The Brattle Group has been commissioned by PJM Interconnection L.L.C. (“PJM”) to produce a whitepaper that compares and contrasts the PJM Reliability Pricing Model (“RPM”) with alternative power market designs and evaluates each design’s ability to maintain resource adequacy. We examine six alternative market designs, beginning with pure energy-only markets and progressing to more highly-structured designs that rely on administratively-determined capacity payments or explicit current or forward reserve requirements in possible combination with centralized capacity markets. For each of these market designs, we summarize relevant U.S. and international experience and discuss the advantages and disadvantages of the various approaches.

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