Friday, May 27, 2016

Power auction good for consumers, not for trouble nukes

This week's capacity auction for the regional power grid contained some good news for consumers: Prices are down.
But the results will increase pressure on generators struggling to compete in a new energy world dominated by abundant natural gas.
Philadelphia Inquirer staff writer Andrew Maykuth reports:

Payments from consumers to suppliers that can guarantee capacity in the year starting June 2019 will fall by $4.1 billion to $6.9 billion, said PJM Interconnection L.L.C., the Valley Forge grid operator that includes 13 states and the District of Columbia.
That will be $4.1 billion more in the pockets of households and businesses, which pay the capacity costs as part of the kilowatt-hour charges on their utility bills, PJM spokesman Ray Dotter said. 
What's good for consumers may be hard for some generators to stomach.
The price that some generators bid was too high to clear the auction, so they will not receive any capacity revenue for 2019-20. That includes Exelon's Three Mile Island nuclear plant near Harrisburg.
It was the second consecutive year that TMI Unit 1 failed to bid low enough to win the auction, leaving the 837-MW plant's economic fate uncertain.
Capacity payments, which are separate from the price of the energy generated, are fees paid to power producers to guarantee they will be able to generate electricity on demand. PJM procures power three years in advance, based on its load forecasts.
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