The time-honored discounted cash flow method for determining appropriate utility returns falls short when interest rates are low. Inadequate ROEs ultimately increase cost of capital and wipe away...
The experts do battle over capacity market design.
as the “replacement capacity” issue, and which was scheduled initially to be presented to the members committee for endorsement on December 13, will instead be returned to the capacity senior task force, which will attempt to forge more precise tariff language.
Importantly, PJM’s Ott took time at the September FERC conference to emphasize the importance of the DR operational initiative, explaining how, at present, without the needed reform, the DR resources cleared in the PJM RPM are dragging down the diversity of the region’s resource mix:
“To some extent,” as Ott testified in September, “we are victims of our own success.
“We have 14,000 MW of demand response … [clearing in RPM] … but 13,000 of it gives us only two hours’ notice and the same price. So I have an 8 to 9 percent resource block that all looks the same.
“We can’t sustain that.”
9. “ No Fuel, No Power ,” Public Utilities Fortnightly, April 2013, p. 20.