By Rory D. Sweeney

VALLEY FORGE, Pa. — PJM won’t be offering market compensation to comply with FERC’s requirement that almost all resources provide primary frequency response (PFR), but the RTO is willing to give everyone a shot at recovering any upgrade costs to provide it.

RTO staff unveiled their newest proposal on the issue at a meeting of the Primary Frequency Response Senior Task Force (PFRSTF) on Wednesday. The idea generated some stakeholder interest but also created plenty of concern in light of FERC’s recent ruling. (See FERC Finalizes Frequency Response Requirement.)

“In general, we’re going to disagree with all of this,” said Carl Johnson, representing the PJM Public Power Coalition. “We are not in favor of where PJM is going with this.”

Johnson said it would create a substantial cost to customers for something that should be baked into the cost of doing business. He said PJM would likely hear from the consumer advocates on the issue.

Staff said they couldn’t quantify the overall cost but would get back to stakeholders with estimates.

Applicable units could seek the cost recovery or include it in their capacity offers, but they couldn’t do both. Howard Haas of Monitoring Analytics, the Independent Market Monitor, outlined a situation in which units that sought the recovery could also clear the auction at a clearing price set by another unit’s bid that includes the upgrade costs.

“From our position, that would be double recovery,” he said.

The Monitor’s proposal argues that units already have opportunities to recover the cost through capacity or energy offers.

“I’ve got good news for you,” he said. “You’re already being compensated.”

CPower’s Bruce Campbell said he would have to review how distributed energy resources are handled in his company’s proposal.

PJM’s proposal also increased its proposed threshold for exempting units, from 10 MW to 20 MW, because the potential benefit from such small units might not outweigh the upgrade costs.

Brock Ondayko with American Electric Power disagreed with Haas on whether units could seek recovery. AEP’s proposal would allow units to petition FERC for recovery if they feel they need it and can justify the request. Ondayko said he would consider PJM’s one-time recovery proposal, but he also mentioned concerns about the cost to customers because provision of PFR isn’t a NERC requirement.

PJM’s Glen Boyle said PFR is a requirement for balancing authorities and therefore an “implicit” requirement for resources.

FirstEnergy’s Jim Benchek agreed with other members that PJM’s proposal seemed to be giving some BAs “a free pass.”

“Is this a solution looking for a problem?” he asked.

AEP’s proposal diverged from PJM’s on how performance would be evaluated. Both agreed that the calculation should be a quarterly pass/fail test on whether units provided at least half of the PFR they were expected to provide. AEP suggested a higher deviation and longer duration of frequency outside the deadband settings before performance could be evaluated.

“There should be something there that makes it possible to identify the unit response from the noise,” AEP’s Jim Fletcher said.

PJM’s Danielle Croop said staff would consider rolling that into their proposal.

“If we’re going to put that minimum of five or six events in there … we want to make sure that we’re still able to perform these evaluations on a quarterly basis and that it’s not that we’re sitting around waiting for events to happen,” she said.

Staff noted that in the 2017 operating year, there would have been 14 events that fit AEP’s standards, which wouldn’t allow for the six events per quarter that PJM planned to use for evaluation. AEP proposed evaluating five events each quarter because they would be “more meaningful,” Ondayko said.

AEP also suggested researching the importance of synchronous inertial response and preserving “what we have today because once it’s gone, it’s gone for good,” Fletcher said.

“If you look at interconnections that are losing their synchronous inertial response, like Texas, you’ll find that they have to resort to paying load resources to compensate for the fact that there isn’t enough primary frequency response anymore to cover that deficit, so the operation of the grid becomes more erratic … and the need for primary frequency response goes up, but there’s limited capability,” Ondayko said. “We recommend that this type of concept be considered in the future, at least recognizing the issue of how it impacts restoration.”