Dive Brief:
- Maryland regulators accepted the results of an October supply auction for customers who have not chosen an alternative supplier, but consultant Boston Pacific said analysis showed declining participation because of rule changes in the PJM capacity markets.
- PJM has considered an "enhanced capacity" product in the wake of FERC's Order 745 being struck down, but it will be months before the changes are finalized, meaning delaying accepting the auction results would not mitigate uncertainty.
- In the April solicitation there was about 3 MW bid for every 1 MW of need, but the October auction returned only 1.8 MW of bids.
Dive Insight:
There were no anomalies in the auction, Boston Pacific told the Maryland Public Service Commission in testimony recommending the state approve the auction results. The bids were consistent with market conditions and there were no violations of RFP rules or regulations. But Boston Pacific said it did not make the recommendation to accept the results without reservations:
"In particular we are concerned with the lack of competition in this procurement, especially for the Residential and Type I products," the firm said. "This lack of competition is driven by uncertainty in the PJM capacity market over the effect of several proposed rule changes. Because this uncertainty will not resolve anytime soon there is little reason to think that rejecting these results and holding another procurement will bring a better outcome."
There were a total of five bidders who submitted bids for one or more of the 10 products available, Boston Pacific said, or four fewer than the number of bidders in April. Only two bidders offered Residential and Type I supply, according to the analysis, and for most Residential and Type I products there was only one bidder.
In total Maryland's four investor-owned utilities sought just shy of 2,200 MW.
"The primary cause of reduced competition in this RFP was uncertainty over PJM’s capacity market," Boston Pacific said in its testimony. "While PJM continues to put out more information ... This process will take several months. Therefore, holding another RFP in the next few weeks is unlikely to bring additional competition."