Stakeholders gave a nearly unanimous endorsement of PJM’s short-term proposal to resolve issues in five-minute dispatch and pricing at Wednesday’s Market Implementation Committee meeting but urged the RTO to continue seeking intermediate and long-term solutions.
PJM’s proposal won 96% support, with 205 members voting in favor, nine against and 31 abstaining. In a nonbinding vote that asked whether members preferred the package over the status quo, the measure passed with 100% support: 218 “yes” votes and 18 abstentions. “I don’t think I’ve seen this before,” said Bhavana Keshavamurthy of PJM.
The RTO’s proposal will have a first read at the June 18 Markets and Reliability Committee meeting and a July vote at the MRC and Members Committee meetings. Pending FERC approval, implementation is tentatively slated for October.
Tim Horger of PJM presented the highlights of the package, which calls for “work streams”: short-term market changes to address pricing alignment; “enhancements and clarifications” to LMP verification; intermediate operational changes to implement more “regimented” real-time security-constrained economic dispatch (RT SCED) case approvals; and long-term operational changes to investigate changing SCED timing and consider previous dispatch instructions.
Horger said PJM decided to break the process up into short-term, intermediate and long-term efforts based on how quickly they could be implemented.
PJM’s proposed short-term fixes would align the locational price calculator (LPC) to use the reference RT SCED case for the same target time. The LPC would calculate prices for the interval from 11:55 a.m. to 12 p.m. using the RT SCED solution for a 12 p.m. target time.
Resource offers, parameters and ancillary service assignments would be inputs to the RT SCED cases. Offers for 11 a.m. to 12 p.m. would be effective through 12, with offers for 12 to 1 p.m. used for the dispatch target 12:05.
FERC ordered PJM last year to revise its Tariff to allow fast-start resources to set clearing prices. In January, the commission voted to hold the RTO’s fast-start pricing compliance filing in abeyance until July 31, agreeing with the Independent Market Monitor and others who said resources’ compensation don’t correspond to their dispatch instructions because PJM uses different market intervals to calculate prices and dispatch. (See FERC Stalls PJM Fast-start Compliance Filing.)
After attempting to craft a joint proposal in response to FERC’s January ruling, PJM and the Monitor told the MIC in April that they were unable to agree on implementation timing. (See PJM, IMM at Odds on 5-Minute Dispatch, Pricing Rules.)
In addition to making changes to settlements as in the PJM plan, the Monitor also proposed changes to dispatch and SCED calculations. “This is an important price formation issue in PJM,” said the Monitor’s Catherine Tyler.
The Monitor’s proposal failed with only 32% support at Wednesday’s MIC meeting.
Wednesday’s vote on the PJM package was limited to the short-term changes, Horger said, and not whether they address the issues the Monitor raised in the fast-start pricing docket. Stakeholders can opine on whether the short-term fix satisfies FERC’s concerns in comments on PJM’s filing, Horger said.
Paul Sotkiewicz of E-Cubed Policy Associates said many stakeholders are still looking to PJM to move fast-start pricing along in the process and asked if short-term fixes could be a major component of the issue.
Horger said the short-term changes are beneficial regardless of what happens with fast-start pricing. He said PJM’s legal view is that short-term changes will meet the fast-start directives from FERC.
PJM is also committed to the intermediate changes, Horger said, but it doesn’t think they are necessary for fast-start pricing.
“We have not heard a firm commitment [from PJM] on even the intermediate” solution, countered Monitor Joe Bowring.
Becky Carroll of PJM gave an operational update on the intermediate changes the RTO is pursuing. Carroll said a 48-hour test of the five-minute auto case execution was successfully completed before Memorial Day.
Carroll said no concerns were found during the test. The next test of the system is planned for June 22, she said, and if it is successful, PJM will use the procedure permanently and draft manual changes documenting it.
Adrien Ford of Old Dominion Electric Cooperative said her company supports PJM’s short-term changes but would also like to see the intermediate and long-term changes fully pursued. She said she struggles when she hears PJM officials use the phrase “committed” to intermediate changes.
“We really want the whole kit and caboodle,” Ford said.
Vice President of Market Services Adam Keech said the RTO wants to “look more broadly” at potential long-term solutions.
“It’s not clear that the MISO/SPP approach that has been proposed [by the Monitor] here is better than what we’ve proposed and the best option out there,” Keech said. “Our reluctance is not knowing whether it’s the best answer … whether it’s better than what ERCOT does, for example.”
Sotkiewicz said PJM needs to listen “very carefully” to stakeholders’ calls for intermediate and long-term changes. He said interest remains in going all the way with pricing changes and not just stopping with the short-term fixes.
“This is a member-driven organization, and just because it might be hard to do doesn’t mean we should just be committing to evaluate,” Sotkiewicz said. “If it’s something that makes sense, we should be committed to do it.”
“We do commit to doing the analysis on the options,” Keech responded.