NextEra Proposal: PJM’s sell offer price
only for release of ~10,000 MWs of “new”
capacity commitments in Transitional CP
Auction equals the Transitional
Incremental Auction Adder
• No changes to IA structure for all other participants
• Single Transitional IA clearing price for CP
commitments from new and existing resource
• Total cost aggregated and socialized proportionally
to all PJM load as an “adder” to capacity costs
• Adder = $28.42 per MW-Day as of the First IA for 17/18
• Benefits: Improved price formation for buyers and
sellers
• Properly assigns value to capacity already purchased
by customers
• Better reflects value of incremental sales of capacity
from sellers subject to Must Offer Rule
Settlement Examples
• Total value of Third IA is
maximized by retaining MWs
that do not provide sufficient
revenue
• Scenario 3 shows that retaining
5,009 MW of capacity
produces $142,349 $/Day in
incremental revenue
• Compare to Scenario 2 where
sale of all 10,017 MWs in
produces just $50,285 $/Day in
incremental revenue
Scenario
Cleared PJM
CP
Sell Offer in Transitional
Third IA
Cost
(MWs UCAP)
1) All PJM Capacity Clears at
Transitional Auction Adder
2) All PJM Capacity Clears at RTO
Price from 16/17 Third IA
3) Half of PJM Capacity Clears at
Transitional Auction Adder
4) Half of PJM Capacity Clears at
RTO Price from 16/17 Third IA
($/Day)
Third IA
Clearing
Price
Total Revenue
from Third IA
($/MW-day)
($/Day)
10,017 $ 4,738,559 $
28.42 $
284,698
10,017 $ 4,738,559 $
5.02 $
50,285
5,009 $ 4,738,559 $
28.42 $
142,349
5,009 $ 4,738,559 $
5.02 $
25,143