PJM Order 844 Compliance Approved
By Tom Kleckner and Rich Heidorn Jr.
Order 844, issued in April 2018, requires RTOs and ISOs to submit monthly reports detailing their uplift payments and operator-initiated commitments. The commission said that existing reporting practices were insufficiently transparent and caused unjust and unreasonable rates. (See FERC Orders RTOs to Shine Light on Uplift Data.)
The commission disagreed with MISO’s decision to exclude price volatility make-whole payments from its zonal uplift and resource-specific uplift reports.
“We understand MISO’s argument to be that price volatility make-whole payments are not classified as uplift in Order No. 844 because they are not triggered by a specific reliability need. However, we disagree that such a narrow definition of uplift was implied by the statement in Order No. 844 that ‘uplift payments reflect the portion of the cost of reliably serving load that is not included in market prices.’”
The commission said the payments — intended to maintain resources’ incentives to follow dispatch signals and operator instructions — are uplift “because they provide economic incentives to resources to operate in a manner consistent with system needs at costs that are ‘not included in market prices.’”
It also directed MISO to replace the word “uplift,” which is not a defined term in the Tariff, with terms describing types of uplift that are defined, such as the day-ahead revenue sufficiency guarantee credit.
The commission agreed with MISO’s decision to use local resource zones (LRZs) — which are used to settle charges under the RTO’s resource adequacy process — for reporting purposes. But it said the RTO needs to explain how it will account for uplift paid to imports.
“We direct MISO to explain on compliance whether the commercial pricing nodes associated with imports are located within LRZs and how it intends to report uplift associated with an import if its commercial pricing node does not exist within a LRZ,” FERC said.
The commission also ordered MISO to amend its Tariff to include “as soon as practicable” similar language to describe the notice issued to market participants for temporarily changing transmission constraint penalty factor (TCPF) values.
FERC rejected a request by the Louisiana Energy Users Group and Texas Industrial Energy Consumers to require MISO to report by categories in its resource-specific uplift report. The industrial users contended that aggregating all uplift payments by resource does not provide enough information about the resource locations to address day-ahead voltage and local reliability (VLR) problems in MISO South.
The groups said the 90-day delay in releasing resource-specific data would protect competition and individual market participants.
FERC agreed with MISO that reporting on categories was not required by Order 844 for the resource-specific report.
The commission accepted part of SPP’s compliance filing but rejected other parts and directed it to make a further compliance filing within 30 days.
FERC found that the RTO’s proposed changes to its zonal uplift report partially complied with Order 844 requirements in that SPP would compile and post make-whole payments categorized by settlement area within 20 days of a month’s end. FERC also accepted a proposal to divide the report by settlement area, saying it “conforms to the commission’s definition of ‘transmission zone’ and provides an appropriate level of geographic granularity.”
But FERC said SPP’s filing didn’t specify what uplift categories it would report “and thus does not reflect all the uplift that SPP intends to report in compliance.” The commission said the proposed Tariff language indicated the report would be broken out by day, and it directed SPP to include the uplift types it will report and to note the report will be broken out by day in the compliance filing.
The commission said SPP’s proposed changes to the resource-specific uplift report also only partially complied with Order 844 because specific uplift categories would not be included in the report, leaving it incomplete. It directed the RTO to modify its Tariff changes to include resource-specific uplift categories.
While FERC agreed with many of the changes to SPP’s operator-initiated commitment report, it said the report did not meet requirements to include all commitments made for a reason other than to “minimize the total production cost of serving load.” The RTO contended that its reliability unit commitment processes minimize total production costs, but the commission disagreed, pointing to SPP Tariff and protocols that “make clear” that RUC processes minimizing total commitment costs are only a subset of total system production costs.
The commission directed SPP to revise its Tariff to include in the report commitments made under its day-ahead, short-term and intraday RUC processes. It found that SPP’s proposal to average the economic minimum across the commitment period does not comply with Order 844, saying the plan “provides less transparency into the size and timing of a system need.”
FERC also found that SPP’s Tariff revisions to TCPFs did not comply with requirements to enumerate any procedures by which factors may be temporarily changed. The commission said SPP conducts an annual review to consider changes to the factor values, but that the process does not address the “temporary, potentially intraday changes to those values.”
“Accordingly, we direct SPP to … clarify whether it temporarily changes its transmission constraint penalty factors,” the commission said, ordering SPP to revise the Tariff to include the procedures for temporarily changing those values and show its intention to provide notice to market participants as soon as practicable.
The commission approved PJM’s compliance filing with few substantive changes.
It rejected the Independent Market Monitor’s claim that PJM’s proposal to identify demand resources and economic load response participants by number, not name, did not comply with Order 844. The Monitor said the names of these resources are not confidential because they are publicly available through the Energy Information Administration and that demand resources should not be able to mask their identity when other participants are transparent.
The Advanced Energy Management Alliance countered that the Monitor’s recommendation would compromise competitive information, noting curtailment service providers’ investments in identifying and recruiting customers.
The commission ruled that PJM’s proposal to report the identification number of demand resources and their location “provides the same level of geographical granularity as there would be if PJM used specific resource names.”
The commission differed with the RTO’s interpretation that the definition of operator-initiated commitment is limited to new commitments that are brought online from an offline status.
FERC agreed that PJM does not need to report commitment extensions ordered to minimize total production costs during periods of price volatility. But it said “manual adjustments by PJM to increase or decrease the amount of committed capacity, or to extend the commitments of units that are currently running beyond the hour for which they were committed by PJM’s [security-constrained economic dispatch] software (i.e., a process to minimize total production costs), must be included in the operator-initiated commitment report, if those commitments are made for noneconomic reasons.”
The commission also rejected the Monitor’s request to require that PJM report the end time as well as the start time of operator-initiated commitments. It also rejected the Monitor’s request to require PJM to disclose operator-initiated commitments cleared before the day-ahead market closes, calling it “a collateral attack” on Order 844.
“In the Notice of Proposed Rulemaking, the commission considered including day-ahead must-run generation in the definition of operator-initiated commitments. However, after considering concerns that day-ahead must-run generation clears the day-ahead market on the basis of reliability and economics, the commission modified the definition to explicitly exclude these commitments,” FERC said. “The IMM did not seek rehearing on the definition of operator-initiated commitments.”
The Monitor also sought clarification that no rules prohibited it from reporting uplift data itself.
“While Order No. 844 does not apply to market monitors, we find that the IMM is not precluded from continuing to report uplift data … in the IMM’s State of the Market reports, to the extent this information does not violate the confidentiality provisions of the Tariff and Operating Agreement,” FERC said.