While many stakeholders still have misgivings about it, PJM’s Oct. 7 revisions to its Capacity Performance proposal appear to have won over Independent Market Monitor Joe Bowring.
Bowring said last week that PJM’s revisions have addressed his most significant concerns and that he now supports it. “I think what PJM’s doing here is an excellent idea,” he said during a discussion at the Organization of PJM States Inc.’s annual meeting. “My disagreements or differences are now points of detail instead of major points of principle.
“I think it’s important to keep that in context,” he added, prompting laughter, “as I go through criticizing it mercilessly.”
The revised proposal envisions a new Capacity Performance product – with increased reliability expectations, compensation and nonperformance penalties – alongside the existing product, to be renamed Base Capacity. (See Lower Penalties, More Flexibility in Revised PJM Capacity Performance Proposal.)
At a meeting with stakeholders Wednesday, PJM Executive Vice President for Markets Andy Ott said PJM plans to “evolve into a single [Capacity Performance] product over time” after a transition of “a few years” with the current Base Capacity product. That addresses one of Bowring’s central concerns — that multiple products could create opportunities for economic withholding.
Ott said PJM staff is still working out the details of a transitional mechanism. “More discussion could occur without having to decide that in the short term,” he said.
Bowring said a transition is “appropriate. These are very significant changes that are being dropped on the market in a very short period of time. But if we create a second product … sometimes it’s very difficult to get rid of them. They create those who make money from them, people who support them in the stakeholder process,” he said.
At the stakeholder meeting, Ott left the door open to reconsidering the plan’s insistence that all new resources be Capacity Performance. Consultant Tom Rutigliano of Achieving Equilibrium and Judith Judson of Customized Energy Solutions said advanced energy storage might not qualify as Capacity Performance but would still be valuable to PJM as Base Capacity.
“If you’re saying they can’t [qualify as Capacity Performance] we’ll have to think about it,” he said.
Next Steps
Stakeholders must inform PJM by Oct. 21 of the coalitions they have formed to address their concerns about the proposal. The coalitions’ briefing papers are due Oct. 28.
The coalitions will make their cases to the Board of Managers, which will decide what changes are ultimately filed with the Federal Energy Regulatory Commission, at an “Enhanced” Liaison Committee meeting in Philadelphia Nov. 4.
Earlier this month, the board received letters of protest from Environment Ohio, which said the proposal is “disruptive and unfairly penalizes renewable energy and energy efficiency,” and two Pennsylvania state representatives, who said it “is likely to significantly increase costs for ratepayers without delivering on its promise for increased reliability for a number of years.”
Reps. C. Adam Harris and Kevin Boyle urged PJM to “find a less disruptive alternative.”
