PJM’s Market Implementation Committee advanced manual language to the Markets and Reliability Committee regarding a stability limits capacity constraint proposal despite the objections of stakeholders who attempted to overturn the decision.
Joe Ciabattoni, PJM manager of interregional market operations, reviewed proposed updates to Manual 3: Transmission Operations; Manual 11: Energy & Ancillary Services Market Operations; and Manual 28: Operating Agreement Accounting. He also reviewed proposed Operating Agreement revisions to reflect the capacity constraint and opportunity cost packages that were endorsed at the September MIC meeting. (See “Stability Limits Endorsed,” PJM MIC Briefs: Sept. 2, 2020.)
The proposals were the result of several months of discussion at the MIC on potential changes to how PJM curtails generating output in order to maintain stability during maintenance outages. Generating units must sometimes be reduced below their normal economic max limit if a planned or unplanned transmission outage presents stability problems that could result in damage to the units. (See “Stability Limits in Markets and Operations,” PJM MIC Briefs: May 13, 2020.)
Current rules require the RTO to implement a thermal surrogate to reflect the stability constraint in the day-ahead and real-time markets and to bind the constraint, affecting the unit’s dispatch.
The capacity constraint proposal was put forward by PJM and the Independent Market Monitor and endorsed by the MIC with 64% support. It addresses the allocation of limits to multiple units by stating that the limit will apply to the sum of the output of the affected units plus ancillary service megawatts. Ciabattoni said the units would be dispatched in economic merit order up to the stated stability limitation.
If a unit chooses not to remedy a stability limitation identified during the planning process, its operating restrictions — as documented in its interconnection service agreement — would be invoked prior to those for other units, Ciabattoni said.
Lost opportunity cost (LOC) credits would not be paid for any reduction required to honor the stability limit. Similarly, LOC is not paid for economic megawatts of a resource that cannot produce because of a ramp limitation.
The opportunity cost proposal, presented by J-POWER and endorsed with 58% support, was fundamentally the same as the PJM-Monitor package except for providing compensation for LOCs. Paul Sotkiewicz of E-Cubed Policy Associates said payment for LOC is permitted by section 3.2.3 (f) of the Attachment K Appendix to the Tariff.
Ciabattoni said the proposed Manual 3, Manual 28 and Manual 11 language for the capacity constraint package clarifies that LOC will not be paid to the generator owners for reductions related to stability. It also includes Tariff language removing LOC eligibility from section 3.2.3 (f).
The alternate opportunity cost proposal had similar language in the three manuals but kept the Tariff language regarding LOC in place.
MIC Chair Lisa Morelli ruled that the manual language for both the capacity constraint and opportunity cost packages will move on to the MRC meeting on Dec. 17 for a first read.
Sotkiewicz made a request that the packages be voted on again at the MIC before being moved to the MRC. He said a September vote was “extremely close” and that PJM had stated “unequivocally” that Tariff and OA changes would be unnecessary in the capacity constraint proposal.
Morelli said it would be “extremely unusual” to vote again on packages already endorsed by the MIC.
Changes in Tariff and OA language would require a FERC filing and stakeholders may have voted differently on the packages with that knowledge, Sotkiewicz said, while the opportunity cost proposal did not require new OA or Tariff language.
Sotkiewicz registered a protest against Morelli’s decision to advance the manual language to the MRC, asking for a new vote on the packages given that ahead of the previous vote the proposal’s backers said there would be no need for Tariff or OA language changes. He said he believed the committee was not following the proper process under the rules of Manual 34.
“The vote was taken under a different set of assumptions about what was going to be required to make any changes,” Sotkiewicz said.
Tom Hyzinski of GT Power Group said he agreed with Sotkiewicz and that the addition of the Tariff language was an admission by PJM that the rules had to be changed as to not pay the LOC.
Stakeholders voted 63% against taking another vote on the packages, with 132 members voting “no” on Sotkiewicz’s protest.
Sotkiewicz said he appreciated PJM crafting manual language for the alternative opportunity cost proposal with members able to make a final decision between the two packages at the MRC.
“I think this is another area where the stakeholder process has failed us, and we’re going to have to revisit this,” Sotkiewicz said.
Greg Poulos, executive director of the Consumer Advocates of the PJM States, said advocates become frustrated when process issues take over substantive discussions at stakeholder meetings. He said the debate over the two packages was a “great example” of a process issue.
“The more we put in rules in the stakeholder process, it becomes a frustration when rules are used to frustrate a process,” Poulos said.
FTR Bid Limits Changes
Stakeholders endorsed a manual revision establishing bid limits for financial transmission rights (FTR) participants at the corporate entity level.
Brian Chmielewski, market simulation manager for PJM, provided an overview of updates to Manual 6: Financial Transmission Rights, which address the enforcement of FTR auction bid limits.
Chmielewski said the update included adding a bullet to Section 6.6 regarding “FTR Auction Business Rules” denoting the rule for FTR auction bid limits at the corporate entity level.
The new bullet reads, “In all FTR auctions, for each applicable auction round, total quotes (inclusive of buy bids, sell offers, and self-scheduled bids) for each effective FTR holder are limited to 10,000 MWh for each available auction period.”
Chmielewski said the FTR group will communicate the changes to the FTR Center, PJM’s tool that market participants use for submitting bids into the auctions prior to it going live. The information will be presented at the Tech Change Forum on Dec. 15.
A final vote is scheduled for the January MRC meeting.
Sotkiewicz asked why a limit is being proposed and why it was set at 10,000 MWh.
Chmielewski said it’s been PJM’s policy to maintain a 10,000 MWh bid limit so that the auction software would function properly. He said a limit had to be created to ensure the software would solve problems on time.
PJM has seen sub-accounts created in the last few years to get around the 10,000 MWh limit, Chmielewski said, with some corporate entities setting up multiple sub-accounts that are able to submit more bids and creating “inequities” among market participants.
Chmielewski said the concept was to memorialize the 10,000 MWh number in the manual language so it becomes a business rule everyone’s aware of and to also change the software so it won’t be possible to get around the limit by creating additional sub-accounts.
Sotkiewicz asked if it would be possible for PJM to look into further software solutions that would be able to handle higher limits and navigate through current programming constraints.
“With advanced software, don’t we think it’s time to move into the 21st century?” Sotkiewicz asked.
Chmielewski said PJM has committed to looking at stress testing the software and potentially increasing the limit.
UTC Uplift Changes
Stakeholders unanimously endorsed manual updates resulting from a recent FERC order addressing the allocation of real-time and day-ahead uplift to up-to-congestion (UTC) transactions.
Ray Fernandez, manager of market settlements development with PJM, presented the updates to Manual 28: Operating Agreement Accounting to conform with changes ordered by FERC regarding uplift charges on UTC transactions (EL14-37).
In its order issued in July, FERC determined that PJM’s current uplift allocation rules are unjust, unreasonable and unduly preferential because they do not allocate uplift to UTCs. (See FERC Orders Uplift Charges on PJM UTCs.)
PJM was directed by the commission to submit a replacement rate that revises the RTO’s current uplift allocation rules to allocate uplift to UTCs “in a manner that treats a UTC, for uplift allocation purposes, as if the UTC were equivalent to a [decrement bid] at the sink point of the UTC.”
Fernandez said UTCs will now be allocated for both real-time and day-ahead uplift.