(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
The PJM complaint and the rising cost of electric reliability.
set by reserve margins and [have] moved toward the price required to sustain new entry.” The Brattle Report also finds that prices in the SWMAAC and EMAAC zones now have tended to fall back to the norm, even as surplus capacity levels in the Rest-of-RTO zone have fallen back as well between the first and fourth BRAs. This is the sort of convergence one would expect to see in a successful market.
At the same time, however, the Brattle Report questions whether PJM is applying the one-in-ten LOLE standard appropriately throughout the RTO region, and whether the one-in-25 standard for individual LDAs is justified.
Above all, the report questions how much reliability the nation really can afford—“Whether the same target level of reliability should be maintained as the cost of capacity increases.”