Friday, October 20, 2017

FERC Seeks More Details on PJM Fuel-Cost Policy Proposal

By Rory D. Sweeney

FERC on Friday accepted PJM’s compliance filing on its fuel-cost policies for generating units but required the RTO to make another compliance filing to address a number of additional details (ER16-372-002).

The commission sided with PJM on several issues that have generated discussion at stakeholder meetings, including the relationship between the RTO and its Independent Market Monitor. (See PJM Attempting to Usurp Market Mitigation Role, Monitor Says.)

AEP’s Conesville Power Station will be subject to PJM’s new fuel-cost policies | © Delta Whiskey, Creative Commons

“We agree with PJM that the proposed changes related to the fuel-cost policy are not designed to change the fundamental roles between the IMM and PJM, but rather to codify the role of the IMM in advising and providing input to PJM in its determination of whether to approve a fuel-cost policy submitted by a market seller,” the order read. “Accordingly, we reiterate our finding in the order that PJM has the final approval authority on fuel-cost policy.”

FERC declined PJM’s proposal that any differences between the RTO and its Monitor should be referred to the commission’s Office of Enforcement. That is the duty of administrative law judges, the order said.

The commission said the compliance filing, due in 30 days, should include:

  • PJM’s resource-dispatch formula and the process for determining the lowest-cost offer;
  • A broader description of which resources will be subject to mitigation;
  • The standard of review and an explanation of how a market seller would be found to be noncompliant with it;
  • specifics on when the penalty for a noncompliant fuel-cost policy would be terminated by the RTO, including a timeline with specific milestones;
  • A 90-day grace period before a new resource must submit its fuel-cost policy; and
  • A definition for when the penalty for noncompliance ends, along with a rebuttal period.

“We note that the penalty can still apply during the rebuttal time period, but if found to not be in violation of its fuel-cost policy, a market seller must be issued refunds as of the date of its rebuttal,” the order explains. “During this rebuttal period, if a market seller does not have a PJM-approved fuel-cost policy on file, it will still be required to submit a $0/MWh offer, but in the event that it is mitigated to its cost-based offer during this time period and its costs to operate, as per a PJM dispatch, are not covered by its market revenues, PJM should make the market seller whole by providing it with an uplift payment.”

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