The Members Committee approved by acclamation a rate-increase proposal that struck a balance between allowing for cost increases and providing long-term certainty.

Members endorsed the Finance Committee’s unanimous recommendation for a composite rate of $0.36/MWh for two years and then a 2.5% annual increase that will result in a rate of $0.41/MWh in 2024. The approved rate schedule creates the lowest projected refunds, explained PJM’s Suzanne Daugherty, and allows for future revisions. The ability to install fee escalators later was built in, along with a five-year review.

PJM touted Moody’s Investors Service’s recent upgrade in the RTO’s credit rating, which praised its structure for recovering administrative costs.

“Under stated rates, PJM uses fixed, long-term capped rates for the administrative costs of managing the grid and wholesale electricity markets. Costs are managed within the rates,” PJM explained. “Other grid operators automatically pass through their administrative costs to members through formula rates that vary from month-to-month or year-to-year.”

PJM noted it has taken on additional responsibilities since the rates were first implemented in 2006, including enhanced physical and cybersecurity, increased planning and analysis related to changing governmental policies and implementation of new technologies.

Assuming timely approval by the PJM Board of Managers and FERC, the rate would take effect on Jan. 1. (See “PJM Eyes Fee Hike,” PJM Markets and Reliability and Members Committees Briefs.)

Transmission Task Force Halts Most Action in Response to FERC Order

Calling it a “unique situation,” PJM’s Fran Barrett won approval from the Markets and Reliability Committee to suspend most of the activities of the Transmission Replacement Processes Senior Task Force in response to a recent FERC order.

The Aug. 26 Order to Show Cause calls into question whether PJM transmission owners, per FERC’s Order 890, are complying with their local transmission planning obligations, specifically with respect to supplemental projects (EL16-71). (See FERC Orders PJM TOs to Change Rules on Supplemental Projects.)

All but the task force’s forward-looking work on transmission project costs — which isn’t affected by the order — has been suspended.

PJM and the TOs have until Oct. 25 to respond to the FERC order, which opened a Section 206 proceeding. An addendum was also approved that allowed the task force to reconvene in March if FERC, which has no deadline for responding, hasn’t acted.

Susan Bruce, who represents the PJM Industrial Customer Coalition, commended the parties involved for maintaining communication during resolution of the issue.

Proposal Chosen for Capacity Release

After months of consideration, the MRC approved the straight-line offer curve PJM proposed for selling back excess capacity in February’s third incremental auction for the 2017/18 delivery year. The curve had to compete against several member proposals, but it was ultimately recommended by the Market Implementation Committee on Sept. 14. (See “PJM’s Straight-Line Offer Curve Recommended for Capacity Sellback,” PJM Market Implementation Committee Briefs.)

Members voted over the objections of Market Monitor Joe Bowring, who reiterated his concerns that the RTO is undervaluing the capacity and shouldn’t publicly broadcast its asking price. “PJM bought this capacity for a fairly high price. We believe, with reliability and the benefits associated with it, the minimum price should be much higher than you’re proposing,” he said.

No Objections to Metering Revisions

The MRC approved revisions to Manual 1 to close gaps in understanding between staff and members on metering rules. The proposal had minor edits from previous presentations, but it maintained its basis on solutions recommended by the Metering Task Force. (See “Metering Standards Ready for Stakeholder Vote,” PJM Markets and Reliability Committee Briefs.)

Flexibility for Vendors Approved for Competitive Bidding Rules

A PJM request to revise  the Operating Agreement’s requirement to use open and competitive bidding when procuring goods or services from a member breezed through both the MRC and MC without objection.

There was some minor concern that the revisions — which exclude certain vendors from PJM’s competitive bidding requirements — might eventually allow for awkward conflicts of interest, but PJM assured that the screenings it devised would eliminate the potential.

PJM’s solution cribs off an existing provision in the OA that addresses a similar issue in allowing PJM personnel to invest in member companies with a de minimis PJM relationship based on a three-part test. To avoid the competitive bidding rules, a company must not:

• be considered an electric sector company under the North American Industry Classification System;
• receive more than 0.5% of its gross revenue from PJM; and
• be involved in more than 3% of PJM’s total market transactions.

“What we found is that over the years, increasing numbers of nontraditional companies … engaged in activities at PJM as a member, but their focus was on other areas” than participating in the energy markets, explained PJM’s Steve Pincus. As examples, he cited office suppliers, such as Target and Walmart, and software companies, such as Microsoft and Siemens.

Responding to stakeholder requests, PJM said it would consider providing a list of the vendors it uses for operations and services as long as it doesn’t run afoul of any confidentiality or disclosure rules.

FE’s MAIT Receives Needed OA Revisions

FirstEnergy received approval for several Operating Agreement changes that will allow Mid-Atlantic Interstate Transmission, its newly formed transmission subsidiary, to assume the rights and obligations of Metropolitan Edison and Pennsylvania Electric in PJM’s Consolidated Transmission Owners Agreement. (See NJ Opposition Derails FirstEnergy’s Tx Reorganization — but not Projects.)

FE plans to make necessary FERC filings in October with a targeted effective date of Jan. 1. Several “legacy” contracts won’t have their interconnection service agreements finalized until later that month.

MRC Endorses Manual Changes

Members unanimously approved the following manual changes:

• Manual 14B & 14C: PJM Region Transmission Planning Processand Generation & Transmission Interconnection Facility Construction. Changes are related to the new equipment energization process.
• Manual 3A: Energy Management System (EMS) Model Updates and Quality Assurance (QA). Adds a new appendix defining a process checklist for energizing new equipment.
• Manual 14B: PJM Region Transmission Planning Process. Makes revisions related to winter temperature ratings.
• Manual 15: Cost Development Guidelines. Developed as part of the periodic review process. The change also was approved by the MC.

— Rory D. Sweeney