The PJM Markets and Reliability Committee deferred a vote on a proposed issue charge to consider rule changes for hybrid resources after members questioned the RTO’s plan to assign it to a new senior task force.

PJM has more than 10,000 MW of co-located generation and energy storage hybrid resources in the interconnection queue. RTO staff intend to focus the effort primarily on solar-battery hybrids, which represent more than 95% of the total, with the remainder wind-battery and gas-battery.

Since introducing the issue charge at the March MRC meeting, PJM added to the education topics the interconnection queue process for hybrids, including how existing material modification rules apply. It also pushed the start date from May 1 to July in response to concerns over the MRC’s workload. (See PJM MRC Moves Forward on Storage, Hybrids.)

FERC has scheduled a technical conference on the “technical and market issues” raised by the growth of hybrid resources for July 23. (See FERC Sets Tech Conference on Hybrid Resources.)

PJM’s Scott Baker said staff recommended creating a senior task force because of the varied issues raised by hybrid configurations. “There’s enough cross-functional [issues] here between planning, markets and operations to warrant this being a separate group,” he said.

Under Manual 34, a senior task force reports to a senior standing committee (the MRC or Members Committee) and is created for “consideration of specific issues that have the potential for large dollar or major policy impacts.”

Dayton Power & Light’s John Horstmann said that while he supported the initiative, it should be a task force under one of the standing committees — the Market Implementation Committee, Operating Committee or Planning Committee — rather than a senior task force.

“To the extent it crosses MIC, OC or PC interests, there is no reason the other committees can’t be invited” to the meetings, he said.

PJM’s Dave Anders acknowledged that the RTO has had “a bit of a struggle” with assigning new projects because of conflicts between concept and practice.

“In theory, we could invite others to a task force under the MIC, but in practice that doesn’t always happen,” he said. “The senior task force seems to get more attention and … participation.”

Horstmann said he was “frustrated” because he and others in the Stakeholder Forum “met for quite a few months to develop clearer” rules for such assignments in Manual 34.

“We think we’ve fixed this problem, but it hasn’t been presented to members for endorsement,” he said.

After discussion, MRC Chair Stu Bresler decided to defer action on the issue charge so staff could reconsider the assignment.

Horstmann explained after the meeting that the members created a table for inclusion in Manual 34 listing “the different types of stakeholder groups with a description of their function and use, including the expected length of time that they would meet.”

Emerging Technologies Subcommittee Proposed

Stakeholders also expressed concerns about the reporting structure for a new Emerging Technologies Advisory Subcommittee (ETAS) that PJM proposed to support its Advanced Technology Pilot Program (ATPP). The ATPP provides a testing ground for studying the viability of integrating new technologies that could enhance system reliability, operational and market efficiency, and resilience.

Eric Hsia of PJM reviewed the subcommittee’s charter, which the MRC will vote on May 28. Hsia said PJM was acting on the issue based on stakeholder feedback and the RTO’s recognition that it currently doesn’t have a forum to discuss emerging technologies and pilot programs.

The subcommittee would identify operational, planning and markets-related issues and make recommendations, Hsia said. In addition to hosting technical education sessions on emerging technologies, it would create and review ATPP procedure documentation to incorporate stakeholder feedback into the process and provide additional transparency. PJM would continue to maintain authority over the ATPP, and the subcommittee would not make decisions on selecting specific pilot projects. The group also would identify benefits of new technologies and obstacles to implementing them.

Gary Greiner, director of market policy for Public Service Enterprise Group, said he supports the idea but that the subcommittee should not report to the MRC, as proposed.

“I think most of what you’re going to see would be operations-based. I’m wondering why it wouldn’t be down at the standing committee level,” he said. “I really think there’s value in having those issues pass through that lower-level layer to be fully vetted.”

Hsia said staff did discuss having the ETAS report to a standing committee but decided on the MRC as its parent because of “the nature of pilot programs and the cross-functional nature of the discussions.” Many issues that come before the new group would involve planning as well as operations, he said.

Paul Sotkiewicz of E-Cubed Policy Associates asked if there was a way to combine the solar hybrid resources issue previously discussed with the ETAS as a way to pare down the number of stakeholder groups.

“It’s just becoming unwieldly to follow all of the committees at this point,” Sotkiewicz said.

Bresler, PJM’s senior vice president of market services, said the location of the committee is “one thing we’ll examine prior to bringing this back for a vote.”

Greg Poulos, executive director of the Consumer Advocates of the PJM States, said the ETAS will help stakeholders understand the functionality and benefits of emerging technologies.

Poulos noted that Thursday’s MRC agenda included several emerging technologies, including hybrid storage and HVDC converters.

“I’m glad that PJM is getting ahead of this,” Poulos said.

‘Credit’ Subcommittee Proposed to Change to ‘Risk Management’

PJM gave a first read to a proposal to rename the Credit Subcommittee as the Risk Management Subcommittee and amend its charter to broaden its authority to include market risk.

Under the revised charter, the renamed subcommittee also would be elevated, reporting to the MRC rather than the Market Implementation Committee. Chief Risk Officer Nigeria Poole Bloczynski said the change would acknowledge that the broader consideration of risks “may incorporate aspects outside of the sole purview” of the MIC.

Anders said the restructured group would be a venue for considering risk management as a wholistic topic. He previously said the subcommittee — which hasn’t met since December 2018, as members have focused their efforts on the Financial Risk Mitigation Senior Task Force in the wake of the GreenHat Energy default — was the best venue for considering a planned problem statement over a credit risk issue the RTO identified in February. (See “Scope, Name Change for Credit Subcommittee?” PJM MIC Briefs: March 11, 2020.)

Bloczynski noted the committee’s charter has not been revised since 2010.

“Risk management seems to be an afterthought. No one thinks about it until there’s a problem,” she said. The MRC will be asked to endorse the revised charter at its next meeting.

The revised mission statement says the committee will “discuss and recommend” ways to address market and credit risk issues. It will not “manage, govern or otherwise set policy for PJM.”

Sharon Midgley of Exelon said she thought the charter change should be considered in tandem with how it will potentially impact the scope of the MIC.

“Anything that we’d talk about credit or markets related at this committee, we’re going to want to make sure that the participants in the MIC are aware of it because that impacts them as well,” Midgley said.

Greiner said he views “market risk” as a term that can be defined differently depending on who is being asked. He said he would like to see PJM put a clear definition of the term in the charter.

“If you have a definition for market risk, it’s going to help inform the scope of what we’re doing here,” Greiner said. “I think it’s probably best to embed it in the charter itself so we can get a sense of what’s in and what’s out.”

Sotkiewicz encouraged PJM to include market design risks in the scope of the charter. He said having a core group of PJM staff and possibly stakeholders working together to look at market designs and finding problems that are there before they turn into a major issue that results in a FERC filing or a financial hit to membership would be of great benefit.

“Those risks are always going to be out there, and if we can get ahead of the game, we in the membership would be much better off,” Sotkiewicz said.

Surety Bonds

The MRC heard a first read of a proposal to allow market participants to use surety bonds as collateral.

Bonds can be less expensive than letters of credit but are dependent on the credit and risk profile of the market participant, PJM said.

The MIC endorsed two proposals in October 2018, with 61% supporting use of surety bonds as collateral for all market purposes except financial transmission rights, with a $10 million cap per issuer for each member and a $50 million aggregate cap per issuer.

A second proposal allowing surety bonds as collateral for all market purposes including FTRs won 58% support. It would set a $20 million cap per issuer for each member and a $100 million aggregate cap per issuer. PJM said it supports the first proposal, citing limited experience in the use of surety bonds in FTR markets and the large size of past FTR defaults.

In December 2018, the MRC agreed to defer action on the proposals until completion of the independent consultants’ report on the GreenHat default. It was deferred again in April 2019 pending appointment of a chief risk officer and appointment of a new CFO.

If the Tariff change is approved, PJM said it will require use of bond companies on U.S. Treasury Department’s certified list and a minimum credit rating of A with S&P Global Ratings; A with Fitch Ratings; A2 with Moody’s Investors Service; or A with AM Best. PJM also will require acceptance of one-day payment demand terms.

The MRC will consider endorsement on May 28, with the MC taking it up in June.

Governing Documents Cleanup

In its only voting action aside from approving the minutes for the MRC’s March meeting, the committee approved administrative revisions to the PJM Tariff, Operating Agreement and Reliability Assurance Agreement, as recommended by the Governing Document Enhancement & Clarification Subcommittee.