CPV Retail Report: July 2023

PJM Regulatory Review

Source: PJM Interconnection, 20230511_PJM Zone Map

Capacity Market Reform

PJM revisiting capacity market construct ​

Market design scrutiny to include:

  • Appropriate capacity levels ​
  • Qualifications ​
  • Performance requirements ​
  • Offer caps ​

FERC filing expected Q3 2023 ​

Base Residual Auction (BRA) ​

Request for delay
FERC acceptance of PJM request issued on June 9th

  • 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
  • PJM announced a small delay in the interconnection process reform transition date to 7/10.
  • Load Analysis Subcommittee focused on Large Load Adjustments to the PJM Load Forecast (particular focus on recent data center growth in the Dominion region)
  • PJM provided an overview of the Black Start 2023 RFP.

Market Drivers

Energy Market Update

  • Market has rallied on extreme heat but is still facing a significant storage overhang.
  • Buyers have stepped in on each decline towards $2.00/MMBTU on the NYMEX.
  • Renewable delays continue to support power through 2025/2026.
  • Natural gas drilling rigs continue to decline as Haynesville has now dropped another 6 rigs.
  • Low gas prices increase gas generation which is now approaching 50 BCF/D.
  • LNG export terminal maintenance ends and pushes exports back towards 14 BCF/D.
  • Oil prices awaiting direction based on supply cuts and return of Chinese demand.

Potpourri Comments

West Virginia Senator Joe Manchin received some welcome news for his home state as the permitting of Mountain Valley Pipeline was finally approved which should see construction completed into Q4/2023. The impact in Zone 5 on Transco could see PJM assets in the PEPCO Zone receive lower priced supplies in the currently highly constrained area. Additional pipeline expansions on Transco (Regional Energy Access) will allow more supply to flow in Zone 6 from NE Pennsylvania. The forward market is pricing in significant discounts to Zone 6 NNY versus TETCO M3 for the upcoming winter which may not come to fruition in the cash market. This is creating some opportunities to lock in power prices at advantageous discounts at your convenience. For these and other opportunities please reach out to your CPV Retail Representative and set up a time to review with the market experts.

Forward Pricing

Renewable Energy