The Federal Energy Regulatory Commission has approved capacity market rule changes for the next two PJM Interconnection capacity auctions "to address reliability and cost-effectiveness as PJM and stakeholders collaborate on longer-term solutions to the imbalance of electricity supply and demand," PJM said.
For the upcoming auction in July 2025 (for the 2026/2027 Delivery Year) and the December 2025 auction (for the 2027/2028 Delivery Year), the Feb. 14 FERC order accepted PJM’s proposal to recognize the contribution of qualifying Reliability Must-Run units that may be reasonably expected to perform during capacity emergencies.
Reliability Must-Run or RMR units are those generator units whose owners have announced their intention to retire the units, but agree to keep them in operation for a limited time while PJM addresses reliability issues that would be caused by their deactivation.
The qualifying RMR units, which have already negotiated compensation agreements to cover the additional period they agreed to run beyond their intended retirement date and are expected to perform during capacity emergencies, will be modeled in the capacity auctions as price-takers.
Longer term, PJM and stakeholders will consider the development of a pro forma RMR agreement with standardized terms and conditions that would require RMR resources to run during capacity emergencies.
RMR units PJM expects to include in the capacity auctions for the 2026/2027 and 2027/2028 Delivery Years are Wagner Units 3 and 4 and Brandon Shores Units 1 and 2, pending completion of all regulatory requirements. Both generating facilities are located in Anne Arundel County, Maryland.
FERC also approved PJM’s proposal to maintain the gas-fired combustion turbine generation unit as the Reference Resource for the same auction cycles. The switch from a gas-fired combined cycle turbine unit, as previously planned, will ease consumer rate impacts, reduce market volatility and still meet resource adequacy targets.
Meanwhile, PJM and stakeholders will complete the next periodic review. That analysis, FERC noted, will reflect conditions PJM is facing, including a tighter supply-demand balance with potential for capacity shortfalls.
In its order, FERC also accepted PJM’s proposals to:
- Establish a uniform Non-Performance Charge Rate.
- Codify the PJM Tariff to provide clarity to market participants that being exempt from the must-offer requirement is not a defense against claims of market power.
- Remove reactive power compensation to resources, per FERC order, beginning with the 2026/2027 Delivery Year.
