By Suzanne Herel
The PJM Board of Managers last week directed staff to seek FERC approval for a package of rule changes related to financial transmission rights (FTRs) and auction revenue rights (ARRs) after the Members Committee nearly reached consensus on the proposal.
“In making this decision, the board took into account the near two-thirds consensus achieved through the stakeholder process,” PJM said in a release. “It also considered the need to address the equity issues associated with the current rules by which the transmission system is planned to ensure future feasibility of Stage 1A ARRs and revenue inadequacy is allocated among holders of both positively and negatively valued FTRs.”
The rule changes, proposed by Old Dominion Electric Cooperative, would redesign the FTR and ARR processes, combining recommendations from PJM and the Independent Market Monitor.
In August, the MC fell just short of a sector-weighted consensus on the proposal, which was backed by most members of the End Use Customer, Transmission Owner and Electric Distributor sectors but won support of only one-third of the Generation Owner and Other Supplier sectors. (See ODEC Seeks Last-Ditch Vote on Deadlocked FTR/ARR Issue.)
The plan contains three elements.
One, drawn from a PJM staff proposal regarding the Stage 1A 10-year process, escalates the current ARR results using a zonal load forecast growth rate of +1.5%. The other two elements change the method of reporting the monthly payout ratio so that any negative target allocations are included as revenue, slightly increasing the reported payout ratio. It also treats each FTR individually, eliminating the netting of positively and negatively valued FTR positions in a portfolio prior to determining positively valued FTR payout ratios.