This blog highlights three recent FERC filings expedited by PJM and its importance to MAREC Action members.
Background
PJM employs a stakeholder process called the Consensus Based Issue Resolution (CBIR) Process to collaboratively develop solutions with input from stakeholders. The CBIR process operates on the principle that collective input leads to better outcomes. Although this approach can be time-consuming and complex, it often results in solutions with broad stakeholder support. However, PJM has chosen to bypass the CBIR process and expedite three FERC filings, as outlined below.
Reliability Resource Initiative
PJM introduced the RRI at the Planning Committee on October 8th (link to presentation), citing growing concerns about resource adequacy. These concerns stem from factors such as increasing load growth; developer challenges related to siting & permitting, supply chain considerations, and financing; accelerated retirements; and the “lower reliability value of resources in the interconnection queue as measured by the Effective Load Carrying Capacity (ELCC).” On October 25th, during the Load Analysis Subcommittee meeting, PJM presented data on recent large load additions, showing that demand growth is outpacing the projects in the PJM 2024 Load Forecast. PJM also highlighted the capacity prices in the 2025/2026 Base Residual Auction (BRA), claiming that the results reflect these supply-demand challenges. While there may be some truth to this, the resource mix in the interconnection queue does not impact BRA clearing prices.
PJM RRI Proposal
PJM presented the initial proposal at a special Markets and Reliability Committee Meeting on November 7th and the final proposal at the Members Committee meeting on November 21st. The proposal aims to expand Transition Cluster Two (TC2) by allowing up to 50 additional projects, that meet certain criteria, to enter TC2. These projects could include those already in Cluster One, entirely new projects, or uprates and additions, such as storage integrated with existing wind or solar projects.
PJM indicated that TC2 currently has 96 GW of capacity, which they plan to process between mid-2025 and Q3 2026. Cluster One already contains 61 GW of applications. However, based on early October queue data, the total requests for each cluster, measured in Maximum Facility Output (MFO), appear to be closer to 150 GW.
PJM proposes to use a weighted formula to rank the projects that apply. The formula is as follows:
From: PJM, Reliability Resource Initiative MC Notification, November 21, 2024, page 7.
UCAP, or Unforced Capacity, is defined by PJM as the installed capacity rated under summer conditions that is not, on average, subject to forced outages or de-ratings. ELCC, or Effective Load Carrying Capability, is a modeling approach used to assess a resource’s reliability value during peak load conditions.
A formula heavily weighted toward UCAP inherently favors traditional resources like nuclear, coal, and combined-cycle natural gas, giving them significantly higher rankings than other resource types. Under the RRI proposal, facilities like the Three Mile Island (TMI) nuclear plant could effectively bypass the queue. Without this proposal, TMI would need to wait for the current interconnection transition cycle to conclude, entering the queue at the back of the line and delaying its study by several years. Securing an RRI position, however, would allow TMI to be studied in the next cluster and potentially be operational much sooner.
Adding so many megawatts to TC2 could seriously impact existing projects that have waited years to complete their studies. This addition risks causing further delays and higher costs for these projects. PJM has done little long-term transmission planning in decades, leaving transmission capacity limited. Even if PJM processes all projects, including those under the RRI proposal, and issues Interconnection Service Agreements, there is no certainty these megawatts will connect to the grid by the decade’s end due to likely network upgrade requirements. PJM should find ways to ensure necessary transmission upgrades are in place to support the resources needed for growing demand.
Capacity Market Changes
The second FERC filing focuses on the capacity market. PJM had planned to change the reference technology for the Variable Resource Requirement (VRR) curve from a combustion turbine (CT) to a combined cycle (CC) but now intends to stick with the CT. Switching to a CC would have caused the net CONE value in several zones to drop to zero, making the demand curve steeper in those zones and increasing price volatility. PJM also proposes including Reliability Must Run (RMR) units as supply resources. The exclusion of RMR coal plants in Maryland’s Baltimore Gas & Electric (BGE) zone from the previous BRA supply stack was a major factor in the price spike in that zone. These changes are expected to stabilize capacity prices in the upcoming BRA.
MAREC Action is pleased that PJM has decided not to change the must-offer exemption for variable resources at this time. PJM recognizes that this change would require rethinking the capacity market design and penalty structure. However, PJM has stated it will address this issue soon. We encourage PJM to consider a sub-annual market design when evaluating changes to the must-offer exemption.
Surplus Interconnection Service (SIS)
The third filing is a tariff change to the SIS language. PJM is proposing to remove the language regarding impacts to customers in the queue. Specifically:
From: PJM, Reliability Resource Initiative MC Notification, November 21, 2024, page 13.
This is a change in the right direction; however, the tariff will still allow PJM to reject SIS applications if there is a “material impact on short circuit capability limits, steady-state thermal and voltage limits, or dynamic system stability and response.” Material impact is not defined so the devil will be in the details. MAREC Action urges PJM to release a definition of material impact, possibly including a preview of the relevant manual language.