Improving Market Design to Align with Public Policy

The Federal Energy Regulatory Commission, which regulates wholesale capacity markets, is looking to reconcile market design with state, and potentially federal, policy preferences. In an effort to mitigate this apparent tension in the gas- and coal-heavy Mid-Atlantic and Midwest, the Federal Energy Regulatory Commission proposed a framework on June 29 for carving out those policy-sponsored resources from PJM's capacity market. The June order poses many questions and leaves open many details for stakeholders to resolve ahead of the close of FERC’s initial round of public comments on October 2, 2018.  This policy brief offers recommendations to improve the efficiency of the developing proposals and help those responding to the FERC order understand the implications of different design choices related to the Federal Energy Regulatory Commission's proposal.