By Christen Smith

PJM’s Market Implementation Committee, which approved changes to its must-offer exception rules in November, will consider two alternative proposals at its meeting March 6.

Members will vote on a joint proposal by PJM and the Independent Market Monitor and one by Exelon in a review prompted by the Markets and Reliability Committee’s decision to defer a vote on the earlier proposal and send the issue back to the MIC for further discussion.

The initial proposal, which won 79% stakeholder support at the November MIC, would:

• Codify the current must-offer exception process in Manual 18.
• Add timing to the list of acceptable reasons for an exception. Exceptions would be permitted for capacity market sellers that can demonstrate they will “be physically incapable of satisfying the requirements for a Capacity Performance generation resource by the start of the relevant delivery year.”
• Allow a capacity market seller to voluntarily initiate a status change to energy-only by making a request to PJM and the Monitor. Status changes would not be permitted while the resource holds a capacity commitment for the relevant time period.
• Require existing capacity resources approved for CP must-offer exceptions and not offered in three consecutive auctions to change to energy-only.
• Treat capacity interconnection rights (CIRs) of resources converted to energy-only the same as if the unit had been deactivated. CIRs will terminate one year from the date on which the resource status change takes effect, unless the rights holder submits a new generation interconnection request within that year which uses the same CIRs.
• Permit participants to request exemptions from multiple auctions in a single exception request.

Stakeholders Delay Action

On Dec. 20, the MRC deferred a vote on the MIC-approved proposal at the request of Susan Bruce, representing the PJM Industrial Customer Coalition. Bruce, who made the motion on behalf of industrial gas producer Praxair, said industrial consumers wanted stakeholders to conduct additional discussion on resources wanting to move between capacity- and energy-only status. (See “Must-offer Exception Process Deferred,” PJM MRC Briefs: Dec. 20, 2018.)

The alternate PJM/Monitor plan to be considered next week adds to the MIC-endorsed package documentation requirements to support exception requests. Effective with the 2023/24 delivery year, exception requests would have to include a plan showing how the resource will become able to satisfy the CP requirements, including a timeline with design, permitting, procurement and construction milestones. Regular status updates also would be required. Exceptions would be limited to two auctions, and status changes would be mandated for existing resources that fail to provide a plan or show good-faith effort to make the resource physically capable of CP.

“The general idea of a plan is just for the seller to inform PJM if they are CP-capable,” PJM’s Pat Bruno explained at the MIC’s Feb. 6 meeting. “The plan would be reviewed by the IMM and PJM.”

Exelon Demurs

Exelon, which initiated stakeholder discussions on the issue a year ago, will offer a second alternative that does not include a requirement for resources to become energy-only.

Sharon Midgley, senior manager of wholesale market development for Exelon, questioned PJM’s insistence on revoking CIRs. “Storage and renewables have no must-offer requirements,” she said at the February MIC. “So why target conventional generation owners?”

Bruno said there are separate rules for intermittent resources and storage.

Midgley said Exelon’s proposal does not include a mandatory switch to energy-only because stakeholders are not in consensus on the issue and that aspect of the updated PJM/Monitor proposal raises important CIR equity issues that haven’t been addressed. “We think there is clear consensus on the process enhancements and the voluntary process if generators want to become energy-only,” she said. “It seems like a double standard. … For that reason, we are agnostic and don’t have anything in our proposal that addresses a mandatory process.”

Monitor Joe Bowring said the IMM has recently seen “a lot of people seeking deactivation and then changing their mind.”

“A voluntary process, in our view, is not sufficient,” he added.

If any of the packages receive more than 50% support at the March 6 MIC meeting, a second nonbinding vote will be taken asking whether participants prefer that package over the status quo and the original MIC-endorsed proposal.

Any proposals receiving 50% MIC approval will be given a first read at the March 21 MRC meeting. The committee will vote on the alternatives at its April 25 meeting.