PJM wants to delay capacity auction after environmentalists' complaint
Adds new details and context throughout
Oct 11 (Reuters) -PJM Interconnection plans to delay its next annual capacity auction by about six months while the largest U.S. grid operator addresses a complaint brought by environmental groups, the biggest U.S. grid operator saidin a letter on Thursday.
PJM's most recent auction, which resulted in payments to power plants in its system that were 833% higher than the previous year, set off concerns about spiking power bills.
That promptedthe Sierra Club, Earthjustice and other environmental groups to file a complaint last month with the Federal Energy Regulatory Commission, alleging thatPJM drove up capacity prices partly by unjustifiably excluding certain power plants.
The grid operator makes capacity payments to power generators to run during times of high demand and the payouts, which are determined each year, depend largely on PJM's estimate of available power supply and demand.
The plants excluded from the auction have contracts, known as RMR agreements, to operate beyond their planned retirement dates. Including these plants would have reduced capacity costs by approximately $5 billion annually over the next three years, the complaint by environmental groups says.
The complaint and another letter sent by the Organization of PJM States, called for RMR agreements to be included in the next auction.
PJM said it plans to ask the FERC to postponeits upcoming auction when it answers the complaint.
"PJM does not take auction delay lightly," the letter said. "However, this approach improves market certainty and provides a path for resolution."
If FERC declines the request, the auction will proceed in December, PJM said.
Potential changes to the market structure could negatively impact PJM-operating Independent Power Producers,analysts at Barclays and Jefferies said.
IPPs Talen Energy TLN.N, Constellation Energy CEG.N, and Public Service Enterprise PEG.N were down between 0.5% and 5% on Friday.
However, this could benefittransmission and distribution utilities and may reduce tightness in the upcoming auction, Barclays added.
Reporting by Seher Dareen in Bengaluru and Laila Kearney in New York; Editing by Tasim Zahid and Deepa Babington
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