FERC's June 29 decision throwing out the rules for PJM's capacity market is the product of years of wrangling over the effect of state energy subsidies on market functions. Gas and coal generators argue state policies that benefit other resources, like renewables or nuclear plants, suppress the market clearing price for the fossil generators, lowering their revenues. In response to those concerns, PJM in March proposed two capacity reform options at FERC — a price floor and a two-part capacity auction that would separate out subsidized resources. FERC's decision sided with the generators, finding the state policies improperly altered market prices. However, the commission also rejected both of PJM's proposed solutions, ordering it to design new market rules that would allow subsidized resources to opt out of the capacity market altogether. That solution would have to come quickly to be in place in time for PJM's next capacity market auction in May, but FERC assured market participants it would render a final decision in early January to provide time to plan the auction. To keep that schedule, FERC ordered PJM to file its revised plans by Aug. 28 in a special proceeding called a "paper hearing." PJM's CEO initially told Utility Dive that the grid operator would respond to FERC's decision within that timeframe, but late last month PJM states asked FERC for a deadline extension, and the grid operator filed in support of the request two business days later. If FERC grants that deadline extension, PJM said in its filing that it would need to also delay its auction to "allow stakeholders, PJM, and the Commission more time to develop and establish the replacement rules," and provide "the necessary timeframe to conduct the auction in an orderly manner once the replacement rules are known." The grid operator pushed FERC to make a decision quickly, writing that "stakeholders have suggested to PJM, and PJM agrees, that if the BRA [Base Residual Auction] is to be delayed, auction participants should have notice of that delay at the earliest practicable date." FERC's invalidation of PJM's market rules has stirred consternation in the mid-Atlantic electricity market, the nation's largest. State members filed last month for a rehearing of the decision at FERC, saying the federal regulators overstepped their jurisdiction and misjudged the cause of low wholesale market prices.
Pennsylvania -based PJM Interconnection has asked the Federal Energy Regulatory Commission ( the Federal Energy Regulatory Commission ) for permission to delay its proposed capacity market auction in March . The move comes as the Federal Energy Regulatory Commission secured an extension for time to submit new market rules, set to be submitted after FERC rejected PJM 's proposed reforms of a price floor and a two -part capacity auction in March . PJM said a delay to the capacity auction would give the company, stakeholders and the Commission "more time to develop and establish the replacement rules".