Unexpected imports from New York — not the mobilization of demand response — caused power prices to crash July 18 after spiking to $465/MWh amid the hottest day of the summer, PJM officials told members Thursday.
LMP prices jumped from nearly $300 for the hour ending 1 p.m to $465 at 2 p.m. before plummeting to $52 an hour later, as PJM called into service 1,000 MW of demand response from the PPL and PECO zones. But the DR was dwarfed by an unexpected 3,000 MW increase in net interchange as thunderstorms dampened load in New York and New England.
Prices jumped again to $232 at 4 p.m. and continued rising through 6 pm as imports declined.
“Did DR cause prices to crash?” PJM Vice President of Market Operations Stu Bresler told the Markets and Reliability Committee, repeating what he said was a frequent question following the heat wave. “The answer is no.”
It was the fourth-highest load ever for the PJM footprint (including ATSI, Duke Ohio and East Kentucky Power Cooperative, which are now part of the RTO), and the biggest day since July 2011.
The cause of the price drop was just one of the questions PJM officials will be trying to answer as they sift through data from the heat wave. They said there will be additional briefings on how the system fared at future meetings. “This is a very data rich, information rich opportunity,” said Executive Vice President for Markets Andy Ott.
PJM issued a Hot Weather Alert for the RTO, excluding the Commonwealth Edison zone, on Sunday July 14. The alert, which signals that demand and unit unavailability may be higher than forecast for an extended period, was scheduled to run through Thursday July 18.
On both Monday and Tuesday, PJM issued a call for long lead demand response and a maximum emergency generator action for the ATSI zone — notification that system conditions may require the use of emergency procedures — but cancelled both hours later.
Monday’s alerts were prompted in part by TVA’s cut of 3,300 MW of exports to PJM, a cut for which PJM had only about 10 minutes’ notice, according to Mike Bryson, executive director of system operations.
On Wednesday, when demand peaked at nearly 155,000 MW and temperatures rose as high as 96 degrees, PJM revised the alert to include the entire RTO.
At 12:40 p.m. Thursday, PJM again put out a call for long lead demand resources and declared a NERC EEA2 —signaling public appeals to reduce demand, possible voltage reductions, and interruptions of non-firm load — for the PECO, PPL and ATSI zones. Operators also issued a maximum emergency generator action for the ATSI zone.
Fearing they would lose 1,000 MW of imports from NYISO, which was running low on reserves, PJM operators mobilized 1,000 MW of demand response in the PPL and PECO zones.
Twenty minutes later, PJM added the AEP Canton subzone to the long lead DR and EEA2. The demand response was called on to relieve an overload on AEP’s South Canton #3 transformer, which briefly exceeded its “Normal Limit” of about 1,900 MW. (Bryson said the transformer is scheduled to be upgraded this fall.)
Operators also created a temporary interface in FirstEnergy’s ATSI control zone so that the region had a single LMP reflecting the DR prices.
Demand climbed throughout the afternoon and into early evening. RTO LMPs increased as well until midafternoon, when prices fell from $465 at 2 p.m. to $52 at 3 p.m. before returning to more than $200 between 4 and 6 p.m.
The fall in prices came as net interchange jumped from less than 4,700 MW to nearly 7,700 MW, including 700 MW of the 1,000 MW PJM feared it would lose from NYISO. Bresler said the unexpected rush of imports was due to the high prices in PJM, which “may have caused market participants to think prices would go even higher.”
At the same time, thunderstorms provided cooling relief in New York and New England, which had been running low on reserves.
In ATSI, prices dropped from $506 at 2 p.m. to $55 an hour later before spiking to $1,512 at 4 p.m. and $1,800 between 5 and 6 p.m. ATSI’s peak demand, 13,123 MW, was reduced by nearly 400 MW of emergency demand response.
PJM’s emergency measures ran through 6 p.m. as temperatures reached 98 in Philadelphia and RTO load peaked at 158,156 MW, the highest of the week. The peak would have been higher but for the assistance of 2,100 MW of demand response.
