The Independent Market Monitor (IMM) for PJM, the largest power market in the U.S., has concluded that flaws in PJM's market rules added billions to the record-high clearing prices in the 2024 summer capacity auction.

Initially, the high prices were thought to be due to rising demand and falling supply, which seemed necessary to encourage new power plant construction. However, the IMM's new analysis points to other issues in the market design.

One major issue is how PJM measures power plant availability, which increased capacity costs by $4.4 billion compared to the previous approach. The auction did not solely reflect supply and demand, but also the definition of supply and demand, said the IMM.

The market monitor found that PJM’s rules exempting wind, solar, energy storage and other types of resources from the auction’s must-offer requirement increased auction revenues by $4.1 billion, or nearly 40%, compared to requiring the resources to take part in the auction.

This report is likely to fuel ongoing debates about the high costs, which were ten times higher than the previous auction.