PJM members Thursday abandoned a year-long effort to establish a long-term capacity product.
The Markets and Reliability Committee voted to strip development of a “Long-Term Capacity Auction or alternative multi-year mechanism” from the revised charter for the Capacity Senior Task Force.
“We feel that we’ve spent more than enough time on this issue,” said Bill Schofield, representing the PJM Public Power Coalition.
The committee initially rejected the proposed charter, which listed five issues, including two newest problem statements approved in May and June, by a 2.33-2.67 sector-weighted vote.
The committee then approved, by a 3.39-1.61 vote, the charter with the two new problem statements — regarding treatment of demand response as an operational resource and the unit-specific review process under the Minimum Offer Price Rule (MOPR) — but without the long-term capacity issue.
Schofield’s motion to strip the issue was seconded by Jason Barker, of Exelon, while representatives of Pepco and the Maryland Public Service Commission spoke in opposition.
“We think some sort of long-term capacity support is needed,” said Walter Hall, energy market advisor for the Maryland PSC. “We would read [removal] as PJM throwing up their hands.”
Gloria Godson, VP, Federal Regulatory Policy for Pepco Holdings Inc., urged members not to give up on the “thorny issue,” noting that officials in Maryland and New Jersey have attempted to create their own solutions because of PJM’s inability to solve the issue.
“I think the PJM marketplace can resolve that concern. PJM has a lot of smart people,” she said. “We can get a resolution to that issue.”
The task force was created in early 2012 to develop a long-term capacity auction. The issue charge approved by MRC set an August 1, 2012 deadline for filing a proposal with the Federal Energy Regulatory Commission for a long-term auction to provide adequate long-term revenue assurances to support entry of new capacity resources.
In April, the Federal Energy Regulatory Commission approved a tariff change resulting from the CSTF that provides new capacity resources with a mechanism to avoid clearing the capacity auction for one year if they require multi-year price assurance to be a viable project. (See Capacity Market: Three-year Price Guarantee for New Capacity.)
The task force said it would consider whether additional changes are needed after reviewing results of the May auction. While other proposals on the contentious issue have been discussed, none found enough support to win consensus.
In June and August, 2012, the MRC added two items — issues related to demand response providers capacity offers and aligning the capacity market auctions with the regional transmission expansion plan (RTEP) — to the task force’s assignments. In May, the group was tasked with considering revisions to standardize the unit specific review process in the Minimum Offer Price Rule (PJM Demand Response Providers Decry Scrutiny, “Freight Train” of Changes).
It was the latter two issues that led to last week’s charter revision. MRC’s decision to eliminate the task force’s original charge sparked a parliamentary debate with some members saying the committee would also have to vote to eliminate the problem statement. Dave Pratzon, of GT Power Group asked, “Is this a second bite at the problem statement apple?”
MRC secretary Dave Anders said that a vote on the problem statement was not needed.
