VALLEY FORGE, Pa. — Capping four years of discussions and analysis, PJM held a first read of proposed fuel assurance rules for black start resources (BSRs) at the Market Implementation and Operating committee meetings Wednesday and Thursday.

PJM has considered fuel supply capabilities along with other technical, operational and cost factors in awarding black start contracts in the past. In 2017, the RTO increased the weighting of fuel assurance in its evaluation of responses to requests for proposals. But current rules have no fuel assurance requirement other than an existing tariff provision requiring black start units to maintain enough fuel for 16 hours of run time.

PJM’s Janell Fabiano said work on the black start proposals — which included a two-year “hiatus” in stakeholder discussions while PJM conducted analyses of restoration times, costs and benefits, and gas supply risks — was an “epic process.”

In the 2018 problem statement launching the effort, PJM said only about half of the units in its black start fleet were fuel assured “through dual-fuel capability, on-site fuel storage or multiple gas pipeline connections.”

The committees heard presentations on two competing proposals, one from the Independent Market Monitor and a second cosponsored by PJM, Brookfield Renewable and the D.C. Office of the People’s Counsel.

Only 23% of stakeholders supported the Monitor’s proposal in polling in June. Nearly three-quarters of stakeholders said they supported PJM’s proposal before it was combined with one from Brookfield and the OPC, which had received 37% support.

PJM Package

The PJM package would select black start sites based on their fuel assurance, giving top preference to units with on-site fuel storage (e.g., dual fuel), followed by those connected to multiple pipelines and then gas-only sites connected to a single source fed directly from a gas supply basin or gathering system ahead of an interstate pipeline.

After that, PJM ranks fuel-assured hydro units (pump storage and run-of-river), followed by fuel-assured intermittent or hybrid sites. The last choice would be at least two gas-only sites in a transmission owner’s zone connected to two separate interstate gas pipelines.

Additional black start units would be solicited for eight “high-impact” sites in which incremental restoration time would be 10 hours or longer with the loss of a non-fuel-assured black start site.

Mitigation of the eight sites in five TO zones would add $28.2 million to the current annual black start cost of $68.2 million, a 41% jump, according to PJM.

IMM Package

The IMM said existing BSRs lacking fuel assurance should correct the problem or have their black start status terminated, with penalties for nonperformance.

The Monitor also would require predefined emission and effluent waivers to accommodate operations during restoration rather than PJM’s proposal that generators use their “best efforts” to obtain permit modifications or waivers.

For dual-fuel resources, the Monitor would require testing of both fuels annually, including a demonstration of the ability to switch between fuels. PJM proposes separate testing for each fuel in the same year. The IMM also would require concurrent annual tests of all BSRs connected to the same fuel source. PJM would not.

PJM would increase the “Z factor” incentive from 10% to 20% for fuel-assured resources selected via the RFP. PJM said the change would cost $436,000 annually.

The IMM would keep the base formula rate incentive factor for such units at 10%. The incentive is multiplied by the sum of fixed and variable black start service costs plus training and fuel storage costs.

The Monitor would also end PJM’s current practice of allowing transmission owners to provide black start service under a “backstop” process following two failed RFPs. “TOs should not own generation,” the Monitor said.

The IMM also opposed PJM’s proposal to allow intermittent resources to seek black start contracts. The Monitor said intermittent resources, other than run-of-river hydro, should not be considered BSRs because they cannot be assured of being available when needed.

PJM’s Tom Hauske said the RTO wanted to allow intermittent resources with storage to offer as black start and to anticipate future technologies. “It’s not going to be easy” for renewables to qualify, he acknowledged.

In a presentation of the IMM’s proposal, Monitoring Analytics President Joe Bowring took exception to the fact that PJM had decided not to impose penalties on intermittent resources that registered as fuel-assured BSRs but failed to meet the new rules, saying that this was “discriminatory” and “doesn’t make any sense.”

PJM said the penalties would be unfair to intermittent resources because the RTO would be responsible for calculating confidence levels for such generators.

Generators are responsible for their own performance, regardless of whether PJM defines the performance standard, Bowring said.

Zonal vs. Regional Plan

Bowring also challenged PJM’s plan to award black start sites, and allocate their costs, by TO zone.

“From a PJM perspective, the zonal approach is the correct approach,” said Dan Bennett, who presented PJM’s proposal. “No one knows a zone more than the transmission operator. They are the right people to be managing this.”

Bowring said TO zones are anachronisms under PJM’s regional management of the grid and that the RTO should take advantage of cross-zonal benefits.

“The fact that TOs can do it is irrelevant,” Bowring said. “There is no magic to zones. Zones are arbitrary. PJM has unfortunately taken the position that TOs are more capable than itself. It’s PJM’s responsibility to do it.”

Greg Poulos, executive director of the Consumer Advocates of the PJM States, said some advocates are not convinced there is a need for black start units in every TO zone. “We are interconnected, unlike ERCOT,” Poulos said. “We do have the ability to have other resources help us.”

Impact on Existing Resources

Stakeholders voiced confusion and concern over the proposed changes, asking for clarification on how they would impact current BSRs that do not register as being fuel assured.

Paul Sotkiewicz of E-Cubed Policy Associates summarized many of these concerns when asking whether the process would be “voluntary” and whether it “would negatively impact BSRs that do not officially register as being fuel-assured.”

PJM responded that the new rules would not impact existing BSRs and were a voluntary process that sought to give additional compensation to eligible generators. Bennett encouraged stakeholders to continue providing feedback or suggestions that would make the packages “stronger because of teamwork.”

The BSR discussions exceeded the allotted time in both the MIC and OC meetings. PJM has scheduled a special meeting for Aug. 25 on the issue. PJM is targeting a filing to FERC in December and an RFP in April 2023.

Dual Votes

Because both the MIC and OC took part in discussions, both will be involved in voting on the two proposals, PJM’s Fabiano said. Voting will open after the Sept. 8 OC meeting and close at 5 p.m. ET on Sept. 15. Only one representative per voting member may participate; if different representatives vote at the MIC and OC, PJM will consolidate the responses and validate one response per member.

Poulos thanked PJM for its work helping the advocates understand the cost-benefit of the fuel incentives. PJM used a range of probabilities of a coincident blackout and fuel delivery failure and a range of values of lost load to calculate the increase in the expected cost that could result if a black start site were unavailable because of fuel failure.

“I don’t think they’re all going to be for it, but I certainly think there’s going to be more support … than there would have been without PJM’s work,” Poulos said of his members.