FERC last week accepted PJM’s proposed Tariff revisions on five-minute pricing to resolve inaccuracy and dispatch misalignment issues.

In its order issued Oct. 13, the commission determined that PJM’s revisions were “just and reasonable enhancements to its pricing and dispatch methodologies” (ER20-2573). The RTO had calculated current prices based on a future dispatch interval, which FERC said contributed to a misalignment between pricing and dispatch.

PJM’s proposed short-term fixes revise the locational price calculator (LPC) to use the reference real-time security-constrained economic dispatch (RT SCED) case for the same target time. For example, 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 p.m., with offers for 12 to 1 p.m. used for the dispatch target time of 12:05 through 1 p.m.

The commission said it agreed with PJM that the proposal to modify the LPC pricing program to use the approved RT SCED dispatch case for the same target time will better align pricing and dispatch intervals.

“Specifically, we find that PJM’s proposal will more accurately ensure that prices appropriately reflect the costs of the marginal resources consistent with the future timing of the dispatch instructions they receive,” the commission said.

In April 2019, the commission ordered PJM and NYISO to revise their tariffs to allow fast-start resources to set clearing prices, contending the current rules were not just and reasonable. (See FERC Orders Fast-start Rules for NYISO, PJM.) PJM submitted a compliance filing in July 2019 that the Independent Market Monitor, state commissions and consumer advocates argued didn’t provide clear evidence that it would implement fast-start pricing correctly. Those commenters noted that PJM uses a different market interval to compute dispatch instructions and calculate prices.

FERC delayed PJM’s follow-up fast-start compliance filing in January, giving the RTO until July to make a filing as members continued working on the issue in the stakeholder process. (See PJM, IMM at Odds on 5-Minute Dispatch, Pricing Rules.)

Several months of heated debate led to members endorsing short-term fixes aligning the LPC to use the reference RT SCED case for the same target time at the June MIC meeting. (See PJM 5-Minute Dispatch Proposal Endorsed.)

Stakeholders officially endorsed the Tariff changes in an unusual unanimous sector-weighted vote at the Markets and Reliability Committee’s July 23 meeting while encouraging PJM to continue to pursue both intermediate and long-term changes. (See PJM Stakeholders OK 5-Minute Dispatch Proposal.)

In last week’s order, FERC rejected the Monitor’s arguments that PJM’s proposal “creates a systematic delay between the dispatch signal and pricing that undermines the incentive to follow dispatch” and that this mismatch “occurs for any price fluctuations due to changes in load or transmission constraints, not just shortages.”

“PJM’s proposal would better align calculated prices that determine real-time, five-minute settlements for generators with the timing of when they are expected to achieve their indicated dispatch levels,” the commission said.

FERC encouraged PJM to continue to work with stakeholders on long-term reforms in its efforts to address the pricing and dispatch misalignment.

The Tariff revisions took effect on Thursday. Approval of the PJM’s fast-start proposal is still pending.