Capacity Prices Rise on the Delmarva Peninsula
Capacity Prices Rise on the Delmarva Peninsula
The PJM Interconnection is the power grid operator in the Mid-Atlantic, an area that covers 65 million people in all or part of 13 states and the District of Columbia. PJM is broken up into “control zones,” one of which is the DPL zone.
The DPL zone covers all of the state of Delaware and also the Eastern Shores of Maryland and Virginia. Within the DPL zone, the area south of the Chesapeake & Delaware Canal is referred to as “DPL-South.”
As a part of ensuring reliability, PJM gains commitments from power generators to be available and generate electricity when needed in exchange for making periodic capacity payments to those generators. PJM runs auctions to facilitate this capacity market. The cost of capacity is ultimately borne by end users.
PJM conducts annual capacity auctions for future delivery years. Delivery years run from June 1 to May 31. PJM is regulated by the Federal Energy Regulatory Commission (FERC).
During February 2023, PJM held a capacity auction for the 2024/2025 delivery year. This auction resulted in an abnormally high clearing price for DPL-South. PJM then proposed, and FERC approved, a retroactive change to the auction results to set a lower capacity price for DPL of $90.64/MW-day.
Earlier this month, the Third Circuit Court of Appeals vacated PJM’s revision and ordered it to revert to the original results of the auction. Starting June 1, 2024, this increase will result in capacity costs for the 2024/2025 delivery year increasing by more than an estimated $100 million in total for customers in the DPL zone. Final 2024/2025 capacity prices for DPL and adjacent zones are as follows:
If you have questions about how this will affect your electricity bill or how you might manage your energy supply costs, please contact us.
The Avalon Advantage – Visit our website at www.avalonenergy.us, call us at 888-484-8096, or email us at info@avalonenergy.us.
Evelyn Teel contributed to this article.
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