The antitrust division of the Department of Justice (DOJ) is probing allegations raised in a PJM Interconnection report that concludes that earlier this year a market participant exercised undue market power in PJM’s capacity credit markets, causing the price in those markets to spike higher than it would have otherwise been in a competitive market.

“It is clear that during the first quarter of 2001, a participant in the PJM daily capacity market did successfully raise the market price in the daily capacity credit market above the competitive level for a portion of the period from Jan. 1 to April 30, 2001,” PJM’s market monitoring unit said in a recent report prepared for the Pennsylvania Public Utilities Commission (PUC) (see Power Market Today, Dec. 3). The PUC has launched an investigation into the region’s wholesale electricity markets.

PJM’s report did not specifically identify the participant, giving the company the moniker of “Entity 1.” But, in a Dec. 6 letter to financial analysts from John Biggar, PPL Corp.’s chief financial officer, the company acknowledged that its PPL EnergyPlus affiliate is Entity 1 (see Power Market Today, Dec. 7).

Now, the DOJ’s antitrust division is seeking answers related to operations in PJM’s capacity credit markets through a civil investigative demand (CID). The details of the DOJ’s CID were recently posted on PJM’s web site (www.pjm.com/).

Among other things, the DOJ is seeking through its CID a number of documents from PJM members. Specifically, the CID seeks all documents discussing or analyzing capacity credits offered for sale or purchase in the capacity market. The DOJ also wants any inquiries, studies or analyses by PJM into sales or purchases in the capacity market, including any documents or data considered in the preparation of such an inquiry, study or analysis.

The DOJ also wants to examine all documents:

PJM currently coordinates a pooled generating capacity of more than 59,000 MW and operates a wholesale electricity market with more than 200 market buyers, sellers and traders of electricity. PJM has administered more than $5 billion in energy and energy service trades since the regional markets opened in 1997.

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