FERC Allows Dominion’s FRR Resources to Shift to PJM Capacity Market
Dominion Energy headquarters in Richmond, Va.
Dominion Energy headquarters in Richmond, Va. | Dominion Energy
FERC granted a complaint from Dominion Energy to allow planned capacity resources to shift their participation from the Fixed Resource Requirement alternative to the Reliability Pricing Model capacity market.

FERC on July 5 granted a complaint from Dominion Energy to allow planned capacity resources to shift their participation from the Fixed Resource Requirement (FRR) alternative to the Reliability Pricing Model (RPM) capacity market without being subject to a newly instituted notification requirement (ER24-2197). 

Dominion argued there’s a disparity between the Dec. 12, 2023, deadline for planned resources — those still in development, but expected to begin operation prior to the start of the delivery year — to notify PJM of their intent to offer into the 2025/26 Base Residual Auction (BRA) and the May 17, 2024, deadline for entities to terminate their participation in the FRR alternative. The utility included 80 MW of planned resources in its 2025/26 delivery year FRR plan prior to notifying PJM it planned to terminate its FRR election April 30, after which the RTO told Dominion those planned resources had missed the BRA participation notification deadline and could not submit offers. (See PJM MIC Briefs: Nov. 1, 2023.) 

The company asked FERC to either grant it a waiver from the notification requirement or rule that PJM’s Reliability Assurance Agreement (RAA), when read together with tariff Attachment DD, impinges on FRR entities’ ability to enter the RPM. 

The commission determined the notification deadline does not apply to planned resources being constructed by an FRR entity when the deadline passes and that Dominion’s planned resources can be entered into the 2025/26 auction, which is scheduled to be conducted July 17. (See FERC Approves PJM Capacity Auction Delay.) 

“As an initial matter, we find that the plain language of Section 5.5 of Attachment DD does not expressly address whether FRR entities at the time of the notice-of-intent deadline are subject to the requirements, including the notice-of-intent deadline, provided for therein,” the commission said. “However, we find that under a sensible reading of the tariff and as a practical matter, the provision did not apply to Dominion’s planned generating capacity resources, as Dominion was an FRR entity, not a capacity market seller, as of the relevant deadline.”  

Subjecting FRR resources to a deadline in December would not comport with transitional process the commission approved in PJM’s Critical Issue Fast Path (CIFP) proposal to overhaul its approaches to risk modeling, accreditation and Capacity Performance penalties, FERC said. Recognizing that insufficiency and capacity deficiency penalties were increased in the changes, FERC also greenlit a process for FRR entities to shift to the RPM with at least two months’ notice ahead of the 2025/26 auction. (See FERC Approves 1st PJM Proposal out of CIFP.) 

In that order, “the commission explained that PJM proposed to allow FRR entities and their resources to transition from FRR to the auction on only two months’ notice,” FERC said. “PJM’s interpretation of Section 5.5 would prevent former FRR entities from transitioning resources planned in accordance with their FRR obligations to the BRA.” 

PJM agreed with Dominion’s argument that the deadlines were misaligned and resulted in unintended consequences for FRR entities seeking to enter the RPM. But it said it could not resolve the issue unilaterally without a commission order. 

“More particularly, the mismatch of the deadlines prevent FRR entities, such as Dominion, from effectively participating in RPM auctions by excluding their planned generation capacity resources from participation in the RPM auctions when terminating the election of the FRR alternative, which could result in adverse consequences to Dominion and its ratepayers,” PJM wrote in a June 17 filing. “Additionally, this could also produce inaccurate market signals by not properly reflecting actual demand and supply.” 

Dominion stated that its decision to return to the capacity market was in part driven by the increased FRR penalties, as well as the short timeline to adjust to the new requirements following the commission’s approval of the CIFP changes. 

“Taking into account the difficulty in satisfying this requirement due to the delivery year being roughly one year away, as well as the significant capacity accreditation reforms and increased penalties for FRR entities approved by the commission and detailed above, Dominion notified PJM on April 30, 2024, that it was terminating its FRR alternative election,” Dominion said in its complaint, filed June 4.

Commissioner David Rosner, who joined FERC last month, participated in the order. The newest commissioner, Lindsay See, did not. 

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