Time is growing short for stakeholders hoping to reach consensus on rules banning capacity market speculation before May’s auction.
After two meetings last week, the Capacity Senior Task Force was still debating nine “replacement capacity” proposals — almost as many as the 11 packages the panel was considering when it failed to reach consensus in November.
Since Nov. 21, when the Markets and Reliability Committee returned the issue to the CSTF, the task force has held four meetings, including two last week. (See Arbitrage Fix Returned to Committee.)
PJM officials want to submit a plan to the Federal Energy Regulatory Commission by mid-March in order win approval in time for the Base Residual Auction. The schedule laid out by CSTF Chair Scott Baker calls for a CSTF vote after its meeting Friday, with a first read before Markets and Reliability Committee Jan. 30.
The odds of reaching an agreement may become clearer as a result of a poll CSTF Chair Scott Baker submitted to task force members yesterday.
The poll, which closes at 5 p.m. Wednesday, is an effort to thin the candidates by identifying consensus on core concepts. One question, for example, seeks to measure support for proposals eliminating the ability to profit in cleared buy bids in incremental auctions. The question then seeks to parse support for addressing the issue in time for this year’s auction or whether the task force should take more time to vet solutions.
Versions of this “IA Settlement Agreement” are featured in packages proposed by PJM, J.P. Morgan Ventures Energy Corp., Citigroup Energy and Duke Energy. Taking different approaches are proposals by Market Monitor Joseph Bowring, Old Dominion Electric Cooperative, Calpine, Exelon and Gabel and Associates. Bowring would eliminate replacement of capacity in incremental auctions except for capacity lost to force majeure events.
The poll also will gauge support for using development milestones to reduce credit obligations or capacity deficiency penalties. Another set of questions focuses on proposed requirements that bidders certify their intent to provide physical resources and not plan to buy out of their obligations in the incremental auctions, when prices are much lower than in the BRA.
An earlier poll found 90% support for raising the Capacity Resource Deficiency Charge (currently the greater of 1.2 times the Resource Clearing Price or the Resource Clearing Price + $20). A proposal to make the penalty the greater of 1.5 times the Resource Clearing Price or the Resource Clearing Price + $50 also had strong support at 86%
The same percentage of respondents endorsed changing the PJM sell offer price (currently an upward sloping offer curve with a starting price equal to the intersection of the updated VRR curve and current commitment level). A proposal to switch to an upward sloping offer curve with the starting price floored at the BRA clearing price won almost 73% support, although that could drop in a binding, sector-weighted vote.
Cutting the number of incremental auctions from three to two won 83% support while only 67% backed a cut from three to one.
