By Suzanne Herel

PLYMOUTH MEETING, Pa. — PJM staff, stakeholders, financiers, regulators and industry leaders debated the effects of environmental rules and RTO policies on the capacity market, reliability and investments at Infocast’s PJM Market Summit 2015 last week.

Following are some highlights. (Presentations for the executive forum, “Disruptive Factors in the PJM Market,” can be found here.)

Mike Kormos, PJM executive vice president and chief operations officer, gave the keynote address, “Priorities and Future Directions for the PJM Interconnection.”

Kormos borrowed a phrase from outgoing CEO Terry Boston for his presentation: “The future ain’t what it used to be,” highlighting the differences between projections from two decades ago and the reality of today.

One of the biggest game changers is gas.

“Even as late as 2007, gas wasn’t being talked about. Gas was too volatile. People didn’t want to get into that part of the business,” he said. “Now, gas is king. It’s all we’re seeing.

“Everyone is thinking gas will remain cheap and plentiful.” But, he said, “We were wrong in 2000. Are you sure we’re right in 2015?”

Prospects for Adoption of Distributed Energy Resources

“The future is quite uncertain,” said Steve Fine, vice president at ICF International. “A lot is going to depend on how DER interacts with the wholesale market.” There, aggregators would play an important role.

He added: “We’re moving away from a net metering system and more toward a distribution resource planning process.”

There are barriers to adoption, he said, including customer pushback, the impact on rates and utility financials, policy uncertainty, metering and data transmission issues, and interconnection standards.

Implications of EPA 111(d) on the PJM Market

Reid Harvey, director of the Environmental Protection Agency’s Clean Air Markets Division, said that the agency is holding calls with states and groups of states to determine how they plan to implement the final Clean Power Plan released in August.

Joe Kerecman, director of government and regulatory affairs for Calpine, said he favors a regional approach. “Just like in PJM, scale matters to market efficiency, and we think that would be the best outcome,” he said.

Kathleen Barron, senior vice president of federal regulatory affairs and wholesale market policy for Exelon, said the Illinois energy giant will be keeping an eye on how the plan’s implementation will affect its nuclear plants, some of which are struggling.

“The CPP is really the last big unknown,” she said. “We’ll be looking very closely at how states are trending for CPP implementation and what that means for our nuclear stations. It’s too soon to know whether the CPP will be the missing link for this particular sector, but we’re keeping an eye on it.”

For his part, Asim Haque, vice chairman of the Public Utilities Commission of Ohio, said his state would be litigating the rule.

A New Day for Demand Response

Greg Poulos, manager of regulatory affairs for EnerNOC, said demand response provides an “incredible value” to consumers. “If you take demand response out of the capacity market, it would cost consumers about $10 billion annually,” he said.

Allen Jones, a consultant for the OPENADR Alliance, said the use of DR is changing, regardless of what the Supreme Court decides on the D.C. Circuit Court of Appeals ruling threatening FERC’s authority over DR.

“It’s being used for more than just, ‘Oh we have a terrible problem, we need to curtail some load,’” he said, noting that retail giant Walmart, among others, has piloted a program integrating it into its energy use plan. “Demand response is going to be something you’re going to see more and more of.”

The Results of the Capacity Auction

The winners of the new capacity market construct are the consumers, said Jason Barker, director of wholesale market development for Exelon. “We’ve estimated the net benefits to consumers somewhere in the neighborhood of $1 billion to $7 billion per year,” he said.

Among the surprises for George Katsigiannakis, principal of ICF International, was the amount of new generation. “I expected a larger amount,” he said.

“The price of the base product was the biggest surprise from that auction. The amount of DR was a surprise for me, also — I was expecting less DR,” he said.

Pricing, however, was not a shock, he said. “We were expecting those levels.”

Steve Lieberman, director of RTO and regulatory affairs for Old Dominion Electric Cooperative, said he expected a much greater spread between the Capacity Performance and base products.

Now, he said, “I’m hoping we can sit on our hands and stop fussing with it. … Let the auctions run, take a step back, digest the results and take it from there.”