PJM stakeholders last week agreed to review modeling practices that the RTO said may be shortchanging loads with transmission agreements that pre-date the RTO’s capacity market.

Members of the Market Implementation Committee approved a problem statement proposed by Stu Bresler, vice president of market operations.

Bresler said PJM’s capacity modeling considers all external firm point-to-point transmission resources as sinking to the “rest of RTO” region, including historic resources that actually sink in constrained zones. While PJM uses this transfer capability in calculating the Capacity Emergency Transfer Objective/Capacity Emergency Transfer Limit (CETO/CETL), it does not allocate the benefits of the capability to the transmission holder. This can expose the load-serving entities to locational capacity price differences, Bresler said.

Under the problem statement, stakeholders will consider adding a mechanism in the capacity market similar to one used to allocate Auction Revenue Rights to historical transmission paths in the energy market. PJM said the issue affects “a very limited number of entities.”

Market Monitor Joe Bowring, however, warned “it’s a slippery slope.”

“There were a lot of entities who had bilateral agreements when they joined the market. There is no reason to make special allowances for preexisting arrangements or for those who do not like the outcome of market rules,” Bowring explained after the meeting. “Others will seek concessions related to locational capacity price differences that are also not permitted by the market rules.”

Waiver Request

Bresler said the issue caused one PJM member in Commonwealth Edison’s locational deliverability area to seek a waiver of PJM’s Reliability Assurance Agreement before last May’s base residual auction.

It was an apparent reference to the Illinois Municipal Electric Agency, which won a waiver from the Federal Energy Regulatory Commission regarding its means of serving the Naperville, Ill., portion of its load (ER14-1681).

IMEA said it had agreed to pay $468 million for rights to capacity resources for self-supply of its ComEd load through 2035. IMEA said it had acquired firm transmission rights to ensure delivery of external capacity resources in Kentucky and Illinois. Without a waiver, it said, its investment in self-supply would be worthless and it would have had to spend as much as $24 million per year in additional costs to serve its Naperville load.

PJM supported the request, noting that the “ComEd LDA was recently, and for the first time ever, modeled with a separate VRR Curve.”

The commission approved the one-year waiver, concluding that it would “not lead to undesirable consequences,” but it urged IMEA and PJM to discuss a solution for future years.

Commissioner Philip Moeller dissented, saying the waiver “will transfer costs incurred on behalf of IMEA to everybody else in Chicago and its neighboring areas.”