PJM Tracking Pa. Virtual Transactions Tax

WILMINGTON, Del. — The Pennsylvania State Senate approved a tax on virtual transactions, moving the measure to the state’s House of Representatives, PJM CFO Suzanne Daugherty told the Markets and Reliability Committee on Thursday.

Senators passed the tax on a 26-24 vote as part of a larger budget-funding package that includes several other consumer and corporate taxes. The Senate bill is the latest in a series of funding proposals after Pennsylvania legislators approved a budget by their constitutional deadline on June 30 but failed to agree on how to fund it. However, the Senate Appropriations Committee officially booked $0 for the PJM tax.

The state’s interest in developing the tax came to light in mid-June, after PJM attempted to explain to Department of Revenue representatives the issues with levying a tax on RTO transactions. Daugherty alerted several PJM financial stakeholders, who launched their own advocacy efforts at the State Capitol, but ultimately blamed the RTO for not making them aware early enough to develop a comprehensive response. (See Traders: PJM Delay Could Mean Pa. Tax; RTO Denies Supporting Levy.) PJM remains opposed to any new taxes on its membership.

FirstEnergy’s Jim Benchek asked Daugherty about PJM’s plan to address the situation. She responded that the RTO will continue to watch the tax’s progress and that it’s “too early to see” how it might respond if the tax is implemented.

Stakeholders Question Focus on DR in Seasonal Capacity PS

While aggregation rules allowed a substantial amount of seasonal resources to clear the 2020/21 Base Residual Auction as annual products, thousands of megawatts of such resources that have cleared past auctions didn’t this time around. To address those situations, PJM is proposing a problem statement and issue charge, which received a first read last week.

However, stakeholders questioned the limitations PJM put on the scope of the analysis. The issue charge focuses on “the impact of peak-shaving resources on the load forecast” and exploring “non-capacity wholesale market mechanisms to value demand response resource flexibility.”

“I struggle with why you’re limiting this to nonmarket issues,” said John Farber of the Delaware Public Service Commission.

Farber argued that adding market opportunities would spur innovation “so all stakeholders could get the benefit of managing that peak.”

Several stakeholders, including American Municipal Power’s Ed Tatum and Carl Johnson representing the PJM Public Power Coalition, asked why the documents focused on DR.

Greg Poulos, executive director of the Consumer Advocates of the PJM States, said his members are concerned about opportunities for residential customers, which he said have been “significantly limited” in recent years.

Organization of PJM States Inc. Executive Director Greg Carmean asked that PJM’s education on the topic explain how the RTO came to develop the products it currently has and the impact of important legal decisions, such as FERC v. EPSA.

Tom Rutigliano, who consults with several energy management companies, requested that the analysis not be precluded from providing preliminary recommendations available for the next BRA in May 2018, despite a stated timeline that would provide results late next year.

PJM’s Pete Langbein, who is overseeing the proposal, said he is open to any suggested changes.

“We’re trying to be realistic about what it’s going to take and not be overly aggressive,” he said about the timeline.

PPANJ’s Jablonski Retires

Jim Jablonski announced he has retired as the executive director of the Public Power Authority of New Jersey. Jablonski, a former chair of the Members Committee, said it was a “pleasure and an honor” and a “humbling experience” to be involved in the PJM stakeholder process over the past decade.

He said some of the hardest issues he dealt with included the development of the minimum offer price rule and the Capacity Performance construct.

“It was a reaction to an anomalous event that may never, ever happen again, and we made these broad, sweeping changes to the capacity market that only increased costs to customers.”

He said that while he agrees with the need for reliability, the people paying the bills need to be considered.

“I still am concerned about cost to customers,” he said. “It seemed like every time we turned around here, we were raising costs to customers.”

He has no immediate plans following retirement, but given his broadcasting background, he may consider media opportunities involved with PJM. He said he joked with PJM’s Stu Bresler about starting a 24-hour PJM TV channel.

Brian Vayda, a former PJM employee, is succeeding Jablonski as executive director.

Stakeholders Approve Variety of Actions

Stakeholders endorsed by acclamation several manual revisions and other operational changes:

• Manual 1: Control Center and Data Exchange Requirements. Revisions developed to comply with NERC reporting requirements. Transmission operators will be required to maintain certain data during outages, including bus voltages for all 345-kV substations or higher and megawatt flows for all tie lines and all lines 345 kV or higher.
• Manual 11: Energy and Ancillary Services and Manual 18: PJM Capacity Market. Clarifies language on what is needed to qualify for exempt or bonus megawatts during performance assessment hours in Capacity Performance. PJM says it needs certain data to determine how close generators follow its schedule. The data include values for economic minimum and maximum and emergency maximum.
• Pseudo-tie pro forma agreement and Tariff and Operating Agreement revisions. The documents were developed to standardize pseudo-ties and minimize operating confusion. (See “OC Discusses Pro Forma Agreements for Pseudo-Ties, Dynamic Schedules,” PJM OC Briefs: July 11, 2017.)
• Manual 14B: PJM Regional Transmission Process and Operating Agreement revisions. Redesigns to the Transmission Expansion Advisory Committee reflecting the change from the annual, 12-month Regional Transmission Expansion Plan cycle to an overlapping 18-month cycle beginning each September. The window for short-term projects will expand from 30 to 60 days. (See “RTEP Cycle Revisions Approved,” PJM PC/TEAC Briefs: July 13, 2017.)

An endorsement vote on Tariff and Operating Agreement revisions to clarify the two-year limit on requests for billing adjustments was postponed to a later meeting.

Members Committee

Stakeholders Endorse Consent Agenda

Stakeholders endorsed by acclamation the committee’s consent agenda along with several other Operating Agreement and Tariff changes:

• Tariff revisions related to the interconnection process regarding the alternate queue and cost allocation for projects less than $5 million. (See PJM Considering Injection Rights for Demand Response.)
• Pseudo-tie agreements and Tariff and Operating Agreement revisions. The documents were developed to standardize pseudo-ties and minimize operating confusion. (See MRC item 3 above.) Eighteen members opposed and six abstained.

Stakeholders Endorse Regulation Changes Despite Continued Opposition

Stakeholders endorsed Tariff and Operating Agreement revisions to regulation market rules on performance scores, clearing and settlements that were previously endorsed by the Regulation Market Issues Senior Task Force and the MRC. The revisions change the rate for substituting traditional RegA and fast-response RegD. (See PJM Regulation Compensation Changes Cleared over Opposition.)

John Horstmann of Dayton Power and Light reiterated his past objection to the changes, which he said don’t provide a sufficient transition period for the energy storage units developed for the original 15-minute neutrality requirement. However, the measured passed handily with 4.24 in favor out of 5 in a sector-weighted vote. Such votes require an approval of 3.33 (66.7%).

— Rory D. Sweeney