PJM's new white paper on capacity market design is unusually candid: the foundational assumptions of organized capacity markets no longer fit the environment in which they operate. That candor is significant, and overdue.

The paper's concerns are striking not for their novelty but for their familiarity. In my 2009 book I argued that capacity markets were emerging because organized wholesale markets had combined two institutional design choices that interacted badly: price caps and suppressed demand responsiveness. That basic problem has not gone away, and in many respects it has intensified.

The strain affecting organized wholesale markets arises both because generation investment has become more difficult and because the institutional framework continues suppressing decentralized demand responsiveness and risk-sharing that modern technologies increasingly make feasible. Continuing to add administrative layers to compensate for institutional constraints that could instead be removed is not a sustainable strategy.

My analysis covers:

* Why the missing money problem was never purely technological

* Administrative demand curves as epistemic substitutes for real preference revelation

* The accreditation-penalty trap documented by Zuo, Macey, and Mays

*What Farhad Billimoria’s hedging architecture framework reveals about PJM's three proposed paths

* Why capacity mechanisms should be a bridge, not a destination