay request by 24 April. But the grid operator said that FERC should deny the request to delay the auction to avoid creating uncertainty if the commission does not expect it can reach a decision on capacity performance by mid-June.

PJM's capacity performance proposal would impose stiff penalties on non-performing resources, creating an incentive for power plants to weatherize equipment and pay for firm fuel.