PJM is delaying its next capacity auction as it plans to review the details of market design after complaints raised on the last auction in June that saw clearing prices reaching more than $400/MW-day in BG&E and Dominion territory. This massive rise in generation prices crowds out much-needed investments in transmission and distribution due to customer affordability concerns. Wonder what else can one expect with supply choked due to long interconnection queues (286 GW in queue compared to 135 GW that cleared the auction), while demand forecasts keeps growing. PJM is accused of sleepwalking in an industry under transition needing a lot more capacity. This is not just a PJM problem but a structural issue with the RTOs/ISOs — inability to support growth, lack of resources, budgets, non-profit status, and lack of performance incentives to deliver the outcomes needed. In contrast, the U.K. after operating the National Grid ESO has formed the National Energy Systems Operator to make planning more effective. It remains to be seen how well it functions, meanwhile, the U.S. structural barriers seem too hard to overcome. At a minimum, utilities can take a more proactive role by placing the customer at the heart of their agenda. This does not come naturally after years of operating in a low growth regulated environment, but if customers interests – from affordability to reliable supply are used a guiding principle – it will provide more clarity in making action plans in a timely manner.
(Photo source: Chatgpt)
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