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PJM Says Reliability Costs Fell on Eastern Grid in Auction

By: Bloomberg |

PJM Interconnection LLC, which runs the largest U.S. power grid, said consumer costs to insure adequate generating capacity in the year starting June 2016 will drop 56 percent amid competition from new plants fueled by natural gas.

Payments to power-plant owners will decline to $59.37 a megawatt per day from $136 in the previous 12-month period, based on the results of an annual PJM auction held May 13 through May 17.

“Prices were generally lower than last year’s auction due to competition from new, gas-fired generation, low growth in demand because of the slow economy and increased imports from other regions, primarily to the west of PJM,” Andrew Ott, senior vice president of markets with PJM in Valley Forge, Pennsylvania, said in an e-mailed statement.

The grid secured 169,160 megawatts of power supplies, up from 164,561 megawatts the previous year. PJM’s record demand peak is 163,848 megawatts. The reserve margin, representing supplies in excess of projected needs, expanded to 21.1 percent from 20.2 percent.

The auction established separate capacity prices for some of PJM’s most densely populated regions, where local transmission bottlenecks limit shipments from other parts of the grid.

New Jersey

The price for Public Service Enterprise Group Inc. (PEG)’s utility territory in Northern New Jersey was set at $219 a megawatt up from $167.46 a year earlier. Mid-Atlantic customers from the rest of New Jersey to Washington will pay $119.13, down from $167.46.

The amount of new power-plant capacity selected in this auction rose to 5,463 megawatts, exceeding last year’s record of 5,346 megawatts, PJM said. Import capacity from outside the PJM region more than doubled to 7,483 megawatts.

The amount of demand-response services, which group electricity customers and commit to curtailing their usage when demand is strongest, fell to 12,408 megawatts from 14,833 megawatts.

PJM’s grid serves 60 million people across 214,000 square miles from New Jersey to North Carolina and Illinois. A megawatt is enough electricity to power 800 to 1,000 homes, the grid operator said.