PJM overcharged members by more than $25 million in reactive service charges last year and will begin providing refunds this month.
Adam Keech, director of wholesale market operations, told the Market Implementation Committee last week that reactive credits in the real time market were inflated by $25 to $30 million between August and December as a result of a software error.
In December 2012, PJM changed the way it allocated local reactive power costs: Costs that were previously allocated to all Day Ahead load, DECs and exports were allocated to the individual transmission zone.
A subsequent change to the logging process, effective Aug. 1, also inadvertently changed the settlement process. As a result, resources committed in the DA market for reactive support were credited with make whole payments in real time.
“Anytime a unit wasn’t following dispatch we assumed it was redispatched for reactive” service, Keech explained.
Officials discovered the error after noticing RT reactive credits, which had been negligible compared with DA credits, grow to more than $5 million per month. The error was corrected for settlements beginning Dec. 20.
