FERC Conditionally Accepts PJM's Pseudo-Tie Requirements For External Resources Participating In Forward Capacity Auctions

On November 17, 2017, FERC conditionally accepted a proposal filed by the PJM Interconnection, LLC ("PJM") to establish pseudo-tie requirements for new external resources desiring to participate in PJM's forward capacity auction, as well as a transition period to allow existing "pseudo-tie" resources to comply with the new requirements.  PJM's proposal was given a May 9, 2017 effective date, provided that it submits further compliance filings addressing FERC's concerns in its order.

PJM's proposal, which it submitted to FERC on March 9, 2017, follows from a series of previous proposals and FERC orders regarding capacity being imported from external generation resources into the PJM footprint.  Despite two sets of capacity market reforms, approved by FERC in 2014 and 2015, PJM claimed it was still encountering difficulties incorporating more distant external resources into PJM through so-called "pseudo-ties," which are mechanisms used by one Balancing Authority