FERC Approves PJM Cap and Floor
April 30, 2025
FERC has approved PJM’s proposal to set a price cap and price floor for its next two capacity auctions in a 4-0 decision that was opposed by the grid’s market monitor.
The proposal sets approximately a $325/MW-day price cap and a $175/MW-day floor for the 2026/27 and 2027/28 delivery years base capacity auctions. Without the collar, the price cap for the upcoming July capacity auction would reach about $500/MW-day with a zero floor.
The proposal grew out of settlement discussions with consumer advocates who expressed concerns about pending bill increases.
PJM defended its current capacity market rules as just and reasonable and operating as designed but submitted the proposal because the region faces a confluence of events that support the need for a balanced and time-bound “collar” to narrow RPM auction outcomes.
Later this year, PJM plans to revise key inputs into its capacity price setting process and implement interconnection queue process reforms.
