VALLEY FORGE, Pa. — PJM’s Operating Committee last week conducted a second first read on RTO and Independent Market Monitor proposals to address the management of remaining run hours for coal and other generating resources limited by fuel shortages or environmental restrictions.

The proposals would change PJM operating procedures for generators in “maximum emergency” status, used to conserve remaining run hours.

Manual 13 currently limits generators on maximum emergency status to a 32-hour remaining run time for steam units, and 16 hours for combustion turbines.

Denise Foster Cronin, representing the East Kentucky Power Cooperative, which owns the coal-fired H.L. Spurlock Station near Maysville and John Sherman Cooper Station near Somerset, said 32 hours is not sufficient. “PJM needs more flexibility than current rules provide,” she said during the meeting Thursday.

The session featured a briefing on the current coal supply shortage on behalf of EKPC and America’s Power. Seth Schwartz of Energy Ventures Analysis showed slides illustrating a 200 million ton drop in coal burn in the U.S. from 2018 to 2020, a reduction of one-third, before rebounding by 65.6 million tons in 2021.

In PJM, coal plant capacity factors dropped from 70% to 33% between 2007 and 2020 before jumping to more than 45% in the first quarter of 2022.

Many coal plants are dispatched after gas combined cycle plants and are run for reliability, Schwartz said.

The uncertainty makes it difficult for coal plants to maintain adequate fuel inventories. Coal suppliers need longer-term contracts to support investments to increase production, Schwartz said, and railroads often require annual contracts with take-or-pay penalties.

PJM’s Chris Pilong said resources in maximum emergency status are not excused from performance assessment intervals.

The RTO proposed allowing coal units only to qualify for maximum emergency with between 32 and 240 remaining run hours. Use of the status would be barred under hot or cold weather alerts, or when conservative operations have been declared. PJM also could deny use of maximum emergency for “any reason,” including potential thermal or voltage violations, black start concerns or extreme weather.

PJM proposed notifications be made via eDart and Markets Gateway with verbal notification to generation dispatch. “Dispatchers are looking at a lot of data,” Pilong explained.

David “Scarp” Scarpignato of Calpine said it could be “overkill” to require the notification in so many different channels, with the risk that one might be missed.

“We don’t want to create a compliance trap,” Pilong said.

Monitoring Analytics’ Joel Luna offered the Independent Market Monitor’s alternative proposal, saying “we don’t want to expand ‘MaxE’ without some consequences.”

The Monitor’s proposal would create a new availability status for “fuel conservation.” That would allow any committed capacity resource with 10 days or less of inventory that does not qualify for the maximum emergency fuel limit (e.g., not beyond the owner’s control, not a temporary interruption, not the result of limited on-site storage) to be made unavailable for economic dispatch.

The catch: Units would forfeit their daily capacity revenues during that status.

Luna said the new availability status is needed because PJM’s proposal doesn’t change the requirement that the maximum emergency status be the result of physical causes.

“The disruption in the coal market, those are not physical events,” Luna said. “Those are decisions plant owners make based on the future. We don’t think it warrants the current definition of MaxE.

“We believe our option is better. … Otherwise we still have the same situation with MaxE being driven by physical events — bridges, barges — not a contractual, procurement decision. This allows both PJM and the market seller to allocate that energy when it’s needed the most,” Luna said.

Becky Robinson of Vistra asked whether units under the IMM’s option would see their equivalent demand forced outage rate (EFORd) reduced for future capacity auctions. “If we’re not doing that, we’re pretending we have more capacity than we do.”

“That’s a really good point, on how to represent these megawatts in the future,” responded Luna.

Tom Hyzinski of GT Power Group said he disagreed with the IMM’s proposed penalties “because there is no failure to meet one’s capacity obligation — one is still subject to CP penalties, and PJM can deny MaxE status and call the unit for reliability at any time.”

Hyzinski said it would be “retroactive ratemaking” to apply the new rules to resources with existing capacity obligations. “If the [Base Residual Auction] has not cleared, and the IMM proposal is in place for that delivery year, then I understand that before I sell the capacity,” he wrote in a WebEx message to other meeting participants.

The committee will be asked to choose between the two proposals at its next meeting.