Stakeholders Endorse Issue Charges on ELCC

VALLEY FORGE, Pa. — The PJM Markets and Reliability Committee on Oct. 30 endorsed two issue charges sponsored by LS Power addressing the transparency and functionality of PJM’s marginal effective load-carrying capability (ELCC) accreditation methodology. 

Both were approved by acclamation. (See “LS Power Issue Charges on Accreditation Transparency, Unit-specific Performance,” PJM MRC Briefs: Sept. 25, 2024.) 

LS Power’s Tom Hoatson outlined several design changes that could be made to the methodology, including reflecting higher potential output in the winter when awarding capacity interconnection rights (CIRs), increasing granularity to allow unit-specific accreditation and recognizing improvements made to generators that may increase their performance. 

Hoatson said that because the current approach determines a resource’s accreditation by looking at how it performed during emergency conditions, if a generation owner makes improvements to a unit that underperformed during a performance assessment interval, it could be years until its accreditation could be updated, after another emergency occurs. 

“You’re not able to improve your accreditation unless you have another Winter Storm Elliott event,” Hoatson said, referring to the December 2022 winter storm. 

There is also an incongruence between the risk modeling approach PJM implemented following the Critical Issue Fast Path process last year, which concentrated risk in the winter, and the use of summer ratings to determine the expected output for some generators, Hoatson said. While the issue charge is not seeking a sub-annual market design, he said there is potential to better align risk modeling and accreditation. 

Paul Sotkiewicz, president of E-Cubed Policy Associates, said there are circumstances beyond a generation owner’s control that result in a resource being labeled as underperforming and there should be a mechanism to allow for steps to be taken to improve accreditation following an event. 

“This is a must-have for many of us, and I think this will help PJM retain a lot of resources in the future,” he said. 

The issue charge aims to file a proposal with FERC in the first quarter of 2025 to be implemented to whichever auction may be held in December of that year, Hoatson said, noting that PJM has requested a delay of the 2026/27 Base Residual Auction (BRA) and several to follow. 

PJM’s Adam Keech said that for any changes to be implementable for an auction conducted in December 2025, a filing would need to be submitted in March or April. While that timeline is doable, he said it’s important that stakeholders keep the tight turnaround in mind. 

“There’s not much time to get changes in for that auction; we are happy to move through this in an expedited fashion,” he said. 

The second issue charge seeks to add transparency to the ELCC process by encouraging more data sharing with generation owners, publishing assumptions underlying class ratings and establishing a date certain for the posting of planning parameters associated with ELCC assumptions. It also envisions a model that stakeholders could use to estimate accreditation of resources they own or representative stand-ins, as well as the ability to modify assumptions to create accreditation sensitivities. 

“Given the large adjustments recently announced to near-term load growth expectations and continued retirement declarations, it has become increasingly important to determine whether and how the accreditation approach as currently implemented will incent needed investment in new and existing resources to maintain resource adequacy,” the issue charge states. 

Vote on Issue Charge to Establish SATA Rules Deferred

Stakeholders deferred action on an issue charge brought by PJM to explore rules to govern battery storage as a transmission asset (SATA) after several argued that members may be inundated with other issues over the coming months. (See “PJM Proposes Reopening Discussion of Storage as a Transmission Asset,” PJM MRC Briefs: Sept. 25, 2024.) 

The motion made by Adrien Ford, Constellation Energy director of wholesale market development, delays action on the issue charge any earlier than February and requires completion of education on the subject at the Operating Committee as well. Ford said stakeholders are being asked to consider numerous issue charges at once and it’s important that the issue charge is written correctly to avoid having to go back to the drawing board, which requires education before moving forward. 

Delaying action was broached by Erik Heinle of Vistra, who noted that stakeholders are also juggling PJM’s Reliability Resource Initiative — which would create a special application window for high-capacity factor resources to enter the second transitional interconnection queue — and a possible Federal Power Act Section 205 filing to revise aspects of the capacity market. 

“When I look around at the most burning issues right now, we’re at a place where we’re trying to put the fires out … and I don’t know that this fits in, so I’m wondering if it makes sense to push this back six months,” he said. 

PJM Director of Stakeholder Affairs Dave Anders said the issue charge sought to delegate the work to the OC in an effort to avoid adding to the workload of other committees already working on other major topics. Heinle responded that members tend to have the same staff working on issues across PJM’s working groups, and, regardless of the venue, another issue charge would add to their responsibilities. 

The RTO also opted to avoid discussion of dual use for storage assets — allowing them to simultaneously act as both transmission and market resources — because of the extensive stakeholder engagement that may entail. 

“Dealing with that dual-use aspect will probably be more time consuming, and we would like to move forward with the operational aspect of it,” Anders said. 

Independent Market Monitor Joe Bowring stated that “there is no logical difference between storage as a transmission asset and a generating unit as a transmission asset. Storage is a competitive market resource in PJM. The MMU opposes the inclusion of competitive market resources in transmission owner rate base because it creates a slippery slope towards rate base rate of return regulation which some are already promoting more broadly.” 

Gregory Poulos, executive director of the Consumer Advocates of the PJM States, said advocates broadly support expanding implementation of storage, and while there are some who are frustrated that the issue charge precluded dual use, they support it. He said some advocates may seek further changes to the rules for market-oriented storage resources through the Public Interest and Environmental Organization User Group. 

Calpine’s David “Scarp” Scarpignato said he is concerned about the prospect of creating a class of regulated transmission assets that could be dispatched to address transmission constraints and the impact that could have on PJM’s markets. He questioned how it could be determined which type of resource would be dispatched under various circumstances. 

“You can’t have somewhat regulated resources being paid for and then expect competitive resources to jump in or participate,” he said. 

CIR Transfer Proposal Discussed

The MRC discussed a proposal to create an expedited process for studying resource interconnection requests that would be using CIRs from deactivating generators.  

A page turn of draft tariff language is scheduled to be conducted during a special session of the MRC on Nov. 14. (See PJM Stakeholders Endorse Coalition Proposal on CIR Transfers.) 

The package is the continuation of the stakeholder coalition endorsed by the Planning Committee on Oct. 8, which won out over proposals from PJM and the Monitor. 

The defining feature relative to the PJM approach is permitting any resource type to receive CIRs and take advantage of the expedited process; the RTO would have categorically excluded storage resources and applied a material adverse impact standard, which opponents argued would effectively limit it to resources of the same fuel type. The process would be limited to projects sited at the same substation and at same voltage as the retiring unit. 

Donnie Bielak, PJM director of interconnection planning, said the RTO’s primary concerns with the coalition package were addressed by the inclusion of a wider set of studies that would be conducted on the impacts a project may have on the grid. Projects’ significant network upgrades would be bounced to the standard interconnection queue, while those with minor upgrades or none at all would be permitted to proceed in the parallel queue. 

The studies would be conducted on the latest phase 2 or 3 model in the wider queue, which Bielak said would result in minimal disruption to the processing timeline for other projects. 

Bowring said allowing bilateral trading of CIRs would create market power for retiring resource owners and could slow resource replacement by allowing those rights to be held for a year before they are transferred. He added that there would be no consideration of the reliability value of the replacement resource nor a requirement that it offer into the capacity market. The Monitor’s proposal would have allowed resources to move to the front of the queue if they resolved a reliability issue and committed to a specific in-service date and being a capacity resource. 

The Monitor’s proposal would have created a PJM-administered process where generation owners could propose new projects to mitigate any transmission violations prompted by a resource deactivation. Any CIRs not transferred through that process would be made available to others in the interconnection queue. 

Elevate Renewables’ Tonja Wicks said this would not be a process where generation owners are handing CIRs over to the highest bidders. Instead, they would be intending to replace their resources with new units at the same location to bring new assets online as quickly as possible. 

PJM Revives Proposal to Sunset Clean Attribute Procurement STF

Clean Attribute Procurement Senior Task Force (CAPSTF) facilitator Scott Baker, PJM business solutions engineer, presented a proposal to sunset the group as states gravitate toward a clean attribute trading program outside of FERC jurisdiction. 

PJM had broached terminating the group during the MRC’s October 2023 meeting, stating that the task force had run its course when its three proposals were rejected without a clear path forward. PJM dropped its recommendation to sunset at the next meeting, and the committee voted against a motion to close the task force. (See “Vote to Close Clean Attribute Group Fails,” PJM MRC/MC Briefs: Nov. 15, 2023.) 

The task force was formed in April 2022 following MRC approval of an issue charge to consider changes to PJM market design to facilitate the creation of a regional, voluntary market for trading clean resource attributes. The discussions yielded three packages, all of which failed to receive majority support in a poll conducted in May 2023. Following that poll, several states formed the Forward Energy Attribute Market (FEAM) Working Group to discuss possible market design and jurisdictional issues. Though the working group was not affiliated with PJM or the Organization of PJM States Inc. (OPSI), its meeting documents can be found on the latter’s website. 

According to a legal and jurisdictional analysis consensus report presented in May 2024, both state-defined renewable energy credits and clean energy attribute credits could be sourced from any qualifying resource and traded among voluntary buyers, such as companies and municipalities with clean energy targets. 

The report states that the credits would not be bundled with the sale of energy and therefore would not fall under FERC’s jurisdiction. It would also not require that states recognize each other’s definitions for qualifying credits, nor would it transfer one state’s authority to another — thereby not requiring congressional approval to establish. Instead, it might take the form of a designated contracts market subject to the U.S. Commodity Futures Trading Commission. 

1st Read on 3rd Phase of Hybrid Resource Rules

PJM’s Maria Belenky presented a package of governing document revisions to expand the RTO’s rules for hybrid resources to include non-inverter-based generation paired with storage.  

The Market Implementation Committee endorsed the revisions Oct. 9. (See “Third Phase of Market Rules for Hybrid Resources Endorsed,” PJM MIC Briefs: Oct. 9, 2024.) 

The hybrid rules would not be applicable to combinations of non-inverter and intermittent generation units, which would be classified as co-located resources. Belenky said PJM is not foreclosing a future pathway for an additional stakeholder discussion on creating a hybrid model for such resources. The rules for non-inverter-based hybrid participation in the energy and ancillary services markets would be based on the Energy Storage Resource Participation Model detailed in Manual 11. 

The revisions would also specify that a hybrid with any component that is subject to the requirement that resources offer into the capacity market would also be subject to the must-offer rule. Hybrids with no component subject to the rule would not be mandated to participate in the market. 

They would also make clarifications to the existing hybrid rules and align language across the governing documents and manuals. That includes defining how generation owners may determine whether the storage component of a hybrid would be offered as a closed loop, incapable of charging from the grid, or an open loop. Belenky said that if the battery is physically or contractually able to charge from the grid, it must be offered as open loop, but there may be circumstances in which the resource owner may wish to operationally limit it to closed-loop usage. 

The revisions would allow generation owners to change loop classification according to the existing technology change rules. A capacity resource is permitted to change its ELCC class once every five years with a request submitted by Aug. 1 of the year prior to the relevant BRA. Energy-only resources can make sure a change every year with a request made by May 30 of the previous calendar year. 

Other MRC Business

PJM’s Michele Greening presented a first read on tariff and Reliability Assurance Agreement revisions drafted by the Governing Document Enhancement and Clarification Subcommittee. The changes include removing sunset terms and obsolete references, correcting drafting errors and clarifying instructions. 

PJM presented revisions to manuals 3 and 10 drafted through the documents’ periodic review. The changes to Manual 3: Transmission Operations would update links and references, clarify the process for revising timely transmission outages, and reflect existing practices on facility ratings. The Manual 10: Prescheduling Operations revisions would clarify how outages for inverter-based resources are reported in eDART, specify that work on forced outages must be completed before planned outages can start and correct an exhibit showing the time the day-ahead market closes. 

PJM’s Suzanne Coyne gave a first read on revisions to Manual 28: Operating Agreement Accounting to expand the lost opportunity cost (LOC) formula to hybrid, storage and solar resources. The formula currently only applies to wind resources. 

The committee endorsed tariff revisions to make PJM’s creditworthiness review of bilateral capacity transactions more proactive. The revisions would require that auction-specific and locational unforced capacity transactions be submitted to PJM in advance for credit review and advance approval. PJM would be expected to approve transactions submitted prior by 1 p.m. by the end of the next business day; submissions made after 1 p.m. would be complete within two days. The credit risk of all parties to the transaction and its potential market impact would be considered in the review. The proposal was added to the Members Committee’s consent agenda by acclamation following the MRC meeting.