Reliability Pricing Model
The Reliability Pricing Model (RPM) is PJM’s capacity-market model. Implemented in 2007, the RPM, based on making capacity commitments three years ahead, is designed to create long-term price signals to attract needed investments in reliability in the PJM region. The long-term RPM approach, in contrast to PJM’s previous short-term capacity market, includes incentives that are designed to stimulate investment both in maintaining existing generation and in encouraging the development of new sources of capacity – resources that include not just generating plants, but demand response and transmission facilities.
The RPM model works in conjunction with PJM’s Regional Transmission Expansion Planning (RTEP) process to ensure the reliability of the PJM region for future years.
The RPM includes the continued use of self-supply and bilateral contracts by load-serving entities (LSEs) to meet their capacity obligations. The capacity auctions under the RPM obtain the remaining capacity that is needed after market participants have committed the resources they will supply themselves or provide through contracts.
The RPM provides:
- Procurement of capacity three years before it is needed through a competitive auction;
- Locational pricing for capacity that reflects limitations on the transmission system’s ability to deliver electricity into an area and to account for the differing need for capacity in various areas of PJM;
- A variable resource requirement to help set the price for capacity;
- A backstop mechanism to ensure that sufficient resources will be available to preserve system reliability.
The following materials are available to provide additional information about the RPM and the auction clearing process.
RPM Auction User Information
All RPM Training Materials can be found at the Training Materials page.
Following the filing of the original RPM proposal with the Federal Energy Regulatory Commission (FERC), most parties in the proceeding filed a settlement agreement with the FERC, though some opposed the settlement.