Power producers who clear in the PJM auction are contractually obligated to provide capacity on demand. When a power producer is unable to meet its obligation during emergency events, PJM assigns steep non-performance charges, which have increased significantly in recent years. The AEGIS Capacity Performance policy is a double-trigger policy which indemnifies power producers against the fixed charges suffered due to inability to provide committed capacity during system emergency periods as a result of an unplanned event.
- Up to US $50 million aggregate limit per policy.
- Twelve types of emergency events are covered.
- Policies may be bound for future years. Limits are set per year. For future years, the risk incepts at that time.
- Typical policy period is from June through May.
- Event duration: 365 days.
- Ability to cover several plants on one policy.
- Settlement process is straightforward: Emergency events are published public information; adjusters are not needed.