Below are the new recommendations included in the Market Monitor’s State of the Market report for the first half of 2013.

HIGH PRIORITY

Addresses a market design issue that creates significant market inefficiencies and/or long lasting negative market effects.

• Operating Reserve — Reexamine allocation of operating reserve charges to participants to ensure payment by all whose market actions result in the incurrence of such charges:
  • Eliminate the use of internal bilateral transactions (IBTs) in the calculation of deviations used to allocate balancing operating reserve charges.
  • Reallocate the operating reserve credits paid to units supporting the Con Edison – PSEG wheeling contracts.
• FTRs — Fix the Financial Transmission Rights overallocation issue:
  • Eliminate cross geographic subsidies.
  • Improve transmission outage modeling in the FTR auction models.
  • Reduce FTR sales on paths with persistent underfunding including clear rules for what defines persistent underfunding and how the reduction will be applied.

MEDIUM PRIORITY

Addresses a market design issue that creates intermediate market inefficiencies and/or near term negative market effects.

• Ancillary Services — Remove the distinction between Tier 1 and Tier 2 synchronized reserve, remove the ability to offer MW of synchronized reserve capability, remove the ability to make reserve unavailable, and automatically dispatch primary reserve co-optimized with energy. In the interim, enforce a must-offer requirement for synchronized reserve based on physical capability and increase penalties for non-compliance during spinning events.

LOW PRIORITY

Addresses a market design issue that creates smaller market inefficiencies and/or more limited market effects.

• Energy Market — When generator is offline, treat as load (not negative generation) the energy drawn from PJM by those generators for calculating average hourly real-time and day-ahead load.
• Demand Response — Load management resources whose load drop method is designated as “Other” should explicitly record the method of load drop.