VALLEY FORGE, Pa. — PJM’s Lisa Morelli presented the Market Implementation Committee last week with revisions to the RTO’s proposal for handling intraday hourly offers in the energy market, delaying a scheduled vote on the plan.

The changes made to Manual 11: Energy & Ancillary Services since the first read on the proposal included a clarification that PJM’s real-time security constrained economic dispatch (SCED) uses data that are effective for the look-ahead solution interval rather than the case execution time. In response to feedback from the Independent Market Monitor, it also clarifies that a generator’s intraday opt-out election must be consistent with its fuel-cost policy.

IMM staffers Siva Josyula and Joel Romero Luna also outlined the Monitor’s concerns with PJM’s proposal. (See “IMM’s Proposed Fuel-Cost Policy Changes Denied,” PJM Markets and Reliability and Members Committees Briefs.)

“Resources should not be able to circumvent [market power] mitigation just by changing the relative levels of price versus cost,” Josyula said.

Luna focused on how generators can elect to opt out of intraday offers. PJM’s rules require that if generators change their price-based offer, they must also change their cost-based offer, he explained. “It’ll be easier for anyone who has a fuel-cost policy to say, ‘If I don’t have it in there, my default is to opt out,’” he said. “If no one changes their fuel-cost policies to incorporate hourly offers, it’s not clear how they can be compliant with the rule that has been presented because [hourly offers] can change your cost-based offer.”

It’s unclear whether the Monitor’s differences will result in separate proposals.

“It might be separate. We’re not completely there yet to say … they are, in fact, two different things. That might be where we end up in another round of conversations,” said PJM’s Chantal Hendrzak, who chairs the MIC.

Morelli also announced that all generators, no matter if they plan to update schedules hourly or not, will need to update their schedule IDs to PJM’s new list by Nov. 1. The RTO will be posting a step-by-step guide in its Markets Gateway online tool. With the implementation of intraday offers, PJM will only accept cost-based schedules 1-9, eliminating 70 others. The number of price-based schedules is being reduced from 19 to two.

PJM Indifferent on Black Start Fuel Compensation

Before presenting proposals from Calpine and the Monitor on calculating fuel-storage compensation for black start units, PJM’s Tom Hauske made it clear the RTO is agnostic to the voting results. He was repeatedly asked for PJM’s position, and he repeatedly declined to take one. (See “Started from the Bottom, Now We’re at the MTSL,” PJM Market Implementation Committee Briefs.)

“What we’ve taken as a position is that we can live with any of the three,” he said, including the status quo among the options.

The Monitor’s proposal would calculate the unit’s compensation for fuel storage — known as minimum tank suction level (MTSL) — based on the ratio of the fuel tank’s total volume to the amount of fuel needed to fulfill the black start requirements of 16 hours of continuous operation. The proposal from Calpine’s David “Scarp” Scarpignato would compensate units based on the average annual fuel volume in the tank.

Scarp and Monitor Joe Bowring sparred for a while on the merits of Scarp’s proposal. Bowring asked why “black start should pay an even bigger piece based on whatever random amount of oil is in the tank.” PJM currently pays about $500,000 per year in compensation for black start fuel storage based on current rules that pay for the entire tank. So either proposal would reduce the costs, the sponsors say.

The conversation between Scarp and Bowring eventually devolved into a fast-food metaphor focused on how much frying oil a restaurant would need to switch menu options. At the end, Scarp asked for clarification on whether his proposal would be set for a vote as an alternative to the Monitor’s proposal. When that was confirmed, he explained that he only meant for his proposal to spur discussion and asked that it be removed.

The vote at next month’s meeting will be on the Monitor’s proposal versus the status quo. Greg Poulos, executive director of the Consumer Advocates of the PJM States, announced his membership is leaning toward the Monitor’s proposal.

Energy Efficiency Kicked to Demand Response Subcommittee

PJM staff canceled plans to begin discussions in the MIC regarding rules for energy-efficiency products entering into the capacity market after stakeholders said they could resolve the issues more quickly through the Demand Response Subcommittee first. (See “EE Problem Statement Narrowly Approved,” PJM Market Implementation Committee Briefs.)

CPower’s Bruce Campbell pushed back on the change of venue, saying it will be difficult for the subcommittee to cover DR, the energy efficiency rules and how to address the impact of state policy initiatives on the markets.

PJM’s Pete Langbein warned that the four- to six-month timeline for results indicated in the energy-efficiency issue charge is “very aggressive.”

IMM Presents Problem Statements on Transmission

Bowring presented two problem statements and issue charges related to transmission concerns on first reading. The first problem statement and issue charge focuses on transmission penalty factors, for which he said PJM has no rules.

In its dispatch model, PJM allows transmission constraints to be violated under some conditions. The violated constraints have defined penalty factors that affect LMPs to reflect the local scarcity. Bowring says the penalty factor for a violated constraint should equal the shadow price — the incremental reduction in congestion cost achieved by relieving a constraint by 1 MW. PJM, however, uses “constraint relaxation logic” to affect the shadow prices, typically causing the shadow price to be slightly below the penalty factor, Bowring says.

Other grid operators, such as MISO, have explicit rules on the topic, he said.

In a presentation on the issue at the Members Committee webinar last September, Bowring recommended that PJM explicitly state its policy on the use of transmission penalty factors: the level of the penalty factors; the line ratings to trigger their use; the allowed duration of a violation; and when the penalty factors will be used to set the shadow price.

In asking you to approve this problem statement, I’m not asking you to agree with my characterization,” he told the MIC on Wednesday. “There are no rules. It should be written down. … I don’t know how long it’s been occurring at PJM — probably since the beginning.”

Morelli said PJM is in favor of the problem statement. “In addition to adding some consistency to how some of this works, it’s also taking a look at constraint reorganization where, essentially, we don’t allow the penalty factors to set price,” she said.

The second problem statement and issue charge focuses on pricing point alignment for cross-border transactions. The current procedure allows for “scheduling energy inconsistent with power flows” that “creates harmful market inefficiencies,” according to the problem statement.

“Our underlying principle is that pricing should be consistent with physical power flows — a radical concept, I know, but it’s not currently being implemented,” Bowring said.

— Rory D. Sweeney