Third time was the charm yesterday as members approved Tariff changes that will allow PJM operators more flexibility in dispatching demand response.

Meeting in a special session, the Members Committee approved an amended version of the changes after rejecting the original PJM proposal and one alternative. The third vote passed after an amendment that won over manufacturers.

Changes

PJM said its experience during two heat waves this summer demonstrated the need for changes to allow quicker and more targeted use of demand response.

Current rules require PJM operators to provide two hours’ notice before dispatching DR. Under the new rules, resources will be dispatchable in 30 minutes beginning delivery year 2015/16 unless they can demonstrate physical reasons for a longer dispatch. Curtailment Service Providers will be able to choose among 30-, 60- and 120-minute dispatch for DY 2014/15.

The new rules also limit the “Emergency DR” designation to resources using back-up generators that are subject to environmental permits. Other resources will be known as “Capacity DR.”

In addition, the minimum event duration will be reduced from two hours to one hour and the strike price will be reduced by 22% to 39% (see chart).

DR Opposition

The proposal passed over the objection of Curtailment Service Providers, who said they agreed with the need to increase DR’s flexibility but disagreed with how PJM was seeking to accomplish it.

Bruce Campbell, of EnergyConnect, said the changes will increase CSPs’ administrative costs and reduce the volume of DR, leading to increased costs for PJM load. He added, “It is retroactive ratemaking and we should not be doing it.”

David “Scarp” Scarpignato, of Direct Energy, argued unsuccessfully for a slower transition to the 30-minute default. He said Direct will challenge the changes when they are filed with the Federal Energy Regulatory Commission.

Katie Guerry, representing EnerNOC, said only a “small minority of customers” can reduce their loads within 30 minutes. PJM’s reliability will not benefit, she said, if it attempts to enforce a lead time “that is simply not physically practical.”

CSPs also complained that PJM had not incorporated changes to its measurement and verification rules.

Votes

The PJM proposal failed with a sector-weighted vote of 2.74 (55%), below the threshold of 3.34 (two-thirds). The proposal had won 67.4% support of the Markets and Reliability Committee Nov. 21, just enough to clear the two-thirds hurdle.

A second proposal, which included an amendment to increase the maximum dispatch time to 120 minutes for state-authorized “mass market” DR programs, also fell short at 2.85.

The third vote cleared by a 3.52 (70%) vote after winning support from manufacturers.

Crucial Amendment

Susan Bruce said some members of the PJM Industrial Customer Coalition could not support the proposal as originally drafted because it allowed manufacturers an exemption from the 30-minute dispatch only if they needed to do so to “avoid damaging major industrial equipment.”

As approved, that clause was amended to also allow manufacturers an exemption if needed to avoid damage to “product or feedstock.” It also included the maximum 120-minute notification for mass market programs.