The Market Implementation Committee will consider modifying the algorithm used for publishing supply curves resulting from the annual capacity market auction.
MIC Wednesday approved a problem statement by Jason Barker of Exelon to seek improvements to the supply curve currently produced by the Market Monitor, which masks individual price-quantity offers. The practice is a compromise resulting from a 2010 Federal Energy Regulatory Commission order (ER09-1063-003) that sought to balance transparency against disclosure of commercially sensitive data.
Barker said the current curves are not accurate enough for any Locational Deliverability Area to be useful in analysis.
The FERC order resulted from a dispute over PJM’s proposal to publish price-quantity pairs after the 2010 Base Residual Auction. Constellation Energy and the monitor said that, due to the concentration of generation ownership in the SWMAAC LDA, the data could be used to reconstruct market participants’ offers.
Barker presented examples of two different algorithms that he said would improve the current methodology: a six variable polynomial and a four-period moving average. The current method, based on a single variable equation, produces a smoothed curve that passes through the intersection of the actual supply and demand curves.
Barker said an improved curve would provide “a better indication of slope inflections” that would help market participants analyze supply and regulators ensure auction results are just and reasonable.
Steve Lieberman, representing Old Dominion Electric Cooperative, supported the change. “It’s obvious almost any formula would be more accurate” than the current one, he said.
A stakeholder representing a retail marketer pushed for a one-month delay before a vote on the problem statement, saying he wanted to hear whether the monitor would oppose the change.
Marji Phillips, of Hess, grew impatient with the request for a delay on the vote. “This isn’t a complicated issue,” she said. “I can’t tell you how counterproductive and stupid [the discussion] looks.”
Jeffrey Mayes, general counsel of Monitoring Analytics, told the committee the monitor wouldn’t oppose changes to the formula as long they could not be “reverse engineered” to reveal actual offers. Yesterday, however, he told PJM Insider that Market Monitor Joseph Bowring is “convinced that [Exelon’s suggested alternatives] do reveal the offer data that we’re concerned about.”
The statement was approved by acclimation, with 16 abstentions. MIC will consider the Issue Charge at its next meeting. Barker said the work should be completed by December to enable analysis of the 2016/17 supply curves under the revised algorithm before the 2017/18 auction. Any change will require FERC approval.
