Electric Power Supply Association Says Price Signals May Resolve Recent Market Misalignments Exacerbated by State Policies and Mandates
FOR IMMEDIATE RELEASE: July 30, 2024
CONTACT: Christina Nyquist | 603.930.8818 | cnyquist@epsa.org
WASHINGTON, D.C. – Today the PJM Interconnection released the results of the Base Residual Auction (BRA) for the 2025/2026 Delivery Year (DY), providing initial price signals needed to finance reliable power generation for 65 million Americans in 13 states and the District of Columbia.
The BRA is conducted to allow for the procurement of power generation resource commitments to satisfy the PJM region’s electric power needs.
In response to the release of PJM BRA results, EPSA President and CEO Todd Snitchler issued the following statement:
“While there is still work to be done, these price signals recognize the situation PJM faces and should begin to incentivize the investment needed to deliver a reliable system in PJM and in other U.S. markets. Reliability watchdogs, regulators, policymakers, and PJM itself have been sounding the alarm that the misalignment of power resource retirements and additions poses a serious reliability risk to the grid – especially in the face of rising demand spurred by data center and manufacturing growth among other factors like electrification, extreme weather, and policy choices.
While encouraging, the results of one auction do not a establish a trend; however, this auction does suggest that the initial market reforms instituted by PJM to address the misalignment issue had a positive impact.
When working well, competitive electricity markets are the best mechanism to maintain reasonable wholesale power costs while facilitating the entry of new, innovative technologies. Adequate compensation, however, is required for the resources that keep the lights on to be available when they are needed. A reliable system isn’t free, but competitive electricity markets continue to remain the best means to deliver a reliable power system without unduly burdening customers with unnecessarily higher costs.”
The auction procured 153,883 MW of capacity, representing a 18.5 % reserve margin (down from 20.4% in the prior auction) compared with 150,640 MW in the prior auction, with the RTO’s Resource Clearing Prices (RCP) for the rest of RTO at $269.92/MW-day compared to $28.92/MW-day in the prior annual capacity auction. Of note, approximately 6,600 MW of generation did not offer or have must-offer exceptions into this BRA compared to the prior auction, continuing a three-year trend of decreasing amounts of megawatts offered.
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The Electric Power Supply Association (EPSA) is the national trade association representing America’s competitive power suppliers. EPSA members provide about 150,000 MW of reliable and competitively priced electricity from environmentally responsible facilities using a diverse mix of fuels and technologies including natural gas, wind, solar, hydropower, geothermal, storage, biomass, and coal. EPSA seeks to bring the benefits of competition to all power customers. Learn more at www.epsa.org and connect with us on LinkedIn and Twitter @EPSAnews.
