PJM Interconnection

PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. My colleage, Troutman Sanders attorney Peter Glaser, just sent around a memo on the impacts of EPA’s regulatory surge on electricity prices. The memo is based on PJM auction reports (here and here).

Peter’s memo is too juicy not to share with a wider audience. I reproduce it below with his permission. — Marlo 

Reality has interceded in EPA’s attempt to play down the impact of its train wreck regulations on the electric utility industry.  First came the widely reported news that Louisville Gas & Electric had filed for a 19% rate increase by 2016 to pay for the upgrades that the regulations will require.
Now, we have the results of the capacity auction that PJM just conducted for the 2014-15 capacity year.  The resulting capacity prices were about 4.5 to 8 times as high as prices paid in the last two auctions and 2.5 to 3 times as high as market analysts had predicted. 
According to PJM, most of this increase can be laid at the feet of EPA.  Based on PJM information, we calculate that the portion of the increase attributable to EPA will cost load (customers) in the PJM region $2-3 billion just in capacity costs and just for a one-year period (2014-15).  
Here are the details.

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