The Markets and Reliability Committee approved agenda items 2, 4 and 5 unanimously Thursday. Details are below:
2. PJM MANUALS
A. Manual 28: Operating Agreement Accounting
Reason for change: Revises the manual to reflect Tariff changes regarding lost opportunity cost compensation, as approved by FERC in docket ER13-1200.
The changes regard the amount of lost opportunity costs that a generator receives when PJM ordered it to reduce its output to maintain system reliability.
PJM made the changes to ensure that generators were not rewarded for operating units above the Maximum Facility Output specified in their interconnection agreements.
PJM told FERC the change was needed to prevent generators from causing constraints by operating above their Maximum Facility Output and then being rewarded with lost opportunity cost payments when PJM orders them to reduce output.
The new rules limit lost opportunity cost compensation to the lesser of the Maximum Facility Output or Economic Maximum (the highest incremental megawatt output level the unit can achieve while following economic dispatch).
Impacts:
- Changes sections 5.2.6 and 5.2.8 (Operating Reserve & Reactive Services Lost Opportunity Cost Credits) to limit lost opportunity cost compensation.
- Section 7.2 (Shortage Pricing) amended to incorporate calculation details for non-synchronized reserve market lost opportunity costs.
- Modifies section 5.3 (Operating Reserve) to correct errors and provide clarifications on exempting deviations during shortage conditions; adds revisions for associating interfaces to the East or West BOR regions.
- Modifies sections: 5.2.3 to incorporate details of Lost Opportunity Cost Credit for Synchronous Condensing; 5.2.6 (Wind Lost Opportunity Cost) to align language with Tariff; 17.3 (Allocation of Annual and Monthly FTR Auction Revenues) to correct section reference.
PJM contact: Stan Williams
B. Manual 14B: PJM Region Transmission Planning Process
Reason for changes: Updates to reflect changes from FERC Order 1000, switch to two-year planning cycle and revised benefit/cost test for Market Efficiency projects.
Impact:
- Separates Reliability and Market Efficiency into subsections
- Adds a new section (2.1.2) to explain two-year planning cycle on Market Efficiency projects.
- Changes to reflect Order 1000.
- Changes energy market benefit calculation component of benefit/cost ratio for Market Efficiency projects eligible for regional cost allocation. The change in total energy production cost and change in load energy payments (previously weighted .70/.30) will be equally weighted.
PJM contact: Tim Horger
4. PARAMETER LIMITED SCHEDULES (PLS) REVISIONS
PJM will add new processes for generators seeking exemptions from operating parameters under changes endorsed by the MRC.
The parameters are defaults for different types and sizes of generators, covering minimum run and down times, maximum daily and weekly starts and turn down ratios (Eco Max/Eco Min). They were initiated in 2008 to ensure lower make whole payments for generators whose entire offers were not covered by Locational Marginal Pricing revenues.
Reason for change: The change will reduce administrative burdens on members.
Impact: The proposed change would create three types of exemptions:
- Temporary Exception: A one-time exception of 30 days or less;
- Period Exception: An exception lasting for at least 31 days but no more than one year during the 12 months between June 1 and May 31; and
- Persistent Exception: An exception lasting for at least one year.
The changes will require revisions to Attachment K of the OATT, Schedule 1 of the Operating Agreement and section 2.3.4 of Manual 11: Energy & Ancillary Services Market Operations.
Assuming FERC approval, the changes will be effective Oct. 1.
PJM contact: Jacqui Hugee
5. STAKEHOLDER PROCESS ON TRIENNIAL CONE REVIEW
Members will consider changes to the Cost of New Entry (CONE) triennial review process under a problem statement and issue charge approved by the MRC. CONE values are used in PJM’s Reliability Price Model (RPM) to obtain capacity resources.
Reason for problem statement: PJM and members agreed to explore changes in the review process in a settlement approved by the Federal Energy Regulatory Commission in January (Docket No. ER12-513).
Impact: The inquiry will assess the use of the Handy-Whitman Index of public utility construction costs for adjusting CONE and consider other potential changes.
PJM is required to file Tariff changes with FERC in time for the 2014 triennial review or a status report if stakeholders are unable to reach consensus on changes.
PJM contact: Paul Sotkiewicz
