AUSenergy News Update 05/29/2014
May 29, 2014

In today’s AUSenergy News Update: PJM announces cost increases following capacity auction, capacity auction results could shut down three nuclear power plants, and Connecticut’s electric rates rising.

PJM announces cost increases following capacity auction

Summary: PJM Interconnection, which runs the largest U.S. power grid, said costs to ensure adequate generating capacity will more than double in the year starting June 2017. Payments to electricity producers will jump to $120 a megawatt per day from $59.37 in the previous 12-month period, based on the results of the annual PJM auction. Capacity costs rose as regulatory changes by FERC limited power imports from other regions and emphasized a shift to higher-cost demand response resources. The auction established capacity prices for some of PJM’s most densely populated regions, where local transmission bottlenecks limit shipments from other parts of the grid. Prices rose across the mid-Atlantic region except in the northern New Jersey area, where prices bucked the historic norm by dropping.
AUS Comment: There will be little to no increase from 2016/2017 to 2017/2018 in most zones across PJM with RTO being the exception. Prices in RTO more than doubled, with 2017/2018 prices coming close to current (2014/2015) capacity prices. PSEG continues to be the highest in PJM territory. With little to no relief from the capacity market, long-term electricity pricing will remain high. While this bodes badly for electricity pricing, it is good news for demand response programs.

Capacity auction results could shut down three nuclear power plants

Summary: Exelon’s Byron and Quad Cities nuclear power plants in Illinois, and its Oyster Creek plant in New Jersey, failed to secure contracts to provide power to the electric grid at last week’s annual capacity auction.
AUS Comment: Exelon has said that they are currently looking to identify market-based solutions and partnering with Illinois policymakers and other stakeholders to allow them to keep all of the nuclear power plants open. There are very few details regarding what those solutions would be at this time.

Connecticut electric rates rising

Summary: An 8 percent increase in electric generation rates for Connecticut Light & Power residential customers was approved by state regulators. The increase will likely raise the average residential electric bill by $5.29 per month. CL&P has also requested permission to raise a separate rate by 5.9% to cover the costs of replacing equipment and improve reliability. The requested rate change would raise the average residential bill by about $6.76 per month.
AUS Comment: The approved rate increases only apply to CL&P customers and do not apply to customers who receive their electricity from competitive retail electricity providers.

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