Markets and Reliability Committee

Stopgap Balancing Ratio OK’d Despite Questions

WILMINGTON, Del. — PJM members approved a Tariff revision setting 78.5% as the balancing ratio to be used in calculating the default market seller offer cap (MSOC) for the 2021/22 Base Residual Auction next May.

PJM said the change was a stopgap measure required for next year’s BRA because there have been no penalty assessment hours (PAHs) since 2015. PAHs are one factor used to calculate MSOC for Capacity Performance resources. (See “Give me a B…,” PJM MRC/MC Briefs.)

The Tariff change passed with no opposition but 10 abstentions.

The MSOC is the product of the net cost of new entry (CONE) and the average of the balancing ratios for the three years preceding the delivery year. PJM proposed using 78.5% because it was used for the 2020/21 BRA earlier this year.

“I’m not sure how you got here,” said Gary Greiner of PSEG Energy Resources & Trade. “I do know 78.5 is not the right number.”

Susan Bruce of the PJM Industrial Customers Coalition agreed that the stopgap number was not correct. “I think there’s something to be said for the fact that there have been no performance assessment hours. That should be telling us something, but that’s part of a larger conversation,” she said.

The Independent Market Monitor’s Catherine Tyler also criticized the number as incorrect. She said PJM should instead rely on its avoidable cost rates, which she said is “already well defined in the Tariff.”

With one abstention, members also approved a problem statement and issue charge to develop a long-term solution. The issue was assigned to the Market Implementation Committee with a target of developing a solution in time for the 2022/23 BRA.

Bruce asked that PJM make clear in its FERC filing that the 78.5% balancing ratio is “not to be precedential in any fashion.”

DER Subcommittee Charter Sent Back to MIC

The MRC postponed voting on a draft charter to transfer all work on distributed energy resources into a subcommittee because of a disagreement over a proposed amendment by FirstEnergy.

The charter would create the Distributed Energy Resources Subcommittee, reporting to the MRC. It arose from concerns that the current problem statement and issue charge on DER is overly narrow and inhibited discussions that should include markets, operations and planning implications. The talks had been taking place in special sessions of the MIC.

FirstEnergy sought to add an amendment saying “Market rules must respect the distribution system and state/local jurisdictional agency standards and protocols to ensure safety and reliability. Rules should adhere to all pertinent jurisdictions and respect the relevant electric retail regulatory authority (RERRA).” (See “Amendment on DER Charter Sparks Debate,” PJM MRC/MC Briefs.)

MRC Secretary Dave Anders said that some stakeholders thought the amendment had been considered in the draft that came out of the MIC-DER group and others did not. The MIC did not formally vote on the measure.

As a result, the charter will be returned to the MIC, which will vote on versions with and without the amendment, with the winner brought to an MRC vote next month.

MRC OKs Sharing Generator Data for Restoration Planning

Members approved Operating Agreement revisions governing PJM’s sharing of restoration planning generator data with transmission owners. (See “TOs to Receive Confidential Generation Data for System Restoration,” PJM Operating Committee Briefs: Sept. 12, 2017.)

The changes will allow PJM to provide confidential generator data for any unit:

• that is or will be modeled in TO energy management system; and
• that is or will be identified in a TO restoration plan.

The second reference to “or will be” was added as a correction between the first read and Thursday’s vote. The corrected version was endorsed with no objections or abstentions.

PJM Consulting with Chinese on Real-Time Market

PJM Chief Financial Officer and MRC Chair Suzanne Daugherty informed members that the RTO’s consulting subsidiary, PJM Technologies, has signed a contract to help the Chinese province of Zhejiang develop a real-time energy market.

Daugherty declined to share financial details of the contract but said it will involve three to four full-time equivalent PJM staffers for 18 months. The province, south of Shanghai, has a load equal to almost half of PJM’s.

For security, the PJM employees will be working on dedicated computers separate from the RTO’s network, Daugherty said.

IRM, Manuals Endorsed

The Markets and Reliability Committee unanimously approved the 2017 installed reserve margin (IRM) study results. (See “IRM Reductions,” PJM PC/TEAC Briefs: Sept. 14, 2017.)

The IRM dropped nearly 1 percentage point, from 16.6% to 15.8%, for delivery year 2021/22, thanks largely to an anticipated fleet-wide EFORd (equivalent forced outage rate – demand) reduction from 6.59% to 5.89%. EFORd measures the probability a generator will fail completely or in part when needed.

The reduced EFORd is the result of 7,150 MW in planned retirements with a 14.56% weighted average EFORd, and the anticipated entry of 16,980 MW of new generation with a 4.42% EFORd.

The IRM will be 16.1% for 2018/19 and 15.9% for 2019/20.

The MRC also endorsed the following proposed manual changes with one abstention and no objections:

• Manual 11: Energy & Ancillary Services. Revisions, which also include changes to the OA and Tariff, were developed to address capping of intraday offers. The current rule offer caps units that fail the three-pivotal-supplier test, but prohibits reapplying the cap during the unit’s day-ahead commitment or minimum run time. The changes would re-evaluate capped units when offers are updated. The changes would also apply to self-scheduled resources. (See “Debate Continues on Intraday Offers,” PJM Market Implementation Committee Briefs: Oct. 11, 2017.)
• Manual 14B: Regional Transmission Planning Process. Revisions developed to add information related to contingency definitions.
• Manual 19: Load Forecasting and Analysis. Clarifies when load drop estimates are produced and includes updates from a periodic review of the manual. (See “Cleared PRD Forces Manual Revisions,” PJM PC/TEAC Briefs: Sept. 14, 2017.)

Members Committee

The Members Committee unanimously approved the IRM study results, the Tariff changes for the balancing ratio, and changes to Manuals 11, 14B and 19 approved earlier by the MRC. (See descriptions in MRC briefs above.)

The committee also approved Tariff and Operating Agreement revisions to clarify definitions, as recommended by the Governing Document Enhancement & Clarification Subcommittee.

— Rich Heidorn Jr.