By Rich Heidorn Jr.
The PJM Board of Managers won’t make its Dec. 1 target for filing the RTO’s Capacity Performance proposal with the Federal Energy Regulatory Commission, CEO Terry Boston told members last week.
As a result, PJM will likely post two sets of parameters for the May 2015 capacity auction — one assuming the status quo and one assuming FERC approval of what the board ultimately files.
Boston also said he will recommend that the board’s Section 206 filing not incorporate PJM’s proposal to eliminate demand response as a supply resource. The proposal, outlined in an Oct. 7 white paper, would make load-serving entities responsible for incorporating DR in reduced demand estimates. (See PJM DR Cos. Confident; Reject PJM EPSA Response.)
Boston said PJM should delay changes in its DR rules pending the resolution of a potential Supreme Court review of the D.C. Circuit Court of Appeals’ Electric Power Supply Association ruling voiding federal jurisdiction over DR compensation. “We think the courts and FERC have to do their job,” Boston said. “CP will work either way.”
Boston said the board, which heard from 50 speakers during a four-hour meeting with stakeholder coalitions on Nov. 11, met the day afterward and also conducted a two-hour teleconference with PJM staff last week. The board plans to meet again after Thanksgiving. “The board knows where each coalition stands,” Boston said. “They are weighing all sides of the issue.”
NJ Regulators OK Pass-Through
Meanwhile, the New Jersey Board of Public Utilities decided last week to allow bidders in its February Basic Generation Service auction to pass through “unanticipated” capacity costs approved by FERC.
Retail customers that do not choose alternative suppliers obtain their power through the BGS auctions. In New Jersey, 85% of residential ratepayers and 70% of small commercial customers rely on BGS.
The BPU said it acted because it was unlikely FERC would rule before the next BGS auction in February and it feared potential bidders would decline to participate or include large risk premiums to cover the uncertainty.
BPU President Richard S. Mroz said the action would ensure “the integrity and competiveness” of the auction. “Faced with the uncertainty of federal action on a draft PJM proposal, there was good reason to believe that electric suppliers would either not participate in the upcoming auction or would bid much higher prices to mitigate unknown risks,” he said.
Md. Auction Sees Reduced Participation
The Maryland Public Service Commission blamed uncertainty over the CP proposal for a nearly 50% drop in bidder participation in its Oct. 20 auction for Standard Offer Service, Maryland’s method of supplying customers that do not shop.
The state’s four investor-owned utilities sought 2,184 MW for residential and small and medium commercial customers. The PSC said only five suppliers submitted bids on one or more of the 10 products available in the auction, down from nine in the previous auction.
Only two bidders offered to supply residential and small commercial customers, and only one bidder made offers for several other products.
Pepco (330 MW of combined residential and small commercial customers), Potomac Edison (46 MW of 12-month and 24-month residential supply) and Delmarva Power & Light (122 MW of residential and small commercial) each received only one bid.
Overall, the PSC received bids totaling 1.8 MW for every megawatt it sought, compared with a 3-1 ratio in the previous auction.
“Although the Maryland PSC accepted the bid results and determined that the SOS auction was in line with market conditions, the material reduction in generator interest in bidding in the auction is a cause of great concern,” PSC Chairman W. Kevin Hughes said in a letter to the PJM board.
In testimony to the PSC, Maryland’s bid monitor, Boston Pacific, concluded that “the current level of uncertainty was great enough to keep many bidders from offering for the longer-term residential and [small commercial] products.”
