Monday, March 18, 2019

Capacity Market Sellers Anxious over Uncertain PJM Auction Rules

By Christen Smith

VALLEY FORGE, Pa. — Capacity market sellers expressed anxiety Wednesday over PJM’s “parallel path” for its upcoming Base Residual Auction, urging staff to consider delaying the auction until FERC clarifies the minimum offer price rule (MOPR).

Stu Bresler, PJM senior vice president of operations and markets, said the RTO is asking capacity sellers to adhere to BRA timelines under current rules as a preventative step in case the commission provides no additional guidance before the auction, which has already been delayed to Aug. 14.

FERC last summer granted PJM’s request to delay the auction in response to the commission’s June ruling requiring the RTO to revamp its MOPR to address price suppression from rising state subsidies for renewable and nuclear power (ER18-2222). (See FERC OKs Delay of PJM Capacity Auction.)

PJM filed its proposed MOPR changes Oct. 2 and said a FERC ruling by March 15 would keep the August schedule on track (EL18-178, ER18-1314, EL16-49).

But at Wednesday’s Market Implementation Committee, PJM’s Jeff Bastian said the RTO had no indication when a ruling would be made.

Bastian then walked stakeholders through the upcoming deadlines in what he called its “parallel path” to the August auction, for delivery year 2022/23. The document called for sellers to confirm whether they will be offering resources with “actional subsidies” by March 17 — a deadline stakeholders said was unreasonable.

Jason Barker, Exelon | © RTO Insider

Staff said they believe only the MOPR will be subject to change in the pending ruling. But they acknowledged the auction might need to be pushed back again if the ruling is not issued soon.

“I would concede that at some point we would get to where it would be impossible to proceed and we would have to look at delaying the auction,” Bresler said. “I don’t have a specific date I can give you at this point.

“I think any delay has some kind of a consequence, so that’s why we are trying to avoid it,” he continued. “We wouldn’t want to go past next May’s auction, obviously. Anything in between has a certain level of negative consequences with it, but I think it gets worse as we go through time.”

Stakeholders balked at the plan, insisting it contradicted the arguments made in PJM’s original delay waiver that its market suffers without certainty.

“It’s hard, as sellers, to know what to provide for MOPR,” said Jason Barker of Exelon. “This new path no longer allows us as sellers to evaluate FERC’s new conditions. This is going to be problematic for market sellers. You guys realize that and wrote it in your Tariff waiver request. Now we seem to be slavishly following a schedule and not the needs balanced in the FERC order.”

Adrien Ford of Old Dominion Electric Cooperative echoed Exelon’s sentiments and complained about the persisting uncertainty across PJM’s markets.

“I don’t feel like there is a single market I can give an update [to colleagues] on with any certainty,” she said. “Then to add this on top of it? I just think it’s going to be really problematic for capacity market sellers.”

John Horstmann, Dayton Power & Light | © RTO Insider

John Horstmann of Dayton Power & Light pressed PJM for more time.

“This could be life and death for your unit,” he said. “You’ve heard from a number of stakeholders how there’s going to be huge impacts. And yet you want us, without any real Tariff, to comply with all these data submissions because they might be enforced. Of course, they might not. ‘Oh yeah, and we want it in a week and a half.’ Where’s the reasonableness in that?”

“What we appear to be doing is asking people to make irreversible decisions based on rules that may change,” said Joe Bowring, PJM’s Independent Market Monitor. “It sounds like PJM’s theory is move forward with existing rules and just be prepared for changes.”

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