VALLEY FORGE, Pa. — It took another hour of debate, but stakeholders at last week’s Market Implementation Committee meeting found just enough consensus to approve a problem statement and issue charge developed by PJM to analyze potential changes in how energy efficiency resources can participate in wholesale markets.
The vote was precipitated by a Kentucky Public Service Commission order saying state retail electric customers have no authority “to participate directly or indirectly in any wholesale electric market.”
The Advanced Energy Economy has also petitioned FERC to issue a declaratory order on the topic.
“There was a state commission that was being asked to clarify its requirements” for letting in-state energy efficiency aggregators bid into the RTO’s energy efficiency market, PJM’s Denise Foster said. “We looked at the rules in PJM and realized there was no way for us to respect any determination that came out of that process. … There was a lot of discussion about jurisdiction … but there was also a lot of discussion about how proscriptive the problem statement and issue charge was — so we cleaned up the problem statement.”
Foster was careful to clarify that PJM doesn’t want to get involved in the regulatory process but seeks to move the analysis forward to be ready to take action as soon as FERC has made a decision. (See “Energy Efficiency Proposal Sparks Debate over State Jurisdiction, Stakeholder Identification,” PJM Market Implementation Committee Briefs.)
Representatives of utilities involved in the issue — including Dana Horton of American Electric Power, Chuck Dugan of the East Kentucky Power Cooperative, Jim Benchek of FirstEnergy and Brian Garnett of Duke Energy — all voiced support for the problem statement. Benchek pointed out that rule changes should be careful to avoid unintended effects on electric distribution companies.
Rick Drom, an attorney representing AEE along with an unnamed energy efficiency aggregator in Kentucky, reiterated his position that the activity is premature.
“I was glad to hear [the utilities] say that once the FERC jurisdictional issues are resolved, then we can move forward with the problem statement, because I think it’s very clear that until FERC jurisdictional issues are resolved, it would be difficult to modify the Tariff,” he said. “To me, this is a simple educational issue.”
Energy efficiency resource providers contract with manufacturers and wholesale retailers, not with retail customers, Drom said, suggesting that the Kentucky PSC might not be aware of that nuance. He warned that by moving forward with the problem statement, “PJM stakeholders will be spending resources on a problem that simply does not exist.”
Dugan said retail customers’ rates will be adversely impacted by energy efficiency providers.
“I don’t think any education is going to change their mind,” he said of the Kentucky PSC. “I truly believe they knew what they were talking about.”
Other stakeholders raised points on both sides of the issue, including EnerNOC’s Katie Guerry, who said PJM’s demand response processes still have “kinks” to be worked out. “I do see value in working out the kinks in advance,” she said.
CPower’s Bruce Campbell motioned to defer a vote on the problem statement until after FERC has ruled, a measure seconded by Tom Rutigliano, who represents energy efficiency providers. That measure failed.
Stakeholders discussed whether the problem statement’s language should be further neutralized. Foster said PJM was very deliberate in its word choices because it didn’t want to be in a position of determining whether participants need to be in compliance.
The measure eventually passed with 85 votes in favor, 81 opposed and 14 abstentions.
All DR Registration Changes Fail
After months of discussion in the Demand Response Subcommittee, all three proposals for increasing flexibility to add and subtract resources from aggregators’ portfolios failed to garner necessary stakeholder support. The three options differed on registration deadlines and testing requirements. (See “DR Open Registration Under Consideration,” PJM Market Implementation Committee Briefs.)
Guerry and NRG Energy’s Brian Kauffman were quick to register their opposition.
“At the outset of this discussion, we had reservations because we knew it was going to be very complicated” and create administrative problems along with additional costs that must be passed on to customers, Guerry said. “From our perspective, it just sort of spiraled out of control.”
Independent Market Monitor Joe Bowring challenged Guerry’s opposition, asking whether she opposed the idea of requiring removal of resources that can no longer reduce load.
“Do I have a specific opposition to that? No, I do not … but these are the additional layers of complexity that we believe are unnecessary just to allow the registration window to be open beyond the window that it’s open to right now,” she said.
“One person’s complexity is another’s solution to a problem, but I understand what you’re saying,” Bowring said.
Campbell, who proposed the problem statement, acknowledged that he hadn’t foreseen some of the issue’s complexity but was simply attempting to make DR comparable to generators, which can enter PJM’s markets at any time.
FTR Revisions Continue Forward
Three new proposals for revising financial transmission rights rules moved forward, although one didn’t advance as easily as the rest.
The wave of FTR actions began when stakeholders endorsed by acclamation revisions to Manual 28 regarding allocation of balancing congestion.
A problem statement and issue charge presented by Direct Energy’s Jeff Whitehead to review the allocation of surplus funds for day-ahead congestion and FTR auction revenues received a little more discussion. GT Power Group’s Dave Pratzon asked if the adjective “alternative” could be substituted for “appropriate” in describing the disposition of the surpluses. The issue, which had received substantial debate previously, was subsequently approved. (See New FTR Task Force on the Way for PJM?)
The final measure, resolving delayed results for periods of the year when there are several overlapping FTR products available, didn’t fare as easily. Bruce Bleiweis of DC Energy suggested the issue might be technological.
“We think that PJM may not be using the most efficient clearing engine,” he said.
Other stakeholders offered differing perspectives. Eventually, Calpine’s David “Scarp” Scarpignato threw up his hands to register his confusion.
“I can’t vote to approve this problem statement because too many people are interpreting it in too many ways,” he said. “I hate telling people to come back with another rock, but this doesn’t do it for me.”
As the meeting broke for lunch, stakeholders debated the issue and eventually agreed upon a two-phased problem statement and issue charge. The first phase would explore reducing the overlapping periods while maintaining liquidity through other market enhancements, and the second would explore other ways to solve the issues, such as through algorithm or technological changes. The revised document subsequently received endorsement.
PJM’s Asanga Perera noted that a special session of the MIC will be held on June 23 to begin exploring the issues.
Started from the Bottom, Now We’re at the MTSL
PJM and the Monitor remain at odds over how much compensation black start units should be allowed to receive for storing fuel.
The RTO is willing to cover storage costs for the oil units require to meet its black start requirement — usually 16 hours of operation — plus the minimum tank suction level (MTSL), which is the lowest amount of fuel needed to provide adequate supply to the generation unit, PJM’s Tom Hauske said.
Bowring argued that the incremental cost of keeping the level of fuel needed for black start capabilities is zero. The tanks are often used for multiple units and are so large that the black start needs are but a small fraction of the tank’s overall MTSL.
Bowring later added that his office agrees with PJM that black start units should be paid carrying charges on the fuel required to meet the 16-hour obligation and for the MTSL when there are tanks dedicated to them.
“But the PJM approach can require customers to pay for more than 10 times the MTSL required for the black start unit, depending on the size of the tank,” he said. “The PJM approach assigns to the black start unit the MTSL for a very large tank that was designed to serve another unit and continues to serve that other unit. The actual MTSL does not change by even a gallon when a black start unit is added for such a unit. The result is unfair to all the customers who pay for black start service.”
Balancing Differences
A PJM analysis of FTR data became a battleground when Roy Shanker, an industry consultant, took exception to the numbers suggesting that auction revenue rights holders benefited from a recent FERC order that allocated the costs for balancing congestion to load.
Perera presented the analysis, which suggested that the value of FTRs for the 2017/18 delivery year would have increased by $91 million compared to the previous year, during which balancing congestion was allocated to the ARR holders.
While other stakeholders defended the analysis as an important backward-looking review, Shanker complained that it seemed to be sending a message.
“I do mind when [the numbers are] represented as a metric of the benefit to the ARR holders,” he said.
“I agree it’s a material difference in perspective: I’m paying for balancing congestion and you’re not,” Direct Energy’s Whitehead countered.
“And you always should have been!” Shanker immediately shot back.
Bowring said the numbers should be neutral, but analysis should still be done. “I would be shocked if there’s a net benefit, but if there is, there is,” he said.
– Rory D. Sweeney