Thursday, February 21, 2019

PJM Stakeholders Explore Price Formation, Seek Transparency

By Rory D. Sweeney

VALLEY FORGE, Pa. — PJM should explain its daily operating decisions in more detail so market participants can better understand how markets are formed, stakeholders told staff at Tuesday’s special session of the Market Implementation Committee.

PJM price formation security constrained economic dispatch

Greiner | © RTO Insider

Bruce Bleiweis of DC Energy went so far as to request that PJM produce “an actual document” that enunciates all of its processes.

“If there are things that PJM doesn’t publicly want to post, doing it under the [Critical Energy Infrastructure Information] protocol should be sufficient,” he said.

Chantal Hendrzak, who chairs the MIC, said that her staff at PJM will “take that back and see what we can come up with.”

Part of the concern for stakeholders is that PJM gives its system operators discretion to analyze data and make decisions on the fly. While this keeps the system flexible, stakeholders said it also makes understanding the RTO’s thought processes more opaque.

“I think the first order of priority ought to be [finding out] what information [PJM can share] to understand what’s going on on the system,” one stakeholder said. He clarified that part of his interest was looking back to determine what caused uplift on the system.

PJM’s Keyur Patel, who gave a presentation on the RTO’s day-ahead market clearing process, pointed out that PJM will dispatch between 1,200 and 1,500 generation units on a typical day, and only 10 to 15 units will change throughout the day.

“There are times where we do want to make some commitment changes, but we run out of time and at those times, it’s better to post results on time than to change one unit,” he said.

Additionally, some decisions are made by the mathematic calculations of PJM’s security constrained economic dispatch (SCED) system without human intervention, said PJM’s Joe Ciabattoni, who gave a presentation on the RTO’s dispatch process.

There are times when “the engine cannot solve the problem in the time parameters it’s given. [It will] sacrifice one constraint to get power balance and retain control for the rest of the system,” he said. “We need a solution every three to five minutes to maintain system control.”

In that case, the system relaxes its constraints to allow the system to solve.

Ciabattoni explained it as his “but-for logic,” in that certain units wouldn’t have been committed but for a specific constraint.

“To unravel every one of those little variables … would need a team to determine them all,” he said. “But we could use: ‘but for that constraint, we wouldn’t have committed these [theoretical] 500 MW.’”

PJM’s perfect dispatch analysis evaluates all commitments, but only after the fact when the RTO knows what flow actually transpired, he said.

Ciabattoni said PJM doesn’t have any ramping issues for wind or solar “like other RTOs do,” except on extremely cold mornings.

An issue to consider, he said, is that once a unit is brought on, the constraint may go away because that unit overwhelms the constraint, but it may return if the unit is turned off.

“When SCED is looking at a solution … it may be getting fractional megawatts from a bunch of units,” Ciabattoni said, or a unit’s economic minimum output may be so close to its economic maximum output that it can’t cycle up or down efficiently. If such a unit is left running, there will be hours where it sets price and hours where it does not. When It doesn’t, it will create uplift, he said.

Joel Luna of Monitoring Analytics, the firm that serves as PJM’s Independent Market Monitor, said uplift comes down to three factors: megawatt-hours, LMP and the unit’s offer price.

The session resulted from a problem statement approved by stakeholders in January. (See “Work on Uplift Moves Forward Despite NOPR,” PJM Markets and Reliability and Members Committees Briefs.)

By the end of the meeting, the special session’s facilitator, PJM’s Rami Dirani, determined that stakeholders needed more education before a useful list of interests for the group could be determined. He decided to cancel the group’s next meeting on April 5 and proceed with more education at its following meeting on April 25.

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