Pseudo-Tie Proposals Too Complex for Some Stakeholders
WILMINGTON, Del. — PJM officials Thursday delayed a vote on its proposed standardized agreements for pseudo-ties, but that didn’t stop complaints from stakeholders who say the rules will be overly burdensome.
“From our standpoint, this pseudo-tie business is starting to get out of control,” American Municipal Power’s Ed Tatum said at the Markets and Reliability Committee meeting. “The stakes are getting higher and more draconian.”
The issue is particularly important for AMP, he said, because it put a lot of effort and resources into creating a pseudo-tied unit.
Mike Borgatti of Gabel Associates voiced similar concerns, noting the multiple layers of rules from separate RTOs that they would soon have to follow.
On March 9, PJM made a Section 205 filing with FERC to add criteria for accepting pseudo-ties despite a lack of stakeholder consensus (ER17-1138). (See PJM to Tighten Pseudo-Tie Rules Despite Stakeholder Pushback.)
PJM officials had planned last week to seek stakeholder endorsement of a pro forma pseudo-tie agreement, a reimbursement agreement for pseudo-ties into PJM and related Tariff and Operating Agreement revisions.
But PJM’s Jacqui Hugee announced at the beginning of her presentation that the proposals were being removed from voting consideration. She said a “beneficial revision” had been suggested at the last minute that PJM wanted to include in the proposal, though she didn’t detail what the proposal was.
PJM’s 205 filing renewed calls by MISO Independent Market Monitor David Patton to eliminate pseudo-ties altogether. (See related story, PJM Filing Renews MISO Monitor’s Call for Pseudo-Tie Elimination.)
Stakeholders Quibble with, but Eventually Endorse, Replacement Capacity Investigation
NRG Energy’s Neal Fitch walked through the entire document in his reintroduction for approval of a problem statement and issue charge on investigating replacement capacity, but it was only one word that truly hung up other stakeholders. (See “Stakeholders Deny Replacement Capacity Initiative; Consider Other Incremental Auction Changes,” PJM Markets and Reliability and Members Committees Briefs.)
Characterizing the amount of cleared replacement capacity as “high” didn’t sit well with CPower’s Bruce Campbell. “It’s data,” he said.
“Are you willing to negotiate on the fly here? Why don’t we just delete the word high?” Fitch asked.
While Campbell considered that, others stepped in with an assortment of suggestions. The revision attempts eventually resulted in minor clarifications that removed the word “high.”
Tom Rutigliano of consulting firm Achieving Equilibrium had concerns with requiring “resources to be deemed physical” and asked that the benefits of replacement transactions also be noted in the problem statement. Fitch declined, saying they could be discussed within the group assigned to the problem statement.
“I will make my commitment to you that, to the extent that you or your clients want to identify benefits, you are more than welcome to,” he said.
The problem statement was approved by acclamation with 10 objections and three abstentions.
IMM’s Proposed Fuel-Cost Policy Changes Denied
After months of debate, rule revisions in Manual 15 and the Operating Agreement regarding hourly offers and fuel-cost policies received committee endorsement, but not without a lengthy final debate. (See PJM Fuel-Cost Policy Changes to Take Effect in May.)
Independent Market Monitor Joe Bowring proposed changes that concerned stakeholders and PJM, including posting its evaluation in the online Member Information Reporting Application (MIRA), reserving the right to communicate information to PJM that it doesn’t communicate to the market seller and codifying in the rules that it will provide PJM with a recommendation whether to approve or reject a proposed policy.
Catherine Tyler Mooney, who works for the IMM firm Monitoring Analytics, explained that the changes would provide transparency regarding the Monitor’s participation in the fuel-cost policy approval process, addressing a source of confusion for stakeholders. She said PJM proposed similar additions to Manual 15 as a result of conversations with the IMM. The key differences in PJM’s and the IMM’s versions were the reference to MIRA and the inclusion of the Monitor’s recommendation, which was suggested by FERC in its Feb. 3 order.
Stu Bresler, PJM’s senior vice president of operations and markets, objected to referencing MIRA and the Monitor’s recommendation in the manual because it’s the only manual that requires Board of Managers approval for revisions. If technology or procedures change, it will require a long process to update the manual, he said. The Monitor is welcome to provide its recommendation voluntarily to PJM, but the Tariff doesn’t require it, so the manual shouldn’t require something different, Bresler said.
Bowring said MIRA is mentioned elsewhere in the manual, so it would need to be revised anyway if methods change, and that PJM should not block it from committing itself to providing more information than required.
Stakeholders were concerned that PJM and the Monitor were far apart on this issue, but PJM’s Suzanne Daugherty assured them that wasn’t so.
“I don’t think [the difference] is big. I think it’s specific,” she said.
Stakeholders remained concerned that approval from PJM doesn’t necessarily guarantee approval from the Monitor, which might still make a referral to FERC.
“It’s like your [PJM] approval doesn’t mean anything,” one stakeholder said.
Stakeholders were also concerned with the Monitor suggesting it might keep information from them.
“I’m struggling with what you would tell to PJM that you wouldn’t tell to the market seller,” GT Power Group’s Dave Pratzon said. “If you only share the details of why [a policy passed or failed] to PJM, you put the market seller in a tough position.”
“I understand that you want to know everything that’s said to PJM about your fuel-cost policy,” Mooney acknowledged, adding that the Monitor makes all of its issues with a fuel-cost policy clear to both the market seller and PJM. Bowring later explained as an example that the Monitor might provide information to PJM of discussions it had with the market seller, so the information would be redundant for the market seller.
Mooney concluded the discussion by stating that “when PJM proposes changes to the manual to provide the details of how it implements the Tariff, it is allowed. When the Monitor wants to provide details of how it performs its responsibilities, it is not allowed.”
The manual and OA revisions were ultimately approved following minor language changes.
Transmission Owners, Customers Clash over Infrastructure Replacement
PJM’s Paul McGlynn presented an update on work in the Transmission Replacement Processes Senior Task Force that has not been halted by FERC’s Order to Show Cause. In August, the commission questioned whether PJM transmission owners are complying with their local transmission planning obligations, specifically with respect to supplemental projects, as required by Order 890. (See “Transmission Replacement Activity Hiatus Extended,” PJM Markets and Reliability and Members Committees Briefs.)
McGlynn said work has continued on a Transmission Cost Information Center, which the task force feels isn’t covered under the order. Sub-groups have completed the design of the tool, and PJM will construct it, he said.
Despite the hiatus, tension in the task force remains, which was highlighted by an exchange between Exelon’s Gloria Godson, who represented the PJM TOs, and AMP’s Tatum. Godson stated that PJM TOs have a strong commitment to transparency and provide their assumptions, methodologies and detailed project information as appropriate. However, she cautioned against stakeholders expecting uniformity from TOs because their processes are not all the same.
“Companies may do things differently and uniformity may not be an appropriate request,” she said.
Tatum clarified that his impression has been that transmission customers are not seeking uniformity. Rather, he argued, customers are asking for the detailed information necessary to be comfortable with owners’ infrastructure upgrade and replacement proposals. Another $1 billion in supplemental projects has been proposed, he noted, along with $860 million in “immediate need” projects that bypass the Order 1000 competitive bidding process.
Godson took exception to Tatum’s call for additional detail, saying he has “hijacked” the Sub-Regional Transmission Expansion Planning Committee in the past and “held court” for the entire meeting to make his point. Tatum rejected her characterization, and John Farber of the Delaware Public Service Commission staff interjected in his defense.
“Not being an engineer, I rely on Ed’s input,” Farber said. “So I don’t consider it holding court.”
Stakeholders Approve Variety of Actions
Stakeholders endorsed by acclamation several manual revisions and other operational changes:
- Manual 13: Emergency Operations. Revisions developed in response to new NERC standards.
- Manual 37: Reliability Coordination. Revisions developed in response to new NERC standards.
- Manual 1: Control Center and Data Exchange Requirements. Revisions developed in response to new NERC standards.
- Shortage pricing and operating reserve demand curve solution and associated manual revisions. (See “Order 825 Implementation Moves Forward,” PJM Market Implementation Committee Briefs.)
- A problem statement and issue charge presented by Bob O’Connell of Panda Power Funds regarding calculation of opportunity costs for units with less than three years of historical LMPs. The initiative will evaluate whether the opportunity cost calculator included in PJM’s Markets Gateway produces the same results as that used by the Monitor. It also will consider updating the calculators to reflect the nonperformance penalties under Capacity Performance. (See “Stakeholders Deny Replacement Capacity Initiative; Consider Other Incremental Auction Changes,” PJM Markets and Reliability and Members Committees Briefs.)
- A draft charter for the Modeling Generation Senior Task Force, an outgrowth of the Combined Cycle Owners User Group, which concluded that a more detailed generator model for combined cycle units might also be applicable to other steam units. The task force will consider expanding the model used by PJM to improve the ability to represent components of all generation types.
- A draft charter for the Incremental Auction Senior Task Force, which will consider changes to the Incremental Auction process and structure, excess capacity sales, and PJM participation in the auctions.
Members Committee
PJM Outlines Potential Impact of FERC Rulings on Auctions
PJM’s Jen Tribulski explained the implications of several FERC proceedings on PJM’s Base Residual Auction in May.
FERC staff issued an order on March 21 that accepted PJM’s November filing on seasonal capacity and resource aggregation. Tribulski said this allows PJM to apply the new rules to the auction, but also that the commission could review the case and require refunds if it comes to a different conclusion when it regains a quorum. The auction, which will begin on May 10, is for the 2020/21 delivery year. (See FERC Staff OKs PJM Aggregation, DR Rules; Refunds Possible.)
Tribulski acknowledged that the staff order was vague regarding what portions of the order it thought might not be just and reasonable. “It was boilerplate language, but I agree with you, we don’t know what aspect if any they are really honing in on,” she said.
NRG’s Brian Kauffman asked what was meant by FERC’s suspension for a “nominal period.” Tribulski said it was a one-day “flash” suspension, but didn’t offer additional details regarding FERC’s intentions.
She also explained the potential implications of PJM’s March 9 filing regarding external capacity enhancements. If FERC doesn’t issue an order by May 9, the rules automatically go into effect and will be applicable for the BRA starting the next day. If FERC orders a suspension subject to refund and further proceedings that expires prior to the auction, PJM will still implement the new rules, Tribulski said. However, if FERC issues a deficiency letter or a suspension that continues beyond the auction date, the BRA will be conducted under the existing rules, she said.
– Rory D. Sweeney