Core Viewpoint - PJM's board has initiated a "reliability backstop" capacity procurement to secure additional power supplies due to a recent auction falling short of its reliability target by approximately 6.6 GW, with expectations of further developments in the capacity market [4]. Group 1: Capacity Procurement and Market Reforms - The board views the backstop auction as a temporary measure, but analysts predict it may lead to more significant changes in the market [1]. - PJM's board has directed staff to explore cost assignment mechanisms for utilities that are short on power supplies due to load growth [2]. - The board emphasized that the reliability backstop procurement should serve as a transitional measure while working towards increasing supply to meet unprecedented demand growth [3]. Group 2: Political and Regulatory Context - The Trump administration and governors from PJM's service states called for an emergency auction and a price collar extension on capacity auctions, highlighting political involvement in energy markets [6]. - Analysts noted that this political intervention could provide a short-term supply fix while allowing PJM to implement market reforms to mitigate customer bill impacts [7]. Group 3: Market Structure and Future Considerations - The board is considering deeper market reforms, indicating that the current capacity market framework may not be sufficient to incentivize new resource development [11]. - As of early October, only 2.1 GW of new generation had come online in PJM for 2025, with a significant portion of current construction projects either suspended or in early stages [13]. - The board has directed PJM staff to assess how energy, reserve, and capacity markets can evolve to provide appropriate investment and performance incentives [14].

This story was originally published on Utility Dive. To receive daily news and insights, subscribe to our free daily Utility Dive newsletter. ISO New England aims to overhaul its capacity auction process by buying capacity a month ahead of time instead of three years in advance, according to a proposal filed with the Federal Energy Regulatory Commission on Dec. 30. The proposal to switch to a “prompt” capacity auction framework in June 2028 would bring a range of benefits to New England, including making ...

Core Insights - The Edison Electric Institute (EEI) is advocating for reforms in the PJM Interconnection's capacity market to address rising capacity prices and ensure adequate power supplies amid increasing demand, particularly from data centers [3][5][6] - Utility companies like Exelon, FirstEnergy, and PPL Corp. are seeking to re-enter the generation business in states where they were previously required to divest their power plants [4] - EEI emphasizes the need for utilities to have a more central role in decision-making within PJM to enhance reliability and reduce cost uncertainty for ratepayers [5][6] Group 1 - EEI's letter highlights concerns over the effectiveness of PJM's capacity market in meeting rising demand despite significant increases in capacity prices in recent auctions [3][6] - The organization calls for a reduction in reliance on the capacity market and suggests that states and utilities should take a more proactive approach in power supply procurement [6] - EEI president Drew Maloney stresses the importance of timely decision-making among stakeholders to address reliability risks and meet customer needs [5][6] Group 2 - Stakeholders owning grid assets must drive outcomes, and the decision-making process needs to be expedited to avoid exposing customers to reliability risks [6] - The letter from EEI suggests exploring various methods to build generation capacity, including regulated generation and improved self-supply frameworks [6]