Ron Norman, an energy industry expert at PA Consulting Group, discussed his views on the capacity markets auction by U.S. electric grid operator PJM.
The article quoted his forecasts on the Regional Transmission Operator (RTO)-wide capacity price as being in the $160-$190 per megawatt-day range.
In an interview, Ron said that he expected most of the PJM grid would clear at the RTO price except for FirstEnergy Corp's American Transmission System Inc (ATSI) zone in Ohio.
He is quoted as saying that “the ATSI zone would likely clear at a premium north of $250 per MW-day in large part because the FirstEnergy region could see the retirement of several mostly older, coal-fired power plants, which will tighten reserve margins in that area.”
Ron discussed the issue that, in part to comply with stricter federal environmental rules, energy companies have asked PJM for permission to retire about 15,000 MW of mostly coal-fired generating capacity from the 2015-2016 auction. Ron said that “the retirement of all 15,000 MW was unlikely, but retirements in the 7,000 MW to 9,000 MW range were possible.”
Commenting on FirstEnergy’s announcement that they were keeping three coal-fired plants on-line, Ron said that “the premium capacity price for the FirstEnergy ATSI zone would likely be a short term phenomenon…the ATSI price could collapse to the RTO price in the 2016/2017 auction if transmission upgrades continue to move forward, making it easier to transmit more power into and out of the ATSI area.”
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