CPV Retail Report: June 2023
PJM revisiting capacity market construct
Market design scrutiny to include:
- Appropriate capacity levels
- Performance requirements
- Offer caps
FERC filing expected Q3 2023
Request for delay
FERC acceptance of PJM request issued on June 9
- 2025/2026 BRA delayed until ~June 2024
- Subsequent auctions held every 6 months thereafter
Additional Agenda Items
- Response to Pennsylvania Governor Shapiro’s letter included recognition of the need for interconnection reforms to work over time while reaffirming the importance of competitive capacity markets for reliability maintenance.
- FERC approved PJM’s request to initiate settlement discussions with the 13 separate entities who filed Winter Storm Elliot complaints. Litigation will continue through this process and FERC will remain silent during settlement negotiations.
- Electric/Gas coordination task force ongoing
- Market remains in contango with diminished volatility
- Buyers stepping in aggressively as NYMEX approaches $2/MMBtu
- Renewable delays continue to support power through 2025
- Natural gas drilling activity closely watched as rigs are deactivated
- Low gas prices increase gas generation (coal to gas switching)
- LNG export growth could arrive early 2024 and support prices
- Oil prices also continue to be put under pressure
Diminished capital investments in upstream oil and gas development leading to possible commodity bull cycle starting later in the year. ESG factors contributing to further resource development challenges and cost increases (material inflation) for oil, natural gas, and various power generation projects. Things likely to continue to get more expensive! Short term power prices remain subdued but likely will turn with this commodity cycle and summer heat. Be a strategic buyer and call your trusted CPV Retail representative to discuss long term procurement strategies.