Duquesne Light has announced it wants to drop out of PJM and join the neighboring Midwest ISO, citing the high costs emerging from PJM’s capacity market as their motivation. The capacity market is called the “RPM” market after the “reliability pricing model” which serves as the underlying pricing mechanism. Duquesne has filed a request with FERC seeking a Commission order directing PJM to exclude the utility from the next running of the RPM auction, scheduled to begin next week. The Energy Legal Blog presents a few more details, and notes a few other cases in which utilities are eying the exits.
The Pittsburgh Tribune-Review made brief mention of the request in a column of energy-related notes:
The Downtown-based utility joined PJM in 2005, but said the organization’s price changes since then would increase its costs in coming years. “We don’t feel that is what is best for customers,” spokesman Joe Vallarian said. … The company said it may join another grid operator based in Indiana; it wants to avoid costs related to the PJM auctions.
“FERC should deny Duquesne’s complaint on the grounds that Duquesne remains a signatory to PJM’s reliability agreement and, contrary to what Duquesne has claimed, there is no credible information that the utility will not be in PJM in 2009,” said John E. Shelk, President and CEO of EPSA.
EPSA is the trade association representing the “competitive power supply industry,” i.e. non-utility generators, and its members will be net recipients of payments from the PJM’s RPM markets. Duquesne Light, on the other hand, as predominantly a wires-and-retail power services company will be net payers into the RPM markets.