FERC lifts price cap for grid operators in Midwest, Mid-Atlantic
FERC granted the waiver for PJM Interconnection, which oversees the grid in 13 states and the District of Columbia, through the end of March.
Grid operators had argued the step was needed to address record-setting costs that electricity generators are incurring as a result of spiking natural gas prices during this winter’s deep freeze across the eastern United States.
PJM has said it’s focused on protecting generators from substantial financial losses.
Spot prices for natural gas in the Mid-Atlantic on Jan. 22 surged almost 340 percent to $45 per million British thermal units, and gas prices in New York City rose more than 780 percent. As a result of the high fuel costs, the price of electricity in the region shot up to $857 per MWh.
Parties like the Maryland Public Service Commission and NextEra Energy Power Marketing LLC had argued against waiving the cap, warning of financial consequences (EnergyWire, Feb. 7).
But FERC today said PJM had made its case for the limited relief. “PJM’s request is limited in scope in that it is limited to the period from the date of this order through March 31, 2014 and limits what types of resources can bid and how,” FERC said in the order.
Last month, FERC granted a separate PJM waiver that allowed the grid operator to temporarily “make whole” generators that provided their resources above a $1,000-per-MWh price cap because of unprecedented gas price spikes (Greenwire, Jan. 27).