FERC on Friday conditionally approved a PJM proposal to revise its approach to accrediting intermittent and hybrid resources under its effective load-carrying capability (ELCC) model, a change that aims to more accurately model roadblocks to delivering capacity from those generators during peak conditions (ER23-1067).

The new rule caps the hourly output that can be incorporated in the ELCC calculation at the resource’s individual capacity interconnection rights (CIR) level and creates a transitional process where generators can temporarily receive higher accreditation while they undergo a re-evaluation of the value of their capacity contribution.

PJM’s current practice of including hourly output above a resource’s CIR rating in its ELCC analysis when setting accreditation has been the source of much of the contention over the two years and is the subject of an ongoing complaint with FERC (EL23-13). (See Stakeholders Challenge PJM in Capacity Accreditation Talks.) The approved proposal was the result of a long development process that culminated in stakeholders approval in January. (See PJM Stakeholders Endorse Accreditation Changes for Renewables.)

“We agree with PJM that reflecting a resource’s deliverable megawatts in PJM’s model of the resource’s expected output guarantees that the modeled output will not exceed the resource’s studied deliverability and aligns with the requirement that a capacity resource’s sell offer cannot be greater than its CIR megawatt value,” the commission said in its order.

In its filings, PJM stated that the shift was based on a reconsideration of the assumption that historical system conditions can be used to effectively estimate the future reliability contribution of intermittent resources. Instead, it posits that decarbonization is likely to change system conditions to a degree that the ability to evaluate future outputs and curtailments is uncertain. The revisions also change the accredited unforced capacity (AUCAP) analysis to adjust actual output to account for curtailments.

For combined resources, such as hybrids, the output of the variable component in the ELCC calculation will be capped at the overall generator’s deliverable megawatt value minus the effective nameplate capacity of the limited-duration component, such as a battery. PJM argued that the status quo risks overcounting the output of the intermittent portion of the generator and cause the combination resource’s ELCC output to exceed its deliverability.

Because the new methodology will effectively reduce the accreditation for intermittent resources and require existing and planned generators to re-enter the interconnection queue, which has been beleaguered by long review times, the revisions include a transitional process through which generators can request a higher temporary accreditation and take advantage of existing transmission headroom.

To participate in the transitional study process, the additional capacity a generator is seeking to deliver must be available without any physical modifications to the facility, and the headroom must not be claimed by another generator’s CIRs. The studies will be conducted prior to each future BRA and continue until PJM has completed the process of transitioning to the new methodology for studying interconnection requests.

The commission identified inconsistencies between the filing’s description of the transition mechanism and the proposed revisions to PJM’s Reliability Assurance Agreement (RAA). It required that the RTO submit a compliance filing within 30 days aligning the two.

Protests

The proposal originally included a requirement that generators seeking to enroll in the studies apply by March 3, but by approving the filing with an April 10 effective date, the commission extended the application time frame and encouraged PJM to consider lengthening it further should it pursue its stated intention of delaying the 2025/26 Base Residual Auction and future capacity auctions.

An association of clean energy industry groups opposed the filing, arguing that closing applications for the transition studies violates a Federal Power Act provision requiring RTOs provide at least 60 days’ notice of any proposed changes and does not provide generators enough time to determine how much additional capacity they should request. It argued that PJM should instead include a new window for applying for the transition studies prior to each BRA.

PJM responded by stating that the stakeholder process included significant discussion of the process and “more than ample notice of the timing.” It also said more than 400 study requests have been submitted, which it said is evidence that generators had sufficient time to apply.

FERC said that, “should PJM determine to make a filing with the commission to delay the 2025/2026 BRA, we encourage PJM to consider extending the deadline for submitting a request to increase a resource’s CIRs as well.”

The Natural Resources Defense Council protested the proposal on the basis that it represents undue discrimination against ELCC resources by requiring them to pay for higher transmission costs to recover the accreditation that would be lost under this proposal, when in the past thermal generators have had interconnection costs passed to load under what it describes as similar circumstances.

“PJM’s proposal does not require any ELCC resources to pay for upgrades to ensure reliability; PJM is offering ELCC resources the opportunity to request additional CIRs to increase their accredited UCAP,” FERC said. “The interconnection queue is PJM’s existing process by which all resources request and receive CIRs. Thus, PJM’s proposal is not unduly discriminatory; it simply reflects existing processes that are designed to achieve different goals.”

Clements Dissent

In opposing the filing, Commissioner Allison Clements argued that the proposal will reduce generators’ ability to deliver capacity that is currently able to be provided to the transmission system and requires them to re-enter the transmission queue at the back of the line, potentially creating scenarios in which generators that could provide their status quo capacity with minimal upgrades wait years to find that they’re now being asked to pay substantially higher transmission upgrade costs. By reducing the accreditation for both intermittent and combined resources, she said, the order risks increasing capacity costs, sending inefficient price signals and over-procuring capacity.

“In other words, owners of existing ELCC resources whose requests for a higher amount of CIRs could have already been processed at low cost find themselves sent to the back of a slow-moving line that will take years, fighting to purchase at a potentially much higher price the same capacity deliverability they could’ve already gotten, or arguably have already purchased,” Clements wrote.

She also argued that the April 10 deadline provided too little notice for generators, likely creating an “ill informed mad dash into the interconnection queue.”

“Rewarding this approach allows regulated entities to strong-arm market participants into compliance actions prior to a commission determination, meaning that proposed rules that are not just and reasonable or are unduly discriminatory will shape commercial decisions before the commission can opine on them,” Clements wrote. “While an order ultimately rejecting a proposal as not just and reasonable or unduly discriminatory would give market participants some relief from having to comply with a rule that does not past muster under the Federal Power Act, it would not return to them the time and money spent complying with the proposed unjust and unreasonable or unduly discriminatory rule in advance of the commission’s determination.”