The Market Implementation Committee last week soundly rejected a proposal to change the modeling assumptions used in long-term auctions of Financial Transmission Rights (FTR).

The proposal — which would have reduced capability in long-term FTR auctions from 100% to 50% of available capability after reserving Auction Revenue Right (ARR) capability — received support from only 36% of MIC voters.

Bruce Bleiweis, director of market affairs for DC Energy, LLC, said the proposal would hurt the ability of market participants to engage in long-term hedging while providing only small improvements to FTR funding shortfalls. “It will result in a lot less liquidity, a lot less price discovery,” he said.

In May, the MIC gave near-unanimous support to two other modeling changes also intended to reduce the risk of FTR funding shortfalls by reducing or eliminating infeasibilities in the FTR model so that increased counterflow FTRs clear.  (“MIC OKs Options to Reduce FTR Shortfalls”)

MIC rejected another proposed change and deferred a vote on the long-term auction proposal pending a ruling on FirstEnergy Corp.’s complaint to the Federal Energy Regulatory Commission over FTR underfunding (EL13-47). FERC rejected the complaint June 5, saying FirstEnergy had not proven PJM’s current practices are unjust and unreasonable. The commission urged the RTO to continue its efforts to address the causes of underfunding.