Board Recognizes Incoming, Outgoing CEOs

VALLEY FORGE, Pa. — PJM Board of Managers Chairman Ake Almgren recognized fellow board member and interim CEO Susan Riley for her efforts to lead the RTO during a “challenging” season, telling the Markets and Reliability Committee on Thursday her work will continue under her successor, Manu Asthana.

“We are very excited to welcome Manu as our new president and CEO,” Almgren said. “He brings many decades of experience from the electric industry. Some were different experiences, but very relevant experiences. We are confident in his leadership moving PJM forward.”

Riley will resume her role on the board once Asthana arrives next month and will help ensure a smooth transition, some six months after former CEO Andy Ott resigned.

“Overall, I’m proud of the progress PJM has made to build stronger relationships with constituents, built on common respect and listening,” Riley said. “I know this great work will continue under Manu, and the board is anxious for him to start.”

FTR Vote Deferred

The MRC deferred voting on the first round of financial transmission rights credit-related policy changes after some stakeholders expressed concerns about the ripple effect the revisions may have on market design.

PJM said the recommendations, initially presented at the October MRC, will improve its credit risk policies after the Financial Risk Mitigation Senior Task Force delegated a more holistic FTR market review and possible design changes to a separate Market Implementation Committee task force. (See “FTR Market Rule Changes,” PJM MRC Briefs: Oct. 31, 2019.)

One change includes hosting five long-term FTR auctions a year, instead of three, in order to increase oversight and visibility into portfolio conditions so that more collateral can be collected if necessary. A second would alter the structure of Balancing of Planning Period auctions so that participants can buy and sell in any month of the year, rather than being limited to a specific quarter.

The PJM Industrial Customer Coalition (ICC) and the Consumer Advocates of PJM States (CAPS), however, said their longstanding concerns about increasing the auction frequency still stand.

“We think the monthly change bleeds into the market design element,” the ICC’s Susan Bruce said. “We’ve not fully thought through the impact of FTR underfunding. If we don’t have good information on transmission outages, we have concerns that it may affect underfunding and it may have implications for market design.”

“The advocate offices had very similar concerns,” said Greg Poulos, executive director of CAPS. “This is one item that has a little bit of impact on market design, something that consumer advocates have been asking to be reviewed since last year when the GreenHat [Energy] investigation was going on.”

PJM Chief Risk Officer Nigeria Poole Bloczynski reiterated that the independent GreenHat investigation recommended these very changes and said the task can revisit the issue, if needed.

“This is not a one-stop shop,” she said. “We will continue to make improvements.”

Riley chimed in, urging stakeholders to find consensus, saying, “If we could get to ‘yes’ on this, it would be a really big win.

“We thought long and hard about design changes versus credit changes,” she said. “I agree this straddles the two. I understand the concerns. Voting in favor of the increase in auctions enables better credit management. … It doesn’t mean that a review of this can’t be a part of market design changes that we consider.”

The MRC will reconsider the changes at its Dec. 19 meeting.

End of Life Issue Charge Endorsed

American Municipal Power and Old Dominion Electric Cooperative scored a big win on Thursday after stakeholders in a sector-weighted vote of 3.83 to 1.17 endorsed their joint problem statement and issue charge exploring end-of-life determinations.

While stakeholders rehashed a familiar debate before casting their votes over where PJM’s role in supplemental project planning should begin and end, the committee ultimately approved formalizing the discussion. (See Competitive TOs Push Against PJM Supplementals and “Stakeholders Mull Tx Asset Management Discussion,” PJM MRC Briefs: Oct. 31, 2019.) None of the 11 TOs voting endorsed the issue charge, according to PJM’s tally.

The MRC will continue working on the issue and recommend approval for any necessary governing document changes at its March meeting.

Comparative Cost Framework, Opportunity Cost Calculator in Flux

The MRC did not endorse revisions to the opportunity cost calculator or hear another first read of its pending comparative cost framework.

In the former issue, main motion sponsors Dominion Energy and Panda Power Funds are working toward a single-package compromise with PJM. (See “Opportunity Cost Calculator,” PJM MIC Briefs: Sept. 11, 2019.) In the latter, PJM said conversations remain ongoing with the Independent Market Monitor on some of the manual language defining its role in the process. (See PJM TOs Wary of Cost Containment Rules.)

Real-time Values, Parameter-limited Schedules

Some capacity generators use real-time values (RTVs) to override unit-specific parameters for inappropriate reasons, PJM contends, causing unnecessary confusion during dispatch.

The original intent of RTVs was to provide a way for generation operators to communicate current operating capability to PJM if their resources couldn’t meet their unit-specific parameter limits or approved exceptions. Generators opt to use RTVs and forfeit operating reserve credits and make-whole payments as a result.

Except, some generators consistently use RTVs to increase notification time on parameter-limited schedules “to reflect the decision not to staff the resource during hours they project the resource will not be economic,” PJM said in a problem statement. The operational impacts mean that resources called in real-time based on their schedules cannot perform as expected.

PJM suggested a special session of the MIC to commence in 2020 to study the problem and recommend solutions.

Manuals Endorsed

• PJM Manual 3: Transmission Operations — periodic review to update operating procedures.
• Manual 03A: Energy Management System Model Updates and Quality Assurance — revisions stemming from a cover-to-cover periodic review and is phase one of an effort to update, reorganize and streamline the manual’s content.
• Manual 13: Emergency Operations — revisions to incorporate the 2020 day-ahead scheduling reserve requirement.
• Manual 15: Cost Development Guidelines — revisions that clarify that market sellers can only change the format of maintenance adders ($/MMBtu, $/MWh or $/start) during the annual review period for energy offer components. (See “Manual 15 Clarifications on VOM Costs,” PJM MIC Briefs: Nov. 13, 2019.)
• Manual 18: PJM Capacity Market — revisions that implement the new must-offer exception process approved by FERC in October. (See FERC to PJM Gens: Use or Lose Capacity Rights.)
• PJM Manual 19: Load Forecasting & Analysis — a periodic review and documentation of the long-term load forecast.
• Operating Agreement revisions that clarify the requirements for sharing forecasted unit commitment data to TOs for reliability studies.
• Non-substantive changes to the Tariff, OA and Reliability Assurance Agreement that standardize cross references in all three documents.

Members Committee Elections

Members Committee Chairman Chuck Dugan, of East Kentucky Power Cooperative, led his last meeting Thursday before Vice Chair Steve Lieberman, of American Municipal Power, takes over next year.

Katie Guerry of Enel X will assume the role of MC vice chair. Brian Kauffman, also of Enel X, will take over as whip for the Other Supplier sector. Members also re-elected all existing whips, including:

• Susan Bruce, PJM ICC, End Use Customers
• Adrien Ford, Old Dominion Electric Cooperative, Electric Distributors
• Michael Borgatti, Gabel Associates, Generation Owners
• Sharon Midgley, Exelon, Transmission Owners

Load Management Test Rules

PJM’s new load management testing rules became official on Thursday after receiving endorsement from the MC.

In October, the MRC endorsed new load management and price-responsive demand testing rules for Capacity Performance resources after PJM said old measures failed to mimic real-life emergency procedures. (See PJM Stakeholders Support More Realistic DR Testing and “Stakeholders Urge Consensus on Load Management Testing Requirements,” PJM MRC/MC Briefs: Sept. 30, 2019.)

The new rules, effective with the 2023/24 delivery year, would give PJM authority over scheduling tests — instead of the resource itself — and provide advanced notification so participants can prepare. The changes would implement a three-step system that gives resources first notice of an upcoming test one week prior to the two-week testing window, with additional alerts by 10 a.m. the day before and the day of the scheduled test. There will be one test per year when there is no event, with half of resources tested in winter and the other half in summer.

Critical Infrastructure Resolution

Growing concerns over a pending Tariff attachment proposal from TOs that would create a new, confidential process to mitigate critical infrastructure reached a crescendo on Thursday when LS Power presented the first read of an advisory against the proposal.

Sharon Segner, vice president of LS Power, said her company believes the attachment conflicts with the OA because it will move forward without any vetting from the MC.

“We can’t veto or delay, but we can offer an opinion,” Segner said of the advising document. “It’s a voice that says the issues with the OA haven’t been addressed.”

At the heart of Segner’s argument is a belief that incumbent TOs don’t get exclusive rights to handling critical infrastructure on NERC’s CIP-014 list. Because the projects could carry significant regional implications, LS Power believes PJM should plan their mitigation. (See PJM TO Filing Stirs Up Transparency Concerns.)

“My company stands on the side of PJM,” she said. “My company believes that PJM is a world class transmission planner and, as a result of that, when it comes to national security, we believe PJM should be in charge.”

Incumbent TOs argue that NERC’s confidentiality standards — and their rights under PJM’s Attachment M-4 process — support their intention to file the mitigation plan at FERC without input from other sectors.

“There is no inconsistency between Attachment M4 and the OA,” said Pulin Shah, director of transmission strategy and contracts for Exelon. “The M4 process is not permanent. It will sunset in five years. There is a compelling need to move forward to address the loss of these substations.”

PJM maintained its neutrality in the debate and reiterated that all stakeholders agree about mitigating critical assets so they are no longer vulnerable to attack. (See PJM Remains Neutral in CIP-014 Debate.)

— Christen Smith