WILMINGTON, Del. — PJM will ask FERC to act within the next couple of months on its Capacity Performance compliance filings and any related outstanding hearing requests, Stu Bresler, senior vice president for markets, told the Markets and Reliability Committee on Thursday.

“PJM recognizes there is a fair amount of uncertainty among our asset owners and operators as to what will occur come June 1 and beyond,” he said. “The purpose of requesting FERC action is to achieve as much certainty as possible ahead of summer 2016.”

Staff expects to make the filing before Christmas.

Load Forecast to Include Distributed Solar

With eight objections and five abstentions, the committee approved manual changes that allow PJM to consider distributed solar generation in its load forecast.

“The reason PJM sees this as important is that this behind-the-meter generation of solar is by far the quickest growing component,” said PJM’s Tom Falin. “It’s really taken off the past three to four years … exponentially. We believe it’s important to recognize this phenomenon now in the forecast.”

In the near term, the model will affect only a few hundred megawatts, he said.

Steve Herling, PJM vice president for planning, said staff wants to act now so it is not caught flat-footed when solar’s growth increases.

“We don’t want to see the phenomenon like we did with energy efficiency variables, which we talked about for a couple of years and by the time we implemented a change it was a pretty substantial change,” he said. “We want to get it into the forecast so we can tweak it as it grows.”

PJM agreed to review the process in a year to see how accurate it is and if any changes need to be made. The revisions will be made to Manual 19: Load Forecasting and Analysis. (See “Distributed Solar to be Included in Load Forecast” in PJM Planning Committee and TEAC Briefs.)

In a related matter, the committee approved manual revisions that aim to prevent energy efficiency resources from being counted both as capacity and load reduction in the new forecast model. The changes will be incorporated in Manual 18: PJM Capacity Market and Manual 18B: Energy Efficiency Measurement & Verification.

The motion passed with 12 no votes and one abstention. Members had delayed the vote until after an additional education session regarding the proposed addback. (See “Members Ask for More Time to Consider EE Resource Manual Changes” in PJM Markets and Reliability Committee Briefs.)

Ways to Mitigate Risk in CP Market to be Studied

A controversial problem statement proposing to study ways capacity suppliers could minimize underperformance penalties by netting them against overperforming units was approved with 80% of a sector-weighted vote.

Those who supported the measure said it was needed to level the playing field between small and large companies and to encourage financial investment.

Opponents said it was a solution without a problem and threatened to unwind a core aspect of the Capacity Performance model.

Bob O’Connell, who brought the problem statement forward on behalf of PPGI Fund A/B Development, responded to consumer advocates who asked what the problem was by saying, “Investors are looking at the market and deciding whether to invest in the energy market or Hollywood films. If investors see too much risk in the market, they may wait several years to bring a project forward.”

Market Monitor Joe Bowring opposed the problem statement.

“This seems to me … an attempt to unwind some critical parts of Capacity Performance,” he said.

Lisa Moerner, of Dominion Energy Marketing, said the concept does not undermine the Capacity Performance construct.

“We plan to do everything we can to perform during an emergency event under CP,” she said. Such risk-mitigating opportunities just give generators more options to do so, she said.

“We’d much rather overperform than pay penalties,” she said. “If we can provide megawatt-hours rather than pay a penalty, how is that a bad thing?”

Jason Barker of Exelon said that while that company’s general policy is to endorse problem statements and let discussion take place, it would be voting against the problem statement.

“This is really an attempt to rewrite Capacity Performance before the ink is even dry and before we’ve had a day of performance under this plan,” he said.

“If you follow the problem statement through to conclusion, it would provide incentives for market participants to underinvest in generation assets, threatening reliability, and enable those market participants to go into a secondary market and find replacement capacity at lower cost than the established non-performance penalty.

“The level of investment and the level of risk should be reflected in capacity market offers.”

Committee Approves Manual Changes

Members endorsed the following manual changes:

• Manual 10: Pre-Scheduling Operations. The changes define a generator planned outage and restrict scheduling planned outages during peak maintenance season; define generator maintenance outage; define unplanned outage and clarify notification requirements; and correct the definition of non-synchronized reserve.
• Manual 11: Energy & Ancillary Services Market and Manual 28: Operating Agreement Accounting. Changes reflect Tariff revisions approved by FERC regarding the energy market offer cap that went into effect Monday (ER16-76). Cost-based offers for incremental energy are capped at $2,000/MWh and allowed to set prices. Costs above that cap will be recovered through an after-the-fact review and make-whole payments. Market-based offers for individual units are allowed to rise with their cost-based offers. (See PJM Members OK $2,000/MWh Energy Market Offer Cap.) There was one abstention and one objection to this issue.
• Manual 14D: Generator Operational Requirements. Revisions reflect the annual review of the manual as well as revisions to the reactive testing process. Revises and renames the wind farm communication model, making it applicable to all jointly owned resources to avoid confusion among control room operators. Adds definitions of generator planned, maintenance and forced outages. There was one “no” vote on this issue.
• Manual 39: Nuclear Plant Interface Coordination. Updates are the result of a three-year review and include safe shutdown loading requirements developed by the nuclear generation owners’ user group.

— Suzanne Herel