At its March 17 Reserve Certainty Senior Task Force (RCSTF) meeting, PJM presented its proposed Operating Reserve Demand Curves (ORDCs) for a newly restructured suite of reserve products under the Reserve Certainty initiative. The proposal introduces six reserve services, including Synchronized Reserves, new Ramp/Uncertainty Reserve (RUR) products in both 10-minute and 30-minute windows, Day-Ahead Scheduling Reserves, and a new Energy Gap product for high-risk winter days. Curve pricing parameters range from $2,100/MWh for Synchronized Reserves down to $1,000/MWh for ramp-based products, with an updated energy price cap of $4,100/MWh (up from $3,700/MWh). While this may seem like a direct cost increase to load, a key framing by PJM explains that these reforms represent a revenue shift from the Capacity Market into Energy & Ancillary Services (E&AS) markets, not simply a cost increase. As E&AS revenues grow, Net CONE falls, mechanically putting downward pressure on capacity clearing prices over time. That is at least the theory, but it is TBD whether the changes in E&AS revenues are dramatic enough to move the needle on capacity prices given the current supply/demand balance and accelerating load forecasts in the future. 

For pricing and market operations, PJM’s own Day-Ahead simulations showed LMP increases concentrated on high-stress days (+$4.72 to +$8.52/MWh on peak winter and summer days), while shoulder-season impacts were minimal. More striking were reserve MCP changes. The 30-Minute Reserve product, which cleared at $0 across all simulated days in the base case, jumped to as high as $51/MWh on a stressed winter day under the new construct. The 10-minute reserve MCP saw a 4x increase on that same day, signaling a meaningful new revenue stream for fast and flexible resources. 

This proposal still needs to be vetted through the stakeholder process and ultimately filed and approved with FERC, but from a commercial standpoint, the implications would vary by participant. Flexible thermal and storage assets with fast-ramping capabilities stand to benefit most from the new reserve revenue streams. Renewable developers will want to closely track eligibility requirements, as some RUR products carry specific performance and response obligations that may limit participation. Load Serving Entities should understand that while capacity prices may ease over time as E&AS offsets grow, the transition period introduces uncertainty. The lag between ORDC implementation and updated Net CONE calculations could result in temporary misalignment. 

If you want to understand how these developments could impact your business or how we can help you navigate the evolving market, connect with our MIQ team experts: 

Sam Selick: Senior Consultant – PJM Marketing Intelligence at Market IQ Guy Filomena: Regional Director Regulatory Services-PJM, Market IQ Carl Johnson: Senior Consultant, Market IQ Jonathan Sasser: Senior Consultant PJM, Market IQ Drop your comments below to explore how we can help you.

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