VALLEY FORGE, Pa. — PJM’s Independent Market Monitor said Wednesday that recently approved maintenance adders to the synchronized reserve calculation allow resources to withhold from the reserve market and increase offers above competitive levels.
To remedy this, the IMM’s Catherine Tyler told the MIC to set the synchronized reserve operations and maintenance cost included in Manual 15 to zero. Market sellers could still submit alternate O&M cost calculations to PJM and the Monitor for review using an exception procedure outline in Section 1.8 of the manual.
Stakeholders on the Energy Price Formation Senior Task Force agreed last year that O&M costs for synchronized reserve offers should be removed from PJM’s market rules. That docket is still pending before FERC (EL19-58).
Tyler said that a specific provision in Manual 15 allows steam unit synchronized reserves to include O&M costs attributable to a heat rate increase in their offers. The incremental energy offer curve and the no-load costs outlined in Schedule 2 of the Operating Agreement and the manual already account for this, Tyler said.
Sharon Midgley, Exelon’s director of wholesale market development, questioned why stakeholders would make this change while FERC has yet to rule on the energy price formation filing.
“The intent is to value resources more appropriately than how they are valued today,” she said. “This really decreases the value of reserves. … It’s doing the exact opposite of what the package’s intent was. Really focusing on one tiny component to us doesn’t seem right at this point in the process.”
“This is overstating costs for reserves, and it’s inappropriate and incorrect,” Tyler said. “Any other market design changes around reserves that would affect the price are completely separate from this.”
Stakeholders will vote on the potential manual change at the February MIC meeting.
Order 841 Update
Andrew Levitt, of PJM’s Applied Innovation Department, said work continues on the RTO’s brief to FERC due March 11 regarding its proposed 10-hour minimum runtime rule for energy storage resources offering into the capacity market.
FERC accepted most of PJM’s storage rules in October, but set the RTO’s 10-hour proposal for a paper hearing to determine whether it was just and reasonable. PJM requested a 90-day extension for its brief on Nov. 26.
In the filing, PJM said it needed extra time to engage with stakeholders after noting the sheer volume of protests over the proposed rule.
“Such dialogue will allow PJM to explore potential alternative approaches, as well as to ensure that all sides better understand each other’s respective positions,” the RTO wrote.
— Christen Smith