The US Federal Energy Regulatory Commission on Tuesday approved PJM Interconnection's request to waive its $1,000/MWh offer cap through the end of March.
The request came after vicious winter weather in January in the Northeast and Mid-Atlantic.
Under its approved request, PJM will waive its offer cap for cost-based day-ahead energy offers for generation resources. FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a "concrete problem," would not harm third parties and would be limited in scope.
PJM made the requests in response to spikes in natural gas prices and extreme winter weather experienced last month.
Speaking at the National Association of Regulatory Utility Commissioners meeting in Washington, PJM President and CEO Terry Boston said that the cold weather brought by the polar vortex last month contributed to PJM having the highest energy month for a winter month. The region set an all-time winter peak January 7 and set eight of its top 10 winter peaks during the month, Boston said.
In its proposal to FERC, PJM said the waiver was necessary to ensure that generation offers reflected marginal costs of the seller. PJM also said the waiver would, if approved, supersede FERC's January 24 approval of PJM proposal to offer make-whole payments for certain generators submitting above the offer cap.
But in comments on the proposal, consumer advocates from Delaware, Indiana and other states, along with industrial customers in PJM, said PJM's request was not sufficiently limited in scope and did not address a concrete problem that needs to be addressed. They also argued that approving the waiver would have a negative impact on consumers.
But FERC largely rejected such concerns in its approval, finding the waiver as proposed was limited given that it would run only through March 31 and applied to only a subset of resources.
