By Suzanne Herel
VALLEY FORGE, Pa. — Stakeholders last week continued their debate over PJM’s proposal to create “historic” capacity transfer rights for some load-serving entities, with the Independent Market Monitor cautioning the Market Implementation Committee that the new Tariff language would constitute a “fundamental change.”
The proposal resulted from a problem statement approved by the MIC in December to review modeling practices that the RTO said may be shortchanging loads with transmission agreements that pre-date the RTO’s capacity market.
The changes would allow market participants to use generation resources outside of their locational deliverability areas (LDA) to meet their internal resource requirements if that external capacity agreement was in place before June 1, 2007, when PJM implemented its Reliability Pricing Model. Previously, there was no locational differentiation made among capacity resources.
The proposal would address the situation faced by the Illinois Municipal Electric Agency, which last year won a federal waiver to allow it to use capacity resources outside of the Commonwealth Edison LDA to meet its internal resource requirement in serving its Naperville, Ill., load.
The Federal Energy Regulatory Commission granted IMEA a waiver for the 2017/18 delivery year after the ComEd LDA last year was modeled for the first time with a separate variable resource requirement curve (ER14-1681).
In January, however, the commission rejected IMEA’s request to continue use of the waiver for future delivery years, saying it had enough time to prepare to meet its internal resource requirement (ER14-1681-001). The commission also rejected a specific waiver request for the 2018/2019 delivery year (ER15-834). (See Illinois Regulators, IMM Line Up Against IMEA Capacity Waiver Request.)
PJM estimates 1,037 MW of historic external resources would qualify under its proposal: 122 MW in the DOM zone, 533 in COMED, 261 in AEP and 121 in DAY.
“This isn’t a piddling amount of megawatts,” GT Power Group’s Dave Pratzon said.
One stakeholder, who declined to be identified by name, said the rule change would be fair if it protects the property rights of load-serving entities that had funded transmission upgrades that increased the capacity emergency transfer limit (CETL) into their region.
But he said it may be “inequitable” if it also covers those whose only claim is a firm transmission reservation that predates RPM. Others observed the change would give such LSEs a preference over their neighbors for available transmission capacity.
Pratzon said he was concerned that PJM would be unable to set a “bright line” to distinguish between entities that have legitimate claims from those that don’t.
“It does seem to be creating a preferential set of rights for a certain group of people. I wouldn’t want us to set something up where in effect we’re giving people a second bite of the apple for certain decisions they made in RPM that they wish they hadn’t made,” he said. “I want to make sure we’re not putting ourselves on a slippery slope to other requests for special treatment.”
Mark Hanson, an economic analyst for the Illinois Commerce Commission, said the proposal goes too far. “It seems like maybe [entities such as IMEA have] gone from being too much at risk to being immunized from risk,” he said.
Market Monitor Joe Bowring said the change “represents a very substantial, fundamental change to the way [capacity transfer rights] are allocated within LDAs.”
Stu Bresler, PJM vice president of market operations, said the proposal would apply to a “well-defined subset” of LSEs. “It could never grow. We’d never have a new one,” he said.
Bresler said PJM will provide additional information on its proposal at next month’s MIC meeting.