WILMINGTON, Del. — A Tariff change endorsed by stakeholders last week will allow PJM to release Base Capacity resources to reflect the Capacity Performance resources it acquired in the transition auction for the 2016/17 delivery year.
PJM procured more than 4,200 MW of new capacity in that auction in August.
The resources would be sold in the third incremental auction for the delivery year, which is set for February. (See “Tariff Change Would Allow PJM to Sell Excess Capacity for 2016/17” in PJM Markets and Reliability & Members Committee Briefs.)
PJM Assistant General Counsel Jen Tribulski said PJM would seek a waiver from releasing capacity if FERC ordered the removal of demand response from the capacity market before the third incremental auction as a result of a Supreme Court ruling upholding the Electric Power Supply Association’s challenge to FERC’s jurisdiction over DR.
Although the lower court ruling specifically addressed DR in the energy market, some legal experts believe a ruling against FERC would also apply to capacity.
If it ruled in such a manner after the auction but before the start of the 2016/17 delivery year in June, or after the delivery year started but with a retroactive clause, PJM would need to repurchase at least 4,000 MW. This could result in a net cost increase.
If FERC removed DR from the capacity market after the delivery year and did not make the order retroactive, no further action would be necessary. The same holds true if FERC removed DR only from the energy market.
Market Monitor Joe Bowring questioned why PJM would release the capacity at all, given the contingencies and the potential of incurring additional cost.
“It’s not prudent to hold on to those megawatts when we can give value back to the load with megawatts we don’t need,” Tribulski said.
Higher IRM for Next Three Delivery Years Endorsed
With one “no” vote and 27 abstentions, the Members Committee approved an increase in PJM’s Installed Reserve Margin.
The IRM is used in the Reliability Pricing Model capacity auctions. The Reserve Requirement Study increased the IRM for the 2016/17 delivery year to 16.4% from 15.5%. IRMs also rose for the following two delivery years.
In previous discussions at lower committees, stakeholders had expressed confusion over why the IRM was increasing at the same time the Capacity Performance model is being implemented. (See “IRM, FPR Rising; PJM Methodology Challenged” in PJM Planning Committee Briefs.)
On Thursday, PJM’s Tom Falin said that Capacity Performance on its own does not result in a lower IRM because the Reserve Requirement Study always has been conducted under the assumption that generators will perform at the CP level.
“CP is changing the market rules to match the assumption we’ve always made in the study,” he said.
Finance Committee, Sector Whips, Members Committee Vice Chair Elected
Members elected the following:
Finance Committee (three-year terms)
- End Use Customers: David Evrard, Pennsylvania Office of the Consumer Advocate
- Generation Owners: Michelle Greening, Talen Energy
- Other Suppliers: Marguerite Miller, Credit Suisse
- Transmission Owners: Jim Benchek, FirstEnergy
Sector Whips (one-year term)
- Electric Distributors: Steve Lieberman, Old Dominion Electric Cooperative
- End Use Customers: Susan Bruce, PJM Industrial Customer Coalition
- Generation Owners: Joe Kerecman, Calpine
- Other Suppliers: Katie Guerry, EnerNOC
- Transmission Owners: Jodi Moskowitz, Public Service Enterprise Group
Members Committee Vice Chair (one-year term)
- Susan Bruce, PJM Industrial Customer Coalition
— Suzanne Herel