VALLEY FORGE, Pa. — PJM is proposing a Tariff change that would allow it to release Base Capacity resources to reflect the Capacity Performance resources it acquired in the transition auctions for the 2016/17 and 2017/18 delivery years.

The RTO uses its incremental auctions to sell excess capacity, or purchase more to replace shortfalls, based on changes to its load forecast. But PJM’s Tariff does not allow for such adjustments based on the additional capacity obtained in the transition auctions.

PJM obtained 4,246 MW of Capacity Performance for 2016/17 and 10,017 MW for 2017/18 in the transition auctions held in August and September.

The Tariff change, which will be brought to a Markets and Reliability Committee vote Oct. 22, would be effective for the third incremental auction for 2016/17 in February.

Independent Market Monitor Joe Bowring took issue with PJM Assistant General Counsel Jen Tribulski calling the amendment a “minor change.”

“This is a substantive change,” he said. “Why buy excess and sell it back? Why do you think that makes sense for the market?”

Stu Bresler, PJM senior vice president for markets, said that when PJM executed the transition auctions for Capacity Performance, it didn’t know what mix of Base and Capacity Performance resources would result.

“This was our intent all along, if we had a case where we had resources committed that weren’t previously committed,” he said. (See PJM Transition Auction Capacity not Included in Incremental Auction.)

In order for the Tariff change to be in place for the February auction, it needs to be filed with FERC by December.

New Methodology Would Decrease Projected Load

The MRC got a look at proposed changes to PJM’s load forecast methodology, which would mean a 2.6% drop in projected peak load for summer 2018.

Among the changes in methodology are the addition of an energy efficiency and saturation variable, a weather history shortened to 20 years and the addition of weather “splines,” which capture the relationship between weather and load, PJM staff said.

“The impact of energy efficiency has finally gotten to the magnitude that it will make a difference in our model,” PJM’s Tom Falin said.

The new methodology is predicted to reduce error rates from 6.6% to 1.5% on a three-year-out basis. (See “New Methodology Could Lower Summer 2018 Forecast by 2.6%; Winter Down 1.8%” in PJM Planning Committee Briefs.)

Members will be asked to endorse the final forecast in November, following the addition of updated economic data, equipment index trends and other data.

While the load forecast is expected to drop, PJM is recommending increasing the installed reserve margin (IRM) to 16.5% from 15.7%.

The proposed increase in the IRM came as a surprise to some members, who expected it to drop as a result of the implementation of Capacity Performance rules. (See “Proposed Increase in Reserve Margin Sparks Opposition from Load” in PJM Planning Committee Briefs.)

But staff said the increase resulted from changes in 2015 capacity and load models, as well as a decline in the capacity benefit of ties (CBOT) — expected capacity imports. The CBOT was reduced because the “rest of world” peak demand is becoming more coincident with the PJM peak.

Staff stressed that changes in the IRM may not have that much impact on the forecast pool requirement (FPR), which determines the amount of capacity procured in the annual Base Residual Auction.

Solution, Task Force Proposed to Curtail RegD Resources

PJM staff presented a provisional solution to address modeling problems that are causing PJM’s regulation market to purchase too much RegD megawatts at times.

They also proposed a charter for the Regulation Market Issues Senior Task Force, which will be assigned to track the issue.

The solution, which will be brought to a vote Oct. 22, would move the benefits factor curve to the left so that it is at zero at 40%. A cap of 26.2% also would be implemented during identified excursion hours — hours when dispatch frequently moves the regulation signal manually.

In addition, the group proposes a tie-breaker logic to rank RegD self-schedules or zero-cost offers. (See “Proposal Would Curtail RegD Resources in Regulation Market” in PJM Operating Committee Briefs.)

The changes to the curve and the tiebreaker would be evaluated quarterly and may be changed depending on the findings of the task force.

Manual Changes Approved

The MRC endorsed changes to the following manuals at its meeting last week:

• Manual 40: Certification and Training Requirements. Edited for grammar and to clarify roles and responsibilities under North American Electric Reliability Corp. definitions.
• Manual M10: Pre-Scheduling Operations. Revised to allow for maintenance outage procedures under Capacity Performance rules. PJM members are now required to specify an “early return time” for planned outages and submit outages with at least three days’ notice. It also grants PJM authority to recall an already underway outage with 72 hours’ notice.
• Manual M14D: Generator Operational Requirements. Incorporates minor changes to the cold weather testing program for seldom-used generators. (See “Members Choose Status Quo on Winter Testing” in PJM Operating Committee Briefs.)
• Manuals 14B and 14A: Generation and Transmission Interconnection Process. Changes document how PJM will oversee transmission projects that have benefits in at least two categories, including baseline reliability upgrades, market efficiency and public policy. (See PJM Wins OK on Multi-Driver Tx Projects.)

— Suzanne Herel and Amanda Durish Cook