By David Jwanier

Black start generators anticipating increased compensation came away empty handed Thursday as stakeholders rejected two proposals that would have boosted payments to existing units by at least 40%.

The Markets and Reliability Committee split along supply-load fault lines in rejecting the proposals.

Proposals Described

The Minimum Incentive proposal, which would have increased total payments to existing black start units by an estimated $3.4 million, won only 60% support in a sector-weighted MRC vote, short of the two-thirds needed to clear. While every Transmission Owners sector member and most members of the Generation Owners sector voted in favor, the proposal failed to win a single vote from End Use Consumers and got about half of Other Suppliers and Electric Distributors votes.

An alternative proposal, the Proxy for Base Formula Replacement, which would have more than doubled costs for existing black start units, also fell short with only 45% support and no support from the EUC and ED sectors.

The proposals had garnered 65% and 63% support, respectively, in unweighted votes in the System Restoration Strategy Senior Task Force.

Existing black start units are paid a base formula rate plus an incentive. The Minimum Incentive proposal would have increased the incentive factor from 10% of the base to the greatest of 10% or $25,000. This would raise the annual payment for a 20 MW black start unit from approximately $51,000 to nearly $72,000.

The same 20 MW unit would have received $312,000 under the proxy proposal. (See Black Start Units to See More Green?)

Bowring: No Need for Increase

Market Monitor Joe Bowring and stakeholders representing load questioned the need for the increase, noting that PJM said it had received a good response to its recent solicitation for new resources.

After the Minimum Incentive proposal failed, NRG Energy’s Neal Fitch made a statement endorsing the Proxy proposal, which he said was similar to compensation methods in New England.

Dave Weaver, representing Exelon, said generators in the PECO zone “are receiving revenues that are nowhere near the proxy.”

“What’s the benefit?” asked the Delaware Public Service Commission’s John Farber.

“I would say the benefit is you don’t lose these resources,” responded Weaver.

Bowring opposed both options, eschewing the “idea of some minimum payment that isn’t based on costs.”

“We support paying black start units full costs,” he said. “This is not what this is about. This is about an artificial cost based on what other units are getting. There is no basis for the assertion that these units will go away” without an increase.

PJM’s Chantal Hendrzak said although some operating generators have stopped offering black start service recently, “we’re finding sufficient black start to meet these critical load needs” as a result of the solicitation.

After the second proposal failed, Gloria Godson, representing Pepco Holdings, called for a renewed effort to create a “back-stop” solution for zones that fail to attract sufficient black start resources. “Generators are not in the business of just breaking even,” she said.

The issue will be returned to the task force for further consideration.