So, what is the RPM? The American Public Power Association has a handy-dandy fact sheet that explains the RPM.
"In 2007, the PJM Interconnection (PJM) began implementing its “Reliability Pricing Model,” or “RPM” – a
funding device to provide extra money to power plant
owners to induce them to build new power plants and
keep old ones running. These are payments over and
above their sales of electricity in the wholesale power
market, also run by PJM."
Has the RPM been an effective tool to get new generation built?
"While the cost has been great, the results have been
slight. PJM claims that considerable capacity has been
secured through its RPM mechanism (over 42,000 MW from 2007 through the 2011 auction)—but these claims
are misleading at best. PJM includes in their figures upgrades of existing plants, withdrawn or canceled retirements, and capacity imports from other regions."
"Perhaps most significantly, very little of the $50 billion
so far for RPM is financing new generation capacity;
rather it is overwhelmingly going to existing generation capacity. More than 93 percent of the total revenue paid by customers has gone to the owners of existing power plants—coal, natural gas, hydroelectric, nuclear, oil, and other existing capacity types. Only 1.8 percent of the RPM revenue so far has gone to new and “reactivated” generation resources."
How much has the RPM cost you?
"Since it began in 2007, RPM has cost customers in
PJM’s territory approximately $50 billion (through the
end of 2011). This works out to approximately $900
per man, woman, and child living in PJM’s 13-state
area. This cost, however, is not evenly distributed
throughout the region; customers in the eastern portion
of PJM have shouldered the main burden of this
cost. New Jersey’s portion alone is over $11 billion and
counting—or almost $1,300 per person living in New
Jersey today. For the RTO overall, in 2010 the RPM
added $140 per year to the average electric bill of a
homeowner, $1,000 for a retail store, and $15,000 for
an industrial facility."
At the PJM cartel, it's not about fair markets, it's about PIG -- Protection of Incumbent Generators.