Below is a summary of the issues scheduled to be brought before a special meeting of the Markets and Reliability Committees Thursday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.
RTO Insider will be in Wilmington covering the proceedings and will provide a full report.
ENDORSEMENTS/APPROVALS
2. MAXIMUM IMPORT LEVEL (9:10-10:00)
Members will be asked to approve a methodology for limiting the volume of imports that clear in future capacity auctions. (See Import Cap Approved Capacity Prices May Rise)
3. CLEARING OF LIMITED DEMAND RESPONSE (DR) RESOURCES (10:00-11:00)
Members will be asked to approve PJM’s proposal to cap the volume of Limited Demand Response that can clear in the capacity auction.
PJM’s proposal won support of 75% of the voters at the Capacity Senior Task Force, besting three alternatives proposed by states and demand response aggregators. None of those bids won support of more than a quarter of the 182 voters. (See States, LSEs on Collision Course with PJM over DR Changes.)
PJM says the current rules result in a vertical demand curve that leads to boom-bust cycles in which the system “oscillates” between being long on capacity, with low prices, and being short on capacity with high prices.
Under current rules, 4.8% of PJM’s reliability requirement can be filled with limited demand response, with higher levels possible if excess capacity clears against the sloped Variable Resource Requirement (VRR) demand curve. PJM wants to reduce the 4.8% by all of the 2.5% Short-term Resource Procurement Target (STRPT) for a net of 2.3%.
A simulation found that PJM’s proposal would have increased total costs by $1 billion over actual costs in the 2015/16 auction and $800 million for 2016/17 while reducing the volume of limited DR clearing in the two years by 64%.
An alternate proposed by Southern Maryland Electric Cooperative (SMECO) and state Public Advocates proposal would have increased costs by less than 1% over the two years while reducing the volume of limited DR by about one-fifth. (See Demand Response Changes Could Cost $1B Annually.)
PJM officials said their proposal will ultimately save consumers money by ensuring adequate capacity and keeping energy market prices low.
PJM wants the new rules in place by February, when the RTO must post planning parameters for the 2014 Base Residual Auction. If no proposal wins support of two-thirds of stakeholders in a sector-weighted vote of the MRC, the PJM Board of Managers can unilaterally decide to file the proposed changes with the Federal Energy Regulatory Commission.
FIRST READINGS
The MRC also will hear first reads on three other proposals that will be brought to a vote at a second MRC meeting Nov. 21.
4. DEMAND RESPONSE AS AN OPERATIONAL CAPACITY RESOURCE (11:00-1:30)
Members will be presented with the results of a Capacity Senior Task Force votes concluding today on six proposals to change the way DR is dispatched. (See Too Many Choices: DR, Auction Changes Go To Vote.)
5. REPLACEMENT CAPACITY / PROSPECTIVE CAPACITY RESOURCE INCENTIVES (1:30-2:30)
Members will be presented with the results of a Capacity Senior Task Force votes concluding today on 12 proposals to prevent speculation in the capacity auctions. (See Too Many Choices: DR, Auction Changes Go To Vote.)
6. PRICE FORMATION AND RESERVE REQUIREMENTS DURING HOT WEATHER OPERATIONS (2:30-3:30)
PJM will present a proposed problem statement and issue charge to consider increasing reserve requirements under certain circumstances. The revised methodology could increase reserve and real-time energy while reducing uplift. (See PJM: Change RT Pricing)
