PJM stakeholders narrowly endorsed a compromise proposal to settle the contentious black start unit issue at last week’s Markets and Reliability Committee meeting.

In a sector-weighted vote of 3.35 (67%), members endorsed a proposal originally put forward by PJM addressing black start unit involuntary termination, substitution rules, capital recovery factor (CRF) and minimum tank suction level (MTSL). The proposal now moves on to the Members Committee for final endorsement at its March 29 meeting.

At the January MRC, PJM’s alternative option 1 proposal failed with a sector-weighted vote of 2.48 (49.6%), while Dominion Energy’s alternate proposal also failed with 2.47 (49.4%), leaving the black start issue in limbo for a month as stakeholders attempted to find a compromise. (See “Black Start Packages Rejected,” PJM MRC/MC Briefs: Jan. 27, 2021.)

Susan Bruce, counsel to the PJM Industrial Customer Coalition (ICC), and Sharon Midgley of Exelon worked together after last month’s MRC on a compromise amendment PJM’s original proposal, which they asked stakeholders to endorse.

Bruce said the compromise proposal has a different “term of commitment” for black start resources: the “life of unit.” PJM’s option 1 had a commitment period of 20 years or greater if the unit offers more in the request-for-proposal process. The Dominion proposal had a commitment of the capital recovery period plus three years of a five-, 10-, 15- and 20-year period based on unit age at the time it entered black start service.

CRF Debated

PJM proposed future updates to CRF to be calculated at the time of the black start unit’s in-service date. The CRF would be calculated using depreciation as applicable under the tax code changes in the Tax Cuts and Jobs Act of 2017.

The CRF issue emerged as the most disputed portion of the black start unit discussions, with stakeholders voting to amend the issue charge at the OC in December to align with language in the problem statement after it was discovered the two documents did not match. (See Vote on PJM Black Start Compensation Deferred.)

Stakeholders are still working through the updates to the CRF table at the Market Implementation Committee, with tariff revisions scheduled to be voted on at its March 10 meeting. (See “Capital Recovery Factors Discussion,” PJM MIC Briefs: Feb. 10, 2021.)

Bruce said black start discussions became “a thorny issue” among PJM members after the issue charge was first endorsed at the Operating Committee meeting last May. (See “Black Start Issue Charge Endorsed,” PJM Operating Committee Briefs: May 14, 2020.)

Constructive conversations between stakeholders over the last month helped to get members in a place where a compromise proposal was possible and to “get the rules of the road correct” to fix issues in the tariff regarding black start, Bruce said.

“It started out as a cleanup endeavor, and it’s really warped into something quite different,” Bruce said.

Stakeholder Opinions

Midgley thanked the ICC and the public advocate stakeholders for their discussions and work to find compromises.

“We really do think this is a good compromise option and appreciate the efforts leading up to this point,” Midgley said.

Paul Sotkiewicz of E-Cubed Policy Associates thanked Bruce and Midgley. He said he had several conversations early in the stakeholder process with the ICC to find solutions, and while one wasn’t initially found, he appreciated that the group was willing to listen to the concerns of generation owners.

Sotkiewicz previously challenged the stakeholder process over the black start issue, but he said the compromise proposal is “workable for everybody.” (See Gen Owners Balk at Change to PJM Black Start Rates.)

“While it’s not our most desirable proposal, it does give us certainty going forward about what we’re all facing,” he said.

Alternative Proposal Pulled

Greg Poulos, executive director of the Consumer Advocates of the PJM States, was set to introduce an alternative proposal addressing the black start issue on behalf of the Delaware Division of the Public Advocate. The proposal, which was first raised at the January MRC, included the addition of language regarding CRF from the Independent Market Monitor’s proposal that failed at the OC. (See “Alternative Black Start Package,” PJM MRC/MC Briefs: Jan. 27, 2021.)

Poulos said that after receiving input from other stakeholders and PJM officials over the last month, it became clear the proposal did not have enough support to be endorsed. Poulos requested that it be pulled from the agenda before it faced a vote, saying the advocates decided to remove it from consideration after the ICC/Exelon compromise was put on the agenda.

Sotkiewicz said he applauded Poulos’s decision to pull the advocate proposal from the agenda, saying it “took an incredible amount of courage” to make the call and showed a good-faith effort by the advocates to work within the stakeholder process.

“At the end of the day, we’re getting to a place where we can find some common ground,” Sotkiewicz said.