By Rory D. Sweeney

VALLEY FORGE, Pa. — PJM and its Independent Market Monitor provided updates to their capacity market redesign proposals at last week’s meeting of the Capacity Construct/Public Policy Senior Task Force (CCPPSTF), but the discussion was dominated by the question of when the group should recommend any rule changes.

Proponents for load — including American Municipal Power, Old Dominion Electric Cooperative, the PJM Industrial Customer Coalition (ICC) and the PJM Public Power Coalition (PPC), the Organization of PJM States and the Consumer Advocates of the PJM States (CAPS) — argued that the decision should be delayed until after FERC responds to the Department of Energy’s Notice of Proposed Rulemaking for coal and nuclear price supports. The commission has said it expects to take some action on the proposal within 60 days after its Oct. 10 publication in the Federal Register.

Generators urged staying on the task force’s current timeline of having a proposal selected to file with FERC by the end of the year. “By putting things off, we just slow down the process,” Calpine’s David “Scarp” Scarpignato said.

Monitor Joe Bowring called for stakeholders to take the lead on how FERC responds to the NOPR.

“What you say does affect the process,” he said. “I would urge you all not to think of yourselves as passive consumers of what FERC is doing. They’re looking for guidance as well.”

Load representatives, however, said they didn’t have enough information to make an informed choice.

“Boy, I don’t have anything among any of these proposals that I can say, ‘This is what’s going to be best for the market and my customers’ future,’” said Carl Johnson, who represents the PPC.

Joe DeLosa, of the Delaware Public Service Commission, said there has been some difficulty in evaluating proposals. “We feel the time is not appropriate to move forward with proposals,” he said.

Morris Schreim, of the Maryland Public Service Commission, asked about a commitment he said PJM made to perform an analysis of the most popular proposals. At a meeting in August, staff agreed to research possible solutions to several stakeholder concerns, including a request from ODEC’s Adrien Ford to substitute data from recent Base Residual Auctions into PJM’s model of the proposals. (See PJM Stakeholders Begin Defining Capacity Design Needs.)

PJM’s Adam Keech responded to Schreim that he remembers another meeting where staff “pretty clearly” said they would not be performing modeling.

RTO officials acknowledged the concerns of load but remained focused on the current timeline.

“I believe it’s important for this group to keep working forward,” PJM’s Suzanne Daugherty said.

PJM Revises Reference Price

PJM revised the reference price in its proposal for undefined subsidies. Previously, it was calculated using a formula for a competitive offer: the net cost of new entry multiplied by the expected average balancing ratio for the delivery year. The RTO has revised it to a “capacity repricing value” that is based on resource type and whether it’s new or existing. That value is used to resort the generation offers in the second, price-setting stage of PJM’s proposal.

The RTO presented its methodology for calculating the default values along with example values for delivery year 2021/22 measured in gross dollars. An existing combined cycle gas turbine’s value would be $84 per ICAP MW-day, while a new unit would be $501. Onshore wind would be $65 and $998, respectively.

“What we’re trying to do is determine what the market price should be for that year,” PJM’s Rich Brown explained.

Stakeholders asked Brown to provide a comparison of how reference prices change under PJM’s previous proposal and the new “capacity repricing values.”

Bowring didn’t need any comparisons.

“This is entirely inconsistent with the Capacity Performance paradigm,” he said.

IMM Revisions

The Monitor revised its proposal to expand one of the exemptions to its extended minimum offer price rule (MOPR) proposal. The renewable portfolio standard exemption would be extended to all competitive, non-discriminatory, state-mandated programs and not just competitive auctions. The IMM is also planning to adjust its public power exemption to allow supply to be “slightly” greater than 105% of demand for a year “to recognize that investment can be lumpy,” Bowring said.

Several load proponents, including Ford, AMP’s Steve Lieberman and Susan Bruce, representing the PJM ICC, thanked Bowring for his willingness to adjust his proposal.

“We don’t think repricing is the right answer,” Ford said, acknowledging that ODEC’s proposal, which has been retracted, included repricing. “We’re really appreciative, Joe, that you’re listening to some of the concerns expressed here in the CCPPSTF and finding ways to modify what we think is a fairly pure market proposal as opposed to an administrative, two-stage approach.”

“Certainly, we continue to believe that the time is not appropriate to move forward, especially with the NOPR out there, but we appreciate the efforts that have been made to try to frame the issue,” Bruce said. “I am not at all suggesting that the time is never. … We live in a time of more uncertainty than I’ve seen. … We’re going to see some guidance from FERC soon, and I think that is going to be an important touchstone.”

Greg Poulos, the executive director of CAPS, said some state advocates are questioning why stakeholders are “all of a sudden” focused on revising the capacity market after nuclear units in one PJM state — Illinois — received price support, particularly when they believe there will not be any new subsidies for generators. He said there is “growing support” among the advocates for the Monitor’s revisions.

“It’s definitely getting more favor from the advocate groups,” he said.

The remaining proposals — from NRG Energy, LS Power, Exelon, AMP, Northern Virginia Electric Cooperative and the Natural Resources Defense Council’s Sustainable FERC Project — had no new revisions.

Poulos expressed advocates’ concerns about “gaming” the repricing structures, and asked representatives from LS and NRG, who have also submitted repricing proposals, whether they have examined how their proposals prevent gaming and how their protections compare to other repricing proposals. The representatives said they have not noticed or been alerted to any concerns.

“We don’t see a meaningful distinction between all the repricing proposals,” Bowring said. “We think they’re all subject to the kinds of issues that were raised by [Poulos].”