By Rory D. Sweeney

Responding to stakeholder demands to resolve a yearlong dispute, PJM’s Stu Bresler has sent a letter outlining his requirements for accepting the Independent Market Monitor’s opportunity cost calculator.

The public pronouncement of PJM’s terms was unexpected but welcomed. “I’m surprised that PJM has apparently decided to negotiate this publicly,” Monitor Joe Bowring said. “We will respond.” Bowring declined to address whether PJM’s terms were acceptable and detailed enough.

For more than a year, PJM and its Monitor have been unable to agree on a single calculator for opportunity costs included in generation offers. PJM argues that FERC Order 719, issued in October 2010, allows the Monitor to provide input on cost determinations but that “PJM retains the ultimate decision-making authority.” From then until “the latter part of 2016,” both calculators produced consistent results, Bresler said in his letter, but have since diverged substantially.

PJM says it can’t endorse the Monitor’s calculator until staff understand how and why it produces different results. For that reason, PJM announced in August it would only accept opportunity cost calculations using its calculator.

The Monitor argues that it has continued to enhance its calculator while PJM hasn’t changed its methodology since 2010.

PJM staff have asked to understand the calculator’s inner workings, but Bowring has been reluctant to fully throw back the curtain, arguing that PJM staff haven’t specifically detailed their requests and that the underlying computer code is proprietary intellectual property.

Generators say the dispute has left them in a bind, fearing a referral to FERC enforcement for using an unapproved number.

At the Aug. 23 Markets and Reliability Committee meeting, generators attempted to force a resolution by threatening Tariff revisions that would require PJM to accept the Monitor’s calculator. (See Stakeholder Proposal Aimed at Ending PJM-IMM Dispute.)

Bresler’s letter details three requests to the Monitor:

• the design requirement specification documents for the Monitor’s calculator, including descriptions of steps taken to calculate adders and accompanying mathematical formulas.
• alternatively, the calculator’s output from pre-defined sample inputs and parameters so PJM can compare the results with its calculator’s output using the same inputs.
• a commitment to notify PJM of any changes to the calculator and to rerun the comparative analyses afterward.

Bresler, PJM’s senior vice president of operations and markets, shot down an earlier suggestion from Bowring that they allow a third-party auditor to compare the calculators, saying it was less efficient and more expensive than his solutions. He gave Bowring a Sept. 10 deadline to respond to the proposal.

The Members Committee is set to vote on the proposed Tariff revisions on Sept. 27, barring an agreement before then.