VALLEY FORGE, Pa. — Stakeholders at last week’s Market Implementation Committee meeting endorsed the first phase of what amounts to a two-phase implementation of Manual 11 revisions to facilitate intra-day generation offers.

PJM was requesting endorsement of manual revisions needed to implement intra-day offers on Nov. 1 as planned. The proposal received 72% approval but not before a lengthy discussion about how frequently generators can elect to opt in or out of making changes to offers in real-time auctions.

PJM and its Independent Market Monitor have differed on the issue, but the two sides came to an agreement that market participants must specify in their annually approved fuel-cost policies (FCPs) the conditions under which they will opt in. This came as a surprise to several generation representatives, including Gary Greiner of Public Service Electric and Gas. He believed the language previously had read that generators would be able to make that election monthly.

PJM’s Lisa Morelli had called the change “minor,” but Greiner took issue with that characterization.

“What I’m hearing now is we have to build it into the fuel-cost policy so we no longer have that monthly option; that’s gone. It’s a once-a-year, permanent thing, unless we want to create a new fuel-cost policy that says we’d want to opt in and [include] everything around all of the mechanics of what we’re going to do intra-day. [Then] we have to stay with an opt-out decision for one year. Is that a minor change?” he asked. “That’s a massive change.”

“So, I should not have used the word ‘minor,’” Morelli acknowledged but pointed out that the language had been the same at the August Markets and Reliability Committee meeting. (See “Division Remains on Oversight of Intraday Offers,” PJM Markets and Reliability Committee Briefs: Aug. 24, 2017.)

PJM’s Jeff Schmitt said such flexibility could be worked into a generator’s FCP.

“As long as we have an approved fuel cost policy … we’d work with you to get there,” he said. “It’s certainly workable from my perspective.”

“I’m uncomfortable with having a predefined trigger that determines when I’m opting in or opting out,” Greiner said.

NRG’s Neal Fitch asked several questions to clarify whether he was correct in assuming that the new rules provided leeway for opting in and out more frequently than just annually.

“To the extent that there is a change in desire down the road, you’re not limited to once per year,” Fitch said.

PJM and the IMM remain at odds about whether market participants must specify in their FCPs the frequency with which they can update price-based offers.

“PJM isn’t necessarily opposed to having that level of detail, but we don’t think that it’s required,” Morelli said.

She also laid out the second phase of revisions, which will be presented for endorsement next month. They would change how offers are capped and how often the three-pivotal supplier (TPS) test is run.

PJM and the IMM mutually proposed re-evaluating which schedule, either the cost- or price-based, is cheapest and reapplying the offer cap when offers are updated. The current rules do not allow for such re-evaluation, which wouldn’t allow market power mitigation to keep up with intraday updates. Since units can self-schedule with 20 minutes of notice, PJM and the IMM proposed running the TPS test on such units every hour following the first hour of operation.

Stakeholders also endorsed related revisions to Manual 28 by acclamation with no objections or abstentions.

MTSL Revisions Kaput

Stakeholders rejected a joint PJM-IMM proposal to revise how black start units are compensated for fuel storage, with some generators complaining that the issue is not significant relative to other issues the membership is addressing.

The measure, which would have paid units based on the portion of fuel they need for black start rather than how much is stored, received 48% approval. The proposal, which was based on the minimum tank-suction level (MTSL) for the fuel-storage tanks, would have saved customers about $210,000 annually. (See “PJM Indifferent on Black Start Fuel Compensation,” PJM MIC Briefs: July 12, 2017.)

NRG’s Fitch said the way the proposal was presented seemed “inappropriate” and “flawed.”

“I hope we do a better job in the future deciding when and where we need to work on the small stuff,” he said.

John Horstmann of Dayton Power and Light called the proposal “shortsighted” because the value of having fuel when needed during a system emergency far exceeds the “minuscule” savings from proportional compensation.

“You can’t even measure these savings on a customer’s bill,” he said.

Others, however, said the principle was the point.

“The status quo is not defensible. There are units being paid more than it takes to provide black start service,” the IMM’s Catherine Tyler said.

“I realize that these are not major dollars, but dollars are dollars, and customers have to pay those dollars,” said John Farber with the Delaware Public Service Commission.

The Monitor noted that the final proposal was a compromise between it and PJM. The RTO estimated the pro rata calculation would have reduced payments by about 95%, so it included a $12,000 “dual-fuel unit adder” that only cut payments in half.

“We do feel that the dual-fuel adder is somewhat arbitrary,” Tyler said, adding that it would need to be justified or eliminated in the future.

FTR Forfeiture Rebilling to Start

PJM’s Brian Chmielewski announced that, barring any further action from FERC, implementation of PJM’s revised financial transmission right (FTR) forfeiture rule will begin with September billing statements and rebill back to the Jan. 19 effective date of the related FERC order. Manual revisions to address the changes ordered by FERC received 82% approval in an endorsement vote.

FERC’s order on the issue (EL14-37) required PJM to evaluate the net effect of a market participant’s entire virtual portfolio of up-to-congestion trades (UTCs), incremental bids (INCs) and decremental offers (DECs) on congestion constraints. A forfeiture is triggered if at least 75% of the energy flowing between the bus where a virtual transaction is made and the worst-case bus — the location at which the transaction has the biggest impact on congestion — is reflected in the constraint. (See FERC Orders Portfolio Approach for PJM FTR Forfeiture Rule.)

Following PJM’s request in 2013 to define UTCs as virtual transactions, FERC initiated an investigation to examine how PJM planned to apply its FTR forfeiture rule to UTCs. PJM had implemented the rule in 2000 to prevent market participants from using virtual transactions to create congestion that benefits their FTR positions but hadn’t included UTCs.

“We just rewrote the entire section because it’s essentially an entirely different, new rule,” Chmielewski said of the manual revisions. “We are on the same page with the IMM. Our numbers are very close to matching.”

He acknowledged that the calculations under the revised forfeiture logic were higher, but “I wouldn’t say they are significantly more in all cases.”

“I think relative to total target credits, the percentage is still very low, but relative to the previous rule, they’re higher,” Chmielewski said.

Several stakeholders noted the existence of protests in the FERC docket, but Chmielewski said that wouldn’t impact the effective date.

Now is the Winter of Our Discontent (with DR Rules)

East Kentucky Power Cooperative’s (EKPC’s) Chuck Dugan proposed a problem statement and issue charge to investigate the impact of winter demand response (DR) not performing on an assessment day due to a maintenance outage. Such nonperformance on a winter peak day reduces a market participant’s winter peak load (WPL), which reduces the participant’s winter DR capacity nomination. An unexpectedly low nomination can result in needing to secure replacement capacity to fulfill a commitment and avoid a daily deficiency penalty, which happened to an EKPC customer, Dugan said.

“We’re paying the resources to be available all year,” said Tyler, adding that the Monitor opposes the proposal.

“They’re already doing what you paid them to do, which is be off,” Dugan countered.

Stakeholders will vote on the proposal at next month’s meeting.

EE Waiver for Kentucky?

Chris O’Hara, PJM’s deputy general counsel, said the RTO plans to submit a Section 205 filing with FERC asking for a prospective waiver of its Tariff to bar Kentucky participants from its energy efficiency resources (EERs) market. The waiver would be limited to Kentucky and only after FERC makes a ruling on the issue.

The request evolved from a Kentucky Public Service Commission staff finding in February that EERs are a retail product under its regulatory oversight that, like other Kentucky retail customers, aren’t eligible to participate in wholesale markets such as PJM. PSC commissioners issued a declaratory order to that effect on June 6. Four days earlier, Advanced Energy Economy requested that FERC declare whether it has sole jurisdiction over EERs.

“To the extent that’s a change to what we’ve said, it is a change,” O’Hara said in response to questions about whether PJM had revised its position on the issue. PJM received stakeholder endorsement to examine how it allows EER aggregations to participate in its wholesale markets. The initiative also was to investigate the potential for creating an “opt-out” mechanism for regulators like what PJM developed for demand response in response to Order 719. (See States, Enviros Differ on Jurisdiction over Energy Efficiency.)

EKPC’s Dugan supported the waiver request, sympathizing with PJM’s position “between a rock and [a] hard place” jurisdictionally. Tom Rutigliano, a consultant who represents EER clients, sought — and received — assurances that the waiver would not extend past Kentucky.

Tyler voiced concerns that PJM is requesting permission to discriminate among market participants “especially in a way that limits competition.”

— Rory D. Sweeney