Delmarva Power & Light Co. must defend itself against challenges to its formula transmission rate filings for 2011 and 2012, the Federal Energy Regulatory Commission ruled last week.
FERC unanimously rejected Delmarva’s claim that the challenges by municipal power agencies and electric cooperatives were impermissible on procedural grounds, though the commission did narrow the issues to be litigated.
The commission ordered a hearing on whether Delmarva’s filings are consistent with FERC rules regarding accounting for income taxes and whether it properly allocated expenses from its parent, Pepco Holdings, Inc. It encouraged the parties — which include Delaware Municipal Electric Corporation, Inc. (DEMEC), Easton Utilities, Old Dominion Electric Cooperative and the Public Power Association of New Jersey — to settle the issues before the hearing.
DEMEC contends that Delmarva has added new costs that were not included in its initial formula rate and that the company improperly booked some non-transmission expenses. The protestors also complained about an increase in Delmarva’s administrative & general costs since implementation of the formula rate.
The commission rejected Delmarva’s contention that that the terms of a 2006 settlement (Baltimore Gas and Electric Co., 115 FERC 61,066) do not permit prudence challenges and that the formula rate inquiry is limited to whether costs were booked to the correct account.
“The commission’s acceptance of a formula rate constitutes acceptance of the formula, but not the inputs to the formula,” the commission wrote. “Parties can challenge the inputs to the formula rate in the same way as they can challenge costs in a stated rate case, including by raising prudence issues. In order for formula rates to work properly, they must allow for after-the-fact corrections and updates.”
The commission dismissed challenges to Delmarva’s handling of taxes associated with deferred investment tax credits and non-deductible pensions and other benefits.
FERC also rejected DEMEC’s request to reduce Delmarva’s return on equity, saying that it was outside the scope of issues permitted in challenges to annual rate filings. The panel noted that DEMEC and the Delaware Consumer Advocate’s office are contesting the ROE in a separate challenge before the commission (EL13-48).
The Federal Energy Regulatory Commission last week reiterated its 20 MW threshold regarding purchase obligations from qualifying facilities as the panel’s two Republican members said the commission should rethink its approach.
The commission ruled that PPL Electric Utilities Corp. must purchase excess power from a proposed 18.1 MW combined heat and power plant because the utility failed to prove the QF facility would have “nondiscriminatory” access to PJM’s wholesale markets.
The order reiterated the commission’s 2006 Order 688, in which it said that QFs above 20 MW were presumed to have access to the wholesale markets and those below were presumed to lack that access. For generators below 20 MW, FERC said, the burden of proof falls on the utility in whose territory the facility is located.
The commission said PPL failed to meet that threshold in its dispute with the IPS Power Engineering Inc. cogeneration facility at a beef processing plant in Souderton, Pa.
IPS Power Engineering Gas Turbine (Source: IPS Power Engineering)
JBS USA LLC, the meat processor, wants to team with IPS to control its power costs and ensure reliable supply. But the partners say the plant won’t be feasible without a contract to sell at least 10 years of its excess energy and capacity to PPL.
The commission ruled that PPL “attempted to make many of the same generalized showings” that the it rejected in its 2010 Public Service Co. of New Hampshire order (131 FERC ¶ 61,027). “Specifically, PPL Electric alleges that the Souderton QF has nondiscriminatory access to PJM’s markets because PJM’s market rules provide such access, and that the Souderton QF will neither have operational characteristics nor face constraints that would definitionally prevent access to PJM’s markets.”
The commission’s ruling could affect many other utilities within PJM. According to PPL, there are 150 generation projects below 20 MW in PJM’s interconnection queue.
The 1978 Public Utility Regulatory Policies Act (PURPA) requires electric utilities to purchase the output of cogeneration and small power production qualifying facilities at their “avoided costs.” The Energy Policy Act of 2005 amended PURPA to allow termination of QF requirements if FERC finds that the QF has nondiscriminatory access to make market sales.
The commission has never granted any utility relief from the mandatory purchase obligation for a QF of 20 MW or smaller. Nor has it given much guidance regarding what kind of evidence would convince it.
Order 688 said such evidence could include whether the QF has already participated in the market. PPL could not make that showing, the commission acknowledged, because the Souderton QF has not begun operation.
And that, said Commissioners Philip Moeller and Tony Clark, is a problem. Although they acknowledged the order follows FERC precedent they said the commission should provide more guidance.
“While we concur with the overall finding in this order and agree that PPL’s application lacked certain QF-specific information required under the Commission’s regulations, such as a system impact study for the interconnection, we do not agree that the PJM market rules and planning process are irrelevant for purposes of determining QF-specific market access,” they wrote.
They said the standard of proof shouldn’t be “so high as to preclude a utility from successfully making a showing before the QF is fully operational and the utility is obligated to purchase.”
Such a “circular result,” they said, could “[render] meaningless the opportunity to rebut the presumption and obtain PURPA relief.”
LAUREL, MD — As manager of a team of eight staffers charged with combating cybersecurity threats to the PJM grid, Stephen McElwee carries secrets.
Steven McElwee, PJM Manager, Corporate Information Security at the October meeting of the INCOSE Chesapeake Chapter
“If I run off to a security briefing, I learn a lot of things and I go home scared. But I can’t tell my analysts who are actually doing the real-time monitoring anything about it” because security clearances are limited to managers, he says.
Such is life in the cybersecurity world, McElwee, PJM manager of corporate information security, told an audience of more than 80 systems engineers at John Hopkins University Applied Physics Laboratory here. Most of the audience at the lecture, sponsored by the International Council on Systems Engineering (INCOSE), were contract workers for the nearby National Security Agency. (See video of lecture.)
“A year and a half ago I would have said [hackers] haven’t touched the energy sector. Now they are touching the energy sector,” he said. “It’s not a matter of if [PJM is attacked] but when.”
Threats to Pipelines, Smart Meters
McElwee said natural gas pipelines have been under attack since last year. “That campaign resulted in breaching of many natural gas companies — stealing plans, and gaining possible footholds in those companies.” Some hackers obtained plans for pipeline compressors.
McElwee and his colleagues also worry about botnets — private computers infected with malicious software and controlled as a group — taking control of thousands of smart meters. “You could … suddenly switch on and off that load, making it nearly impossible to control” the system, he said.
PJM Defenses
PJM’s defenses are a combination of risk assessment, education of system users and information-sharing partnerships with government and industry.
Education is key to prevent “spear phishing,” in which hackers penetrate networks through unwitting employees.
Thus, PJM hired a consultant to conduct mock phishing campaigns by sending employees emails with links that could have contained malware. When the test started, McElwee said, one in five recipients clicked the bad links. Over a year of education, the click-through rate was reduced to 4%, where it has remained in the current year. “It’s hard to get it below that” rate, he said.
PJM also has hired contractors to conduct penetration testing — probing the network for vulnerabilities — and to provide 24-hour monitoring of threats. It has staff dedicated to installing patches and has formed a security assessment committee of PJM officials to identify risks in any new software and projects.
`Kill Chains’
The company uses “kill chain” analyses to assess threats: “How far did it make it? Where did we stop it? Where did we detect it?”
PJM uses that data as an input back in its risk assessment, McElwee said, “so we have a feedback loop that allows us to continually improve our security posture.”
PJM relies on partnerships with industry and government to ensure it has adequate response plans and the best technology. “We recognize we can’t do this on our own,” McElwee said.
Cyber Risk Information Sharing Program (CRISP) (Source: PJM Interconnection, LLC)
Thus, PJM has become one of four pilot participants in the Cyber Risk Information Sharing Program (CRISP), a Department of Energy program involving Argonne National Laboratory, Pacific Northwest National Laboratory (PNNL), and the Electric Sector Information Sharing Analysis Center, a project of the North American Electric Reliability Corp. (NERC).
CRISP analyzes PJM’s network traffic and uses “snort signatures” and other techniques to identify potential threats.
“When there’s something suspicious that they see on our network they give us a call and say `here’s an IP address you need to block’ and we can proceed and block that address and never know it was the nation-state of the day that was attacking us,” McElwee said. “All we know is that somebody was watching out for us.”
CRISP is considering adding 20 new participants soon, with a broader expansion after that. “Because the power grid isn’t just PJM,” McElwee said. “It’s all the transmission owners all the generation owners that make up the entire system.”
NERC Standards ‘Dated’
McElwee said NERC’s Critical Infrastructure Protection standards are “dated.” A new version, which is awaiting final approval by the Federal Energy Regulatory Commission, “promises a lot more protective mechanisms,” he said. (See FERC OKs New Reliability Standards)
President Obama’s executive order, issued in February, was helpful in providing industry increased access to information, he said. “Not all information needs to be classified as high as it is.”
The Illinois Department of Commerce and Economic Opportunity took coal-education material off its website after objections that it was unduly pro-coal. The website sections, intended to educate children about energy, sparked a grassroots campaign demanding that the pages be taken down.
(Source: IL Dept. of Commerce & Economic Opportunity)
An eastern Kentucky economic development organization recommended some coal severance tax funds be devoted to a program to diversify the regional economy. But many local needs and dwindling revenue from the tax present tough decisions for the area’s policy makers. Eastern Kentucky has lost more than 5,700 coal jobs in the last two years.
PPL’s two Kentucky utilities have proposed building a 700 MW combined-cycle plant and a 10 MW solar facility to help replace retiring coal generation. The new projects would make the Louisville Gas and Electric-Kentucky Utilities portfolio 59% coal, 40% gas and 1% renewables.
Baltimore Gas & Electric must try harder to reach customers who have not responded to efforts to switch them to smart meters, the Public Service Commission said, rejecting for now the utility’s suggestion to call these customers meter “opt-outs.” BG&E also may not terminate their service for non-response, the PSC ruled.
Michigan could get 40% of its energy from renewables by 2035, and do so at half the cost assumed when the state enacted its renewable portfolio standard in 2008, a renewable energy trade group said. The Michigan Energy Innovation Business Council made its comments in response to a draft state report that predicted the state could get 30% of its electricity needs from renewable sources by 2035.
American Transmission Co. filed for state approval of a 60-mile 138 kV line to improve reliability of Michigan’s Upper Peninsula grid. The line, which would cost up to $132 million, is part of a larger Bay Lake project. ATC plans to spend up to $3.6 billion over the next decade in Michigan, Wisconsin and neighboring states.
Newly-elected Sen. Cory Booker, who won the seat made vacant by the death of New Jersey Democratic Sen. Frank Lautenberg, may be assigned to the Environment and Public Works Committee. Lautenberg was an active member of the panel, and Booker has been engaged with climate change issues in New Jersey.
Natural gas is a major player right now, but “there is no doubt coal needs to continue to play a major role in our future generation mix,” PUC Chairman Todd Snitchler told a state House committee. He also expressed confidence in advanced coal technologies.
AEP CEO Nick Akins sees coal as a diminishing part of the utility’s portfolio. The company’s future is “natural gas, energy efficiency, smart-grid activities and renewables,” he told a Columbus Metropolitan Club program.
PPL asked the Public Utility Commission to add another new line item to its customers’ bills: a fee that would help it recoup its costs for severe weather and expenses related to the $60 million blow dealt the company by Hurricane Sandy in 2012. The utility has just begun to collect a distribution improvement charge, a first in the state, and the new charge, if approved, would also be a first.
The Public Utility Commission refused to disclose details of its $60,000 settlement with PPL that resolved allegations that the company improperly transferred a repair crew from a high-priority outage to work on a low-priority outage after a freak snowstorm in October 2011.
The PUC denied a public records request by The Morning Call to review the letter from an anonymous tipster that launched regulators’ investigation. The PUC said its decision was necessary to protect the identity of the whistleblower. The agency also refused to identify the locations involved in the incident.
The Public Utility Commission approved settlements with IDT Energy and AP Gas & Electric on complaints of “slamming” and other illegal practices. The companies will pay civil settlements and take steps to comply with the state’s regulations. They admitted no wrongdoing.
PennFuture, an environmental group, criticized state officials for refusing to consider raising Pennsylvania’s alternative energy standard above the current target of 8% by 2021. “While other states in the region and around the country recognize the multiple benefits of renewable energy and have increased the requirements in their state portfolios, [the Department of Environmental Protection] is telling us upfront that they won’t consider the idea of increasing renewable energy in Pennsylvania,” the group said.
Dominion Virginia Power proposed lowering average customer bills 3.3% because of the unexpectedly lower cost of fuel. The fuel adjustment, which Dominion wants to make earlier than scheduled, would cut an average residential bill about $3.70. Overall rates would be about where they were five years ago, the company said.
Generation owners that do not qualify for a connection to the PJMNet private communication network would be able to purchase as many as five under a proposal approved by the Operating Committee.
PJM currently pays for at least one PJMNet connection for each transmission owner considered important to system reliability and for generation owners with resources of at least 100 MW. Entities that do not have a PJMNet link connect to PJM by Internet SCADA, which is less reliable.
The committee approved a proposal that would let smaller generating members, and those that already have a PJMNet connection, buy up to five connections. Members rejected a proposal to allow smaller generators to buy only one connection and another that would have required all members to buy their first connection.
PJM says the monthly cost for a non-redundant connection will be about $2,600. Installation will cost about $12,000 or $22,000, depending on the type of protocol used. Redundant connections would cost more.
PJM will flag potential upgrade requirements earlier in the transmission study process under manual changes outlined last week to the Planning Committee.
“We’re going to bring you more violations and you’re going to have to give us more upgrades,” said Steve Herling, PJM vice president for planning.
PJM evaluates the expected transmission impact of a new generator based in part based on the historical probability that it will reach commercial operation.
In past years, studies identified many reinforcements which were ultimately not needed as projects dropped out of the backlogged queue.
Improvements in study processing have reduced the backlog. As a result, some projects have cleared the Impact Study phase (studied at 53% probability) without any apparent violations, only to have violations indicated when they are evaluated at 100% in the Facilities Study.
This can delay completion of the Facilities Study, cause costly surprises to project sponsors and hamper base case development.
As a result, PJM plans to eliminate the 19% probability for Feasibility Studies and replace it with the 53% currently used for Impact Studies. Impact Studies will use the 100% probability.
PJM will make the change for studies beginning in November (Y3 Impact Studies, due 3/31/2014 and Z1 Feasibility studies, due 2/14/2014).
PJM says the changes will give customers more accurate estimates of required upgrades before entering Facilities Studies. In addition, projects with no identified impacts at the Impact Study phase won’t remain in “limbo” awaiting Facilities Studies.
Herling said planners faced a tough tradeoff: “Do you start with a bigger list and whittle it down or start with a small list and surprise people later?
“To give people clean Impact Studies or [ones incorrectly indicating] minor upgrades … we saw as too much to ignore.”
He said upgrade requirements that occur late in the process are problems for generation developers who “have already been talking to their banks.”
The committee will be asked to endorse the changes, which affect Manual 14B, at its next meeting.
“We have to act on this quickly or we’re just going to compound the problem,” Herling said. “…If we can come up with something better in six months we will.”
PJM has narrowed the list of favored solutions to the Artificial Island stability problems, officials told the Transmission Expansion Advisory Committee last week.
Eight companies proposed 26 potential solutions ranging from $100 million to $1.5 billion in the window that closed June 28.
Salem and Hope Creek Nuclear Reactors on Artificial Island. Photo Taken By Peretz Partensky from San Francisco, USA [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
PJM’s initial analysis focused on combining the lower cost proposals with static VAR compensators to provide reactive support. The analysis found that proposals interconnecting with facilities to the Delmarva Peninsula on the west are effective and have the lowest estimated costs.
PJM plans to hire an engineering consultant to review the proposals in more detail, including validation of cost estimates and identification of risks.
PJM’s Paul McGlynn said the consultant would not review all 26 proposals but that it was “premature” to identify any proposals as finalists.
“We’re not taking anything off the table at this stage,” he said. “I wouldn’t glean too much from what I said today because we still have a lot of work to do.”
PJM expects to recommend a solution to the TEAC and the PJM Board early next year.
Artificial Island is the home of the Salem and Hope Creek nuclear plants in Hancocks Bridge N.J. Five utilities and three independent developers made proposals in PJM’s first competitive transmission project under FERC Order 1000.
RALEIGH, N.C. — The capacity market and the role of demand response dominated the discussion as more than 170 state regulators, PJM staff and stakeholders gathered here for the OPSI annual meeting last week.
The role of imports and the coordination of the gas and electric markets also were the subject of remarks during nine sessions involving more than 40 panelists.
Although some of the voices were new, the debates were familiar to those who have attended stakeholder meetings. (All presentations from the conference can be found at the OPSI website.)
DR `Too Blunt’
Demand response and its role in the capacity market was a frequent theme.
As currently defined and deployed, DR is “too blunt an instrument,” said PJM CEO Terry Boston. Boston said PJM needs to be able to deploy some DR with less than two hours’ notice and do so with more geographical granularity.
“We need to focus it down to the … 69 (kV) and below feeder level” — the cause of the problems that led to load shedding in September, Boston said. “When we have shorter notice and longer dispatch, DR will have arrived.”
Gloria Godson, vice president of federal and PJM policy for Pepco Holdings Inc. and Katie Guerry, senior director of regulatory affairs for curtailment service provider EnerNoc, said they support PJM’s efforts to make DR more of an “operational” tool but said rapid changes risked alienating participants.
“It’s appropriate for the product to evolve. It’s not appropriate for demand response to be like all other resources,” said Guerry.
Godson said PHI lacked the ability to dispatch DR by the zip code or pNode. And more important than whether PHI has the technology to make changes is “when the customers are ready” for them, she said.
She opposed proposals to require DR to offer into the energy market, saying it would increase customers’ risk. “That’s not what we signed up for,” she said.
Guerry agreed: “Customers are not in the business of generating energy,” she said. “If we start requiring customers to be active participants in the energy market my concern is we are going to deter those customers from” taking part in DR.
In separate comments, Dan Griffiths, director of the Consumer Advocates of PJM States (CAPS) made a similar point. “For consumers, it’s about mitigating costs, not making profits — particularly for residential customers.”
Dallas Winslow
Dallas Winslow, chairman of the Delaware Public Service Commission, said regulators gave DR proponents leeway in crafting rules. “The pendulum went too far perhaps; we don’t want it to swing back the other way too far.”
Stu Bresler, PJM vice president of market operations, said he was encouraged Guerry and Godson’s comments. “I think I hear more areas in which we’re aligned than in which we are not,” he said.
Capacity Market Incentives
Several speakers recommended changes to the capacity market, saying current rules don’t encourage new generation or support existing plants.
Chuck Whitlock
Chuck Whitlock, president of Midwest commercial generation for Duke Energy, said his company’s Ohio River plants are among the cheapest coal plants in the country. Still, they struggle to earn revenues because of capacity prices suppressed by DR and low energy prices resulting from cheap natural gas and intermittent resources, he said.
Nick Akins
Nick Akins, president and CEO of American Electric Power, echoed Whitlock’s complaint. He said PJM should use a five-year rolling average to set clearing prices to reduce volatility. He also said PJM should buy capacity in seven- to 10-year increments to incentivize new generation.
“There is just no product that provides for long term capacity in the market,” he said. “What the market is telling us right now is not to invest.”
Meanwhile, Allen Freifeld, senior vice president, law and public policy for Viridity, said PJM should procure DR six or nine months before delivery rather than three years ahead. “For demand response, the three-year forward is a barrier to entry,” he said.
Capacity Imports
The role of capacity imports also was the subject of considerable debate.
Boston noted that imports into PJM have been cut twice this year by Transmission Loading Relief (TLR) declarations. Overreliance on imports, Boston said, are “a clear and present danger to reliability.”
AEP’s Akins said PJM is taking a risk in buying capacity as far away as Louisiana. “I wouldn’t depend on that much capacity from Baton Rouge to Shreveport let alone [to] Columbus, Ohio,” he said.
Susan Bruce
Susan Bruce, representing the PJM Industrial Customers Coalition, said customers benefit from imports that increase competition and lower prices. “We should not be erecting unreasonable barriers to their participation,” she said.
Auction Arbitrage
Participants generally agreed with PJM Market Monitor Joe Bowring, who said the RTO needs to address arbitrage between the Base Residual Auction and Incremental Auctions. “We need to address the lack of risks associated with what has become a financial strategy,” he said.
Steve Schleimer
Steve Schleimer, vice president of governmental and regulatory affairs for Calpine, said PJM should increase the penalty for failing to deliver promised capacity, calling the current 20% penalty “way too low.” Alternatively, he said, suppliers should give up all the upside in trading between the base and incremental auctions, excluding a 10% “dead band.”
Bruce agreed that there should be no speculation between the auctions but warned against “unnecessarily blunt” solutions.
No `Magic’ from FERC Conference
In a luncheon address, FERC Commissioner Cheryl LaFleur told attendees that she heard two conflicting messages at the commission’s technical conference on capacity in September: “`We need stability, consistency, certainty or we won’t invest. However, there are a lot of things that are broken. Can you fix them please?’” (See Capacity Market Attracts Praise, Criticism at FERC)
Citing the tensions between must-buy obligations and municipal utilities’ desire to self-supply she added, “To no one’s surprise we did not come up with a magical solution.”
Gas-Electric Coordination
The coordination of the gas and electric markets, another subject that’s on the mind of FERC, was the topic for a session Tuesday morning.
Abe Silverman
Abe Silverman, chief regulatory counsel for NRG Energy, said generators in New England are sometimes forced to choose between responding to RTO dispatch orders and pipeline tariffs.
“In the future, security constrained economic dispatch is actually going to have to take into account fuel constraints,” he said. “I don’t know how you do that. I don’t know if you can do that.”
Stan Chapman
Stan Chapman, senior vice president for marketing and customer services for Columbia Gas, said the penalties his pipeline can impose are not enough to dissuade generators from “drafting” gas from the pipeline without a supply contract.
“What scares me is when a generator tells me, `You should interrupt your gas customers to keep the electric system operating. They’ll understand.’”
Because generators are reluctant to sign firm gas contracts, Chapman recommended PJM purchase pipeline capacity and release it to generators.
Paul Sotkiewicz
That was a nonstarter to Paul Sotkiewicz, PJM’s chief market economist. “That would be PJM taking a market position on behalf of a group of market participants,” he said. “And that’s just not going to happen.”
RALEIGH, N.C. — Some of the attendees had drifted away by the final session of last week’s annual meeting when OPSI and PJM publicly celebrated the renewal of PJM’s contract with Monitoring Analytics.
“We could have had a very different situation up here” had the contract not been renewed, said Michigan Public Service Commissioner Greg White.
“We would have had better attendance,” joked Maryland Public Service Commissioner Lawrence Brenner, chairman of OPSI’s Market Monitoring Committee.
In March, the Organization of PJM States Inc. (OPSI) joined industrial consumers and cooperatives in protesting the PJM Board of Managers’ plan to issue a request for proposals for monitoring services. OPSI, which represents state regulators in the PJM footprint, said the board’s proposed RFP contained language that could undermine the independence of the monitoring function. Other protestors expressed concern that PJM would suffer a loss of institutional knowledge if it replaced Monitoring Analytics.
But all was seemingly forgiven last week as PJM Board Chairman Howard Schneider and Jean Kinsey, head of the board’s competitive markets committee, shared the dais with Monitoring Analytics President Joe Bowring and several OPSI board members in a panel discussion that closed the two-day conference.
Schneider said that itself marked progress: In past years, no board members had been on the panel for the Market Monitor Advisory Committee meeting. “We hope this is a harbinger of things to come in the future,” Schneider said. “Not only do you need to get Dr. Bowring’s view of how things are going, you also need PJM’s view.”
The rapprochement was made possible when the board dropped plans to solicit competing bids and announced in April that it was negotiating a new contract with Monitoring Analytics.
That did not end tensions with OPSI, however. In July, Brenner sent a letter to the board complaining that the state regulators had not been consulted in the drafting of the new contract. (See PJM, Monitoring Analytics Sign New Contract) Brenner said the board’s action ignored a 2008 order in which the Federal Energy Regulatory Commission authorized OPSI to provide advice to the commission and PJM regarding market monitoring issues.
OPSI later asked FERC to amend the contract to include clarifications — included in a transmittal letter — regarding the balance between board oversight and the monitor’s independence.
The commission rejected OPSI’s request in a Sept. 27 order, but said it expected “that PJM and the [Independent Market Monitor], having made commitments in the transmittal letter, will abide by them.”
That was sufficient, Brenner said last week. “All’s well that ends well.”
Kinsey said the contract was “much improved” over the original because it clarified the Board of Managers’ oversight of the monitor, including regular performance reviews. The pact runs through the end of 2019.
While all expressed relief at the resolution of the contract dispute, there was no mistaking the underlying tensions that remain.
Both Bowring and Schneider are strong-willed personalities and can be blunt when they disagree.
When Brenner said he was happy to be able to call Bowring the “current and future market monitor,” Schneider interjected — “Current and future king” — with a chuckle.
“He has managed to annoy just about everybody in this room,” Robert Hanna, president of the New Jersey Board of Public Utilities, said of Bowring. “To me that’s a very good sign. He’s not in the tank for anybody. He does it in a principled way and he lets you know the basis.”
Schneider also tweaked Brenner gently. The chairman observed that PJM’s stakeholder process “seems to be working well.”
“Sometimes slowly,” Brenner said.
“Sometimes slowly and sometimes too fast, as you tell us,” Schneider responded.
Capacity imports could clear at lower prices than internal resources under proposed import limits being considered by PJM.
PJM officials are planning to create an RTO-wide import limit as well as individual limits for PJM interfaces with the North, South and West, Stu Bresler, vice president of market operations, told the Market Implementation Committee last week.
If the external limit is not reached, the “rest of RTO” and “outside RTO” regions would clear together at the same price. Once the cap is reached, however, the marginal external resource would set the price for the “outside RTO” region while the marginal internal resource would set the price for the “rest of RTO” region.
If there is price separation, internal resources will clear at a higher price than imports, just as resources east of PJM’s west-to-east constraints are often priced higher, Bresler said.
An alternate approach being considered by PJM is to require that resources have firm transmission as a condition for allowing them to offer into the auction.
PJM said last month that its initial analysis indicated the RTO should be able to absorb the more than 7,400 MW of imports that cleared in May’s capacity auction for 2016-17.
Officials said that their initial review found PJM can import 11,000 to 12,000 MW simultaneously. That would allow at least 7,500 MW of imports to clear in the capacity auction, with an additional 3,500 MW reserved for the RTO’s Capacity Benefit Margin — a set aside to be used in emergencies. (See Current Capacity Imports OK: Study)
However, PJM’s Mark Sims told the Planning Committee last week that the estimate may be overly optimistic because it assumes redispatch of almost 10,000 MWs. “We know in real-time that these kinds of adjustments … haven’t happened,” he said.
Capacity Price Curve With Import Cap (Source: PJM Interconnection, LLC)
Sims said staff will conduct a revised analysis that puts more “realistic” limits on redispatch. The new analysis also will set a threshold distribution factor of 3% rather than the 1% factor used in the original analysis. “We don’t want to consider distribution facilities in Florida,” he said.
The Planning Committee approved a problem statement on a proposed cap last month in response to the May capacity auction, in which cleared imports increased by more than 3,000 MW.
Officials plan to seek Planning Committee approval of the import caps next month. PJM wants to implement the new rules prior to posting the planning parameters for the next Base Residual Auction.
Delmarva Power & Light Co. must defend itself against challenges to its formula transmission rate filings for 2011 and 2012, the Federal Energy Regulatory Commission ruled last week.
![Salem and Hope Creek Nuclear Reactors on Artificial Island. Photo Taken By Peretz Partensky from San Francisco, USA [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons](/ext/resources/2013/09/Salem_and_Hope_Creek_Nuclear_Reactors_7238282472.jpg)
