FTR Lateness Blamed on High-Volume Period
VALLEY FORGE, Pa. — PJM’s Asanga Perera came to last week’s Market Implementation Committee meeting prepared to seek forgiveness. But instead of mea culpa, his message was: “Help Wanted.”
PJM’s Tariff requires that it post monthly financial transmission rights auction results within five days, but a series of emails to stakeholders made it clear that wasn’t going to happen this month. PJM was eventually able to post the solution on March 1, and all paths were awarded for the full period.
That said, Perera noted this is the second time in as many years that results of the March auction have been late. An analysis found three contributing factors. Bid volumes and transmission outages played a role, he said, but the major issue was overlapping periods.
Every quarter, four auction periods occur simultaneously, stretching PJM staff and resources to their limits. Perera noted that some staff worked throughout the night to make even the relaxed deadlines. In March, the markets for March, April, May and fourth-quarter auctions are available. The other months with four open periods are June, September and December.
Perera solicited stakeholder feedback, noting that the issue may impact approval of residual auction revenue rights.
In other FTR news, PJM said it will file Tariff changes documenting its new FTR forfeiture rules by April 19. The rules will be retroactive to Jan. 19 — the date of FERC’s order finding PJM’s current rules not just and reasonable — once the appropriate tool is built. The new approach will include several tests to determine the FTR’s impact. Additionally, the forfeiture is only for FTR profits. PJM plans to discuss FTR thresholds and review related Tariff and manual changes at the April MIC meeting. (See FERC Orders Portfolio Approach for PJM FTR Forfeiture Rule.)
Vitol Accepts Simplified Solution to Spot-In Issues
Vitol’s Joe Wadsworth, who has urged PJM for years to rectify issues with its spot-in transmission service procedures, said he is willing to accept a smaller revision that would better align daily timelines for when the service is granted.
Wadsworth had been campaigning for a much more sophisticated market-based solution that would apply only to the NYISO seam. The Independent Market Monitor objected that any changes to border operations should apply to all seams. (See “Spot-in Transmission Analysis Expanded to all Interfaces,” PJM Market Implementation Committee Briefs.)
“I always hate to surrender, but I don’t think it makes sense to pursue [the more-sophisticated plan], especially if PJM doesn’t support it,” Wadsworth said. “But there’s significant room for improvement there, not just on the issue I’ve raised but on other issues too.”
He said the challenge with stakeholder leadership — in this case, on cross-border issues — is trying to wrangle both grid operators. Although he said the issue deserves a more comprehensive look by NYISO and PJM, PJM wouldn’t support NYISO’s requirement that it distribute any costs it incurs to PJM stakeholders. The grid operators have been unwilling to proactively address the issue without his insistence, Wadsworth said.
PJM agreed that the issue deserves a closer look.
“It’s tough to say there’s not things to improve there,” said PJM’s Adam Keech, who oversees market operations. “To the extent that stakeholders wanted to take a look at the issue, I would probably say we should look at all the interfaces and not just New York.”
Calpine’s David “Scarp” Scarpignato asked about the prudence of making seams changes without acknowledgement from the other grid operator. PJM’s Chris Pacella, who has led the analysis on the spot-in issue, said PJM has changed its internal procedures — deadlines in this case — and not heard back from NYISO about any problems.
Suction Level Revisions Endorsed Despite Stakeholder Reluctance
Stakeholders approved by acclamation amendments brought by the Independent Market Monitor to a problem statement and issue charge to address minimum tank suction level (MTSL) costs. The vote was quick even after NRG Energy’s Neal Fitch pointed out that the issue was likely considered when annual revenue requirements for black start units were initially discussed.
“I have to believe this topic was discussed then, so why are we discussing it again?” he asked.
PJM’s Tom Hauske explained that, under the current rules, generators can over-recover their costs for keeping the fuel available. (See “PJM Looking to Avoid Lump-Sum Billing on New Black Start Units,” PJM Market Implementation Committee Briefs.)
The Monitor provided an illustration of a generator with a fuel tank capacity of 4 million gallons and an MTSL of 800,000 gallons, 48,000 gallons of which is the black start portion.
PJM’s original method would allow recovery of the carrying costs on the full 800,000 MTSL, while the Monitor would allow recovery of costs for only 48,000 gallons. “The actual incremental amount of MTSL that results from the addition of black start capability is zero,” the Monitor explained.
Hauske also presented an updated issue matrix for the initiative on annual revenue requirements for new black start units. “At this point in time, I think we’re pretty close” to consensus, he said.
NOPR Analysis: Uplift Bad, Fast Start not Good
PJM staff gave the MIC their analyses of recent FERC Notices of Proposed Rulemaking, making clear they have some strong opinions. Regarding the NOPR on uplift, PJM’s Rebecca Stadelmeyer said the RTO doesn’t support it.
Asked if she could explain why, she said: “Absolutely, I’d love to. I thought we might skip right over that.”
FERC’s first proposal would create two categories for real-time uplift costs associated with deviations: systemwide and congestion management, and charge uplift only in accordance with cost-causation principles. Stadelmeyer said it could be done, but that PJM doesn’t support any parts of the NOPR. (See “Members Approve Uplift Proposals,” PJM Markets and Reliability and Members Committees Briefs.)
More important, Stadelmeyer said, was FERC’s second proposal to distinguish between helpful and harmful deviations and allocate uplift only to harmful ones.
“We’ve continuously said that we cannot find a non-subjective way to isolate whether those deviations help or harm the system,” she said.
There was also some disagreement on the intentions of the NOPR. DC Energy’s Bruce Bleiweis said it stated “fairly strongly” that costs should be allocated to load.
“That wasn’t our read,” Keech said. “If they wanted it to be allocated to load, they probably would have said that.”
On the fast-start NOPR, PJM appeared largely indifferent until it came to relaxing the eco-min of fast-start resources. Doing so “will likely create significant over-generation concerns,” PJM wrote in its presentation. The change could exacerbate already complex uplift allocation methods. (See FERC: Let Fast-Start Resources Set Prices.)
“No analysis could be indicative or identify what the tradeoff would be,” PJM’s Lisa Morelli said. “It would not be a wash. There would likely be a difference between the uplift paid to fast start and the [lost opportunity cost] of resources.”
FirstEnergy’s Jim Benchek asked her to guess at which would be higher, but she said she wouldn’t. Citigroup Energy’s Barry Trayers said that it appeared that much of FERC’s opinion came from a “MISO foundation,” along with lessons learned, when other ISOs/RTOs might have more robust and efficient procedures.
The Monitor largely agreed with PJM’s opposition. “[For] those of you who haven’t read our comments, we think the NOPR is a terrible idea,” Bowring said. “We don’t think the solution is to change the definition of fast start. We think the appropriate way to handle this is to think of it as a tradeoff.”
– Rory D. Sweeney