Summary
FirstEnergy Corp. (FE) disclosed on May 18, 2012, the results of the 2015/2016 PJM Interconnection, LLC, Reliability Pricing Model capacity auction. Notably, the four simple-cycle gas-fired peaking units offered by its subsidiary, FirstEnergy Solutions Corp., failed to clear this auction. This means these specific generation assets will not be compensated for their capacity under the PJM market rules for the specified period.
Key Highlights
- 1FirstEnergy Solutions Corp. (a subsidiary of FE) participated in the 2015/2016 PJM capacity auction.
- 2The company offered four gas-fired, simple-cycle peaking units into the auction.
- 3These specific units, totaling 208 megawatts, did not clear the capacity auction.
- 4Failure to clear the auction implies no revenue generation from capacity payments for these units in the 2015/2016 PJM market period.
- 5The filing is a Regulation FD disclosure, indicating the information is being made public simultaneously to all investors.
- 6The auction results were released by PJM Interconnection, LLC.
Frequently Asked Questions
When a generation unit 'clears' a capacity auction like the PJM Reliability Pricing Model auction, it means the market operator has committed to paying that unit for its availability to provide power during peak demand periods. By 'not clearing,' FirstEnergy's four offered units will not receive these capacity payments, potentially impacting their revenue streams from this specific market mechanism.
The PJM RPM is a market mechanism designed to ensure sufficient generation capacity is available to meet electricity demand in the PJM region. Capacity auctions are held periodically to secure this capacity, with successful bidders compensated for making their generation resources available.
The immediate financial impact depends on the specific economics of these four peaking units and their prior revenue expectations from capacity payments. As simple-cycle gas-fired peaking units, they typically operate less frequently and their profitability often relies on capacity payments and potentially high energy prices during scarcity. The failure to clear the auction removes a potential revenue stream, which investors will need to assess in the context of FirstEnergy's overall generation portfolio and profitability.
The filing specifically states that 'The four 208 megawatt gas-fired, simple-cycle peaking units offered into the auction by FirstEnergy Solutions Corp. did not clear the auction.' It does not provide information on whether other FirstEnergy assets were offered or if they cleared. Therefore, we can only confirm the status of these particular units based on this filing.