Businesses with up to 100 kW in annual peak demand will be exempt from the new 30-minute notice rule for demand response providers under a compliance filing yesterday by PJM.

In approving the new “operational” DR rules last month, the Federal Energy Regulatory Commission ordered PJM to add small commercial customers to the list of those eligible for a “mass market” exemption from the requirement that they respond within 30 minutes of notice (ER14-822). (See PJM Wins on DR, Loses on Arbitrage Fix in Late FERC Rulings.)

PJM told the Markets and Reliability Committee Thursday that it planned to file changes to Manual 18 that reserved the exemption to businesses with less than 20 kW of annual peak demand. PJM said 20 kW is the threshold FERC has used to define “small commercial.”

Representatives of the Maryland Public Service Commission and Pepco Holdings Inc. said such a low threshold could cripple current and planned demand response programs for small businesses.

Walter Hall of the Maryland PSC said the 20-kW cut-off would force 30% of commercial customers in his state to drop out of the DR program. Hall said the threshold should be increased to at least 100 kW, adding that the PSC would contest the issue before FERC.

Gloria Godson of Pepco said PJM should look to the rate classes set in state tariffs for guidance in setting the threshold. The 20-kW limit “is not going to work,” she told PJM officials. “Your approach is really very constraining.”

GT Power Group’s Dave Pratzon, however, said that “PJM is being entirely appropriate in setting these limitations.

“A 100-kW customer — or a 350-kW customer, as suggested at another meeting — is nothing like a small C&I.”

PJM made no commitments to changing the threshold at the meeting. But in its compliance filing yesterday, the exemption limit was increased to 100 kW.

In addition to the changes to Manual 18, the demand response “operational enhancements” also required revisions to Manuals 11: Energy & Ancillary Services Market Operations, 13: Emergency Operations, 18: PJM Capacity Market, 19: Load Forecasting and Analysis and 28: Operating Agreement Accounting. They were endorsed by the MRC without debate.

Consultant Seeks “Safe Harbor” on Scheduling Rule

A change to PJM’s Regional Practices in response to a FERC directive sparked an exchange between Market Monitor Joe Bowring and consultant Roy Shanker.

In April, FERC ruled that PJM’s scheduling rules did not fulfill Order 764, which requires transmission providers to offer scheduling at 15-minute intervals. The order is intended to remove barriers to wind and other variable energy resources. (See FERC Rejects PJM Schedule Rules.)

FERC took issue with PJM’s practice of requiring that interchange transactions have a minimum duration of 45 minutes. The commission said the practice was inconsistent with Order 764 because it does not allow a generator to schedule for less than three consecutive 15-minute intervals.

PJM implemented the 45-minute rule in 2008, after MISO officials determined that nearly 60% of intra-hour schedules between MISO and PJM occurred in the final 15 minutes of the hour. PJM said the trading was the result of market participants’ ability to “predict with relative certainty the direction of the price separation between the two RTOs.” PJM said this resulted in interchange spikes of up to 1,000 MW — increasing uplift charges because of the need to balance the generation swings.

With FERC rejecting the restriction, Shanker said PJM and the Market Monitor should clarify the circumstances under which trades made in the last 15 minutes of the hour would be subject to  enforcement action. Shanker said failing to create a “safe harbor” for traders would leave them unfairly vulnerable to “subjective judgment.”

“It is not acceptable to put market participants in this position,” Shanker said. “Some profitable transactions in the last quarter of an hour are OK and some are not? Who’s to tell?”

Among Shanker’s clients are Powhatan Energy Fund, which has mounted a public campaign in response to a FERC enforcement action over up-to congestion transactions. Shanker said FERC was incorrect in describing the company’s transactions “wash” trades. (See PJM Trader Calls FERC on Manipulation Probe.)

Executive Vice President for Operations Mike Kormos said PJM was making the rule changes to comply with the FERC order. Whether transactions are referred to FERC “will be Joe’s decision,” Kormos said.

Bowring said he wanted to retain the ability to review such trades for manipulation. “It is possible to game the market while following the rules,” he said.

No Debate

The MRC endorsed the following changes without debate:

• Manual 36: System Restoration: Annual update of manual as required by NERC Standards EOP-005-2 (R3) and EOP-006-2 (R3).
• Manual 03: Transmission Operations: Updates to special protection schemes, operating procedures, etc.
• Manual 28: Operating Agreement Accounting: Changes resulting from the Settlements Formulation Review project — including revisions regarding calculation of regulation lost opportunity cost credits during shoulder hours — and other clean-up items.
• Manual 18: PJM Capacity Market: Revisions developed by the Demand Response Subcommittee that would allow a curtailment service provider to add additional MWs as “existing” for offer into RPM auction through an exception process, if the nominated amount on the registration is low because the peak load contribution is low due to a load data anomaly. The current process does not allow for exception for one-time events such as power outages or major equipment failure.
• Manual 33: Administrative Services for the PJM Interconnection Operating Agreement: Sets forth rules for communicating with electric distribution companies and reallocating load reallocation due to defaults by load serving entities. (See PJM Considers New Rules on Defaults.)