Friday, December 14, 2018

PJM MRC/MC Briefs: Oct. 25, 2018

By Rory D. Sweeney

Summer-only Demand Response

WILMINGTON, Del. — Stakeholders at last week’s PJM Markets & Reliability and Members committees meeting agreed to fast-track a proposal on demand response so it can potentially become effective in time for the deadlines related to the Base Residual Auction for the 2022/23 delivery year, which will be held next August.

The proposal, developed through the Summer-Only Demand Response Senior Task Force, is intended to “better value” summer-only DR by allowing the resources’ value to impact the load forecast as an alternative to participating as a supply-side resource in capacity auctions. To avoid double counting, resources that take the peak-shaving alternative wouldn’t be eligible to participate as either a DR resource or price-responsive demand (PRD) in the same year. (See Plan Would Reduce PJM Capacity Curve Through Peak Shaving.)

PJM’s Markets & Reliability and Members Committees met on Oct. 25, 2018. | © RTO Insider

The proposal received 3.48 in favor in a sector-weighted vote that had a 3.34 endorsement threshold in the MRC. PJM sought and was granted permission to seek approval at the MC on the same day, a request that is usually discouraged. The proposal received 3.69 in favor in another sector-weighted vote with the same threshold. A competing proposal developed by EnerNOC that had also been scheduled for MRC consideration was retracted prior to the meeting.

Carroll | © RTO Insider

PJM’s Rebecca Carroll said the same-day request was made because the necessary changes to the Reliability Assurance Agreement require approval by the Board of Managers, whose next meeting occurs before the next MC. Additional delay would mean the revisions wouldn’t get approved until the board’s February meeting.

The endorsed proposal was developed in conjunction with proposed revisions for measuring PRD, but PJM decided to delay seeking an endorsement on the PRD changes pending the outcome of the vote on the peak-shaving proposal.

Scarpignato | © RTO Insider

Calpine’s David “Scarp” Scarpignato questioned that approach, saying he would have preferred to see them “voted together, if possible,” though he did not motion to defer the peaking-shaving vote.

“My comments are more to the stakeholders to make sure everyone understood that these proposals are meant to be tied together,” he said.

The PRD proposals received a first-read at the MRC and will be considered for endorsement at its Dec. 6 meeting. They address whether PRD should be required to reduce load in the winter like other Capacity Performance resources.

Proxy Fight

Members and staff engaged in a debate within a debate during a vote on revisions to the regulation market when a stakeholder requested time to set up voting as a proxy for another member not in attendance.

Panda Power Funds’ Bob O’Connell challenged the move, saying PJM’s policies require making that announcement by noon the day before the meeting. PJM’s Dave Anders said that requirement was simply meant to give the RTO enough time to make the necessary changes and that it’s traditionally been allowed if possible.

Direct Energy’s Marji Philips challenged that, saying she has experienced situations where she’d been told the proxy can’t be set up in time.

“You need to stop telling people that if that’s not true,” she said. “We [either] have a process or we don’t going forward.”

PJM CFO Suzanne Daugherty, who chairs the MRC, acknowledged the need for predictability.

“We do want to always give consistent feedback on the procedures,” she said.

Anders announced the issue was resolved when the market participant joined the meeting to vote without the proxy.

Day-ahead Market Timeline

Stakeholders also supported fast-tracking a proposal that would allow more time each morning to submit day-ahead bids and offers. Thanks to improved computing power, staff are able to push back the submission deadline from 10:30 a.m. to 11 a.m., PJM’s Tim Horger said.

While the proposal was only scheduled for a first read, Old Dominion Electric Cooperative’s Adrien Ford motioned for a vote on it, prompting Philips to voice concern that rules were once again being subverted. Ford acknowledged the point, saying she wouldn’t have made the proposal other than for the benefit of timing. It was also approved in the MC as part of its consent agenda.

Staff also agreed to seek expedited approval from FERC.

“PJM has heard loud and clear that the membership would like to have this implemented as soon as possible,” PJM’s Stu Bresler said.

Opportunity Cost Calculator Vote Deferred

A faceoff between PJM and its Independent Market Monitor about whose opportunity cost calculator reigns supreme might be ending amicably and without FERC involvement.

The situation escalated in August after stakeholders threatened to push through Operating Agreement changes if PJM held on to a recently enacted policy of not accepting the Monitor’s calculator in determining generators’ cost-based energy offers. The threat incentivized PJM and the Monitor to work toward a deal (See “PJM, Monitor Come to Agreement on Opportunity Cost Calculator,” PJM MRC/MC Briefs: Sept. 27, 2018.)

pjm price formation

Tyler | © RTO Insider

Prior to the MC vote on the OA changes, Bresler thanked the Monitor’s staff for providing “an extensive review” of how its calculator works and explained that the cooperation has allowed PJM to find a way to work within its existing policies to approve using the Monitor’s calculator.

“We are in a good place now as to how the two calculators can coexist,” he said.

The announcement satisfied O’Connell, who initiated the stakeholder threat, and he motioned to postpone the scheduled vote on the OA changes until the Jan. 24 MC meeting. The motion was approved.

“It’s my preference that we don’t amend the OA unless we absolutely have to,” he said.

The Monitor’s Catherine Tyler cautioned that the idea shouldn’t be taken off the table completely. The IMM has proposed alternative revisions to address the issue, as has PJM.

Market Seller Offer Cap Balancing Ratio

By the slimmest of margins, the MC declined endorsement of proposed Tariff revisions that would change how PJM estimates the expected future balancing ratio used in the default market seller offer cap.

The proposed method would take the average balancing ratios during the three delivery years that immediately precede the BRA using actual balancing ratios calculated during RTO performance assessment intervals (PAIs) of the delivery years, along with estimated balancing ratios calculated during the intervals of the highest RTO peak loads that do not overlap a PAI for any preceding delivery year with less than 360 intervals (30 hours) of RTO PAIs. (See “Balancing Ratio,” PJM Market Implementation Committee Briefs: July 11, 2018.)

“We’re in a spot where we’re not comfortable supporting this proposal,” said Susan Bruce, who represents the PJM Industrial Customer Coalition. Greg Poulos, executive director of the Consumer Advocates of the PJM States, said many of his members also can’t support it.

grid resilience andy ott pjm fuel diversity

Ott | © RTO Insider

The measure received 3.3 in favor in a sector-weighted vote, short of the necessary 3.34. Bresler said the existing process can be used because there are PAIs from this year, which range between 80 and 90%.

“We have reviewed this with legal and the Tariff does not say anything about the scope or the region over which [the PAI] occurred,” he said. The two PAI incidents earlier this year were very localized. (See 2nd Load Shed of PJM’s CP Era Follows Closely on 1st.)

While the proposal would have been a better approach, staff believe they fulfilled the required investigation of the issue, Bresler said.

“We think we’re good,” PJM CEO Andy Ott said.

The Monitor, however, might not be as satisfied.

“We may circle back. We have concerns about using those [PAIs],” Tyler said.

Super Forum

Members endorsed a proposed problem statement and issue charge related to potential enhancements to the stakeholder process developed in response to feedback gathered in the Stakeholder Process Super Forum held on July 25, 2018. (See Poll: PJM Stakeholder Process Imperfect, Necessary.)

The approval included a friendly amendment to the problem statement suggested by Duquesne Light’s Tonja Wicks that an additional pathway “or pathways” need to be developed for vetting issues that are contentious or must be decided quickly. Action on the plan is set to start on Jan. 1.

Nominating Committee Recommendations

Members approved nominees for the 2018/19 class of the Nominating Committee. They include: Pat McCullar of the Delaware Municipal Electric Corp. for the Electric Distributor sector; Kristin Munsch of the Illinois Citizen Utility Board for the End Use Customer sector; Scarp for the Generation Owner sector; DC Energy’s Bruce Bleiweis for the Other Supplier sector; and John Horstmann of Dayton Power & Light for the Transmission Owner sector.

Stakeholders Approve Variety of Actions

Stakeholders endorsed by acclamation several manual revisions and other operational changes:

  • Manual 3A: Energy Management System (EMS) Model Updates and Quality Assurance (QA). Revisions developed to clarify the process for considering external bulk electric system facilities for modeling.
  • Manual 13: Emergency Operations. Revisions developed as part of PJM’s comprehensive security-threat review.
  • Manual 11: Energy & Ancillary Services Market Operations. Revisions developed to address FERC approval of Tariff changes related to a new day-ahead pseudo-tie transaction product designed to address overlapping congestion for units pseudo-tied out of PJM.
  • Manual 28: Operating Agreement Accounting. Revisions developed to address FERC approval of Tariff changes related to a new day-ahead pseudo-tie transaction product for units that are pseudo-tied out of PJM.
  • RPM Credit Requirement Reduction Clarifications: Tariff language to remove an apparent overlapping credit reduction provision for qualified transmission upgrades, to clarify milestone documentation requirements for internally financed projects and to clarify that capacity market sellers should submit requests for reductions..
  • Transmission Constraint Penalty Factors: Joint PJM-Monitor package developed at the special Market Implementation Committee sessions related to transmission constraint penalty factors and draft Manual 11 and Manual 33 revisions, as well as OA and Tariff language. It was also approved in the MC as part of the consent agenda. (See “Transmission Constraint Relaxation Removed,” PJM Market Implementation Committee Briefs: Sept. 12, 2018.)
  • FERC Order 831 – Offer Caps: Manual 11 language that describes the long-term automated process for price-based offers greater than $1,000/MWh. There were seven objections from consumer advocates. (See “Automating Offer Confirmation,” PJM Market Implementation Committee Briefs: Sept. 12, 2018.)
  • 2018 Reserve Requirements Study Results: The results recommended a 15.7% installed reserve margin and a 1.0887 forced pool requirement, both of which are decreases from last year’s recommendations. It was also approved in the MC as part of the consent agenda. (See “IRM Study,” PJM PC/TEAC Briefs: Oct. 11, 2018.)
  • Cost Development Manual Biannual Review: Members will be asked to endorse draft revisions to Manual 15 developed through the required biannual review, which include addressing terminology inconsistencies and updating the Handy-Whitman Escalation Index.
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