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EPSA Files Comments on Proposed Changes to PJM's RPM Construct
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) today filed comments with the Federal Energy Regulatory Commission (FERC) to address changes proposed by the PJM Interconnection to its forward-capacity market Reliability Pricing Model (RPM). RPM is a pricing system that was developed by regulators and stakeholders to ensure there is an adequate and reliable supply of electricity for PJM's 51 million customers, who reside in 13 states and the District of Columbia.
In its comments, EPSA urged the Commission to consider proposed changes to RPM that further the goal of ensuring the right long-term sustainable price to promote reliability and infrastructure investment, rather than simply achieving the lowest short-term price. Critically important elements of a successful capacity market include locational pricing; an accurate cost of new entry (CONE); and comparable treatment among generation, energy efficiency and demand side resources in terms of rules, requirements and charges.
In support of such changes, EPSA cited a detailed report by an independent consulting firm that issued findings and recommendations on PJM's capacity markets in July 2008. The Brattle Report filing was followed by an extensive stakeholder process that resulted in a December 2008 filing with FERC regarding changes to RPM. EPSA commended the stakeholder process. EPSA further supported the Brattle Report's overarching finding that RPM is working as intended, "with RPM auctions of capacity for 2007 through 2012 producing considerable enhanced reliability for customers through additional electricity generation, the realization of substantially increased demand response, and a continued trend in the reversal of planned retirement of existing generating facilities."
EPSA President and CEO John E. Shelk said, "Given that the cost of new entry is the critical element on which all other prices hinge in RPM, it is imperative to the long-term sustainability of the RPM construct that this value is calculated accurately. If CONE is underestimated, there is increased risk that generation and demand response will be insufficient, and reliability threatened. The bigger picture underscores the necessity for CONE values to reflect the current, true costs of investment in the auction process. Properly updating CONE is critical to sending accurate price signals to the market, furthering the Commission's goal of promoting long-term reliability and facilitating investment that ultimately benefits consumers in PJM."
EPSA also urged the Commission to ensure comparability of rules and requirements for generation, demand-side, and energy efficiency. The proposal properly includes revisions to enhance energy efficiency and demand-side resources participation, but "there must be assurances through clear and comparable requirements that all demand-side resources are strictly accountable and will be available to perform at the time committed to ensure reliability, just as they apply to cleared generation resources," EPSA said.
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.