VALLEY FORGE, Pa. — The PJM Market Implementation Committee endorsed by acclamation revisions to Manual 18 to define how distributed energy resources will participate in the 2028/29 capacity auction in accordance with PJM’s Order 2222 compliance filing.

The Independent Market Monitor had proposed revising the language to address a possible issue where resources could bypass market power mitigation by offering into an auction as an aggregation of demand response resources, which are not subject to market power mitigation rules, but then include generation during the delivery year by classifying the resource as heterogeneous.

The recommended language would have sorted DERs into either homogenous distributed generation, homogeneous demand response or heterogeneous resources. If a resource failed to abide by its classification in the delivery year it would fail to meet its capacity commitment. It was not included as an amendment to PJM’s language.

Deputy Monitor Catherine Tyler said a resource with a DER plan should be required to supply the same type of aggregation that it offered into a Base Residual Auction. An aggregation composed of a combination of generation and DR that changed the concentration of one or the other would not be affected by the proposal, she said.

Questioned how PJM would handle such an issue today, PJM’s Pete Langbein said the information collected about market participants would make it clear how a resource is being offered into the market. If there appears to be an effort to exercise market power, PJM would reach out to the participant and potentially refer them to the Monitor or FERC’s Office of Enforcement. He said it likely would be rare for a DER to solely be composed of DR, but if such a resource was offered into an auction and then installed a significant amount of generation, that would raise red flags to PJM staff.

Aaron Breidenbaugh, senior director of regulatory affairs at CPower Energy Management, said it can be difficult to anticipate the future three years in advance. A DR participant might decide to install storage or solar and then be unable to do so, which could create compliance risks for customers interested in aggregation. Adding onerous limitations would discourage participants and possibly punish participants who had no adverse impact on market power.

“It’s a harsh solution in search of a potential problem,” he said.

Monitor Joe Bowring responded that if an entity believes they may participate in the capacity auction as a more advanced resource, they should offer as such.

“It is ineffective to substitute red flags and potential referrals for good market rules. Good market rules are not punishment unless participants attempt to exercise market power,” Bowring said.

The Manual 18 revisions also reflect changes to how DR is offered into the market, removing the availability window to model DR as being dispatchable in all hours and changing the calculation of participants’ winter peak load to be based on the 9 a.m. coincident peak, rather than each DR site’s individual peak. (See PJM Stakeholders Endorse More Detailed Demand Response Modeling.)

PJM Update on Regulation Market Redesign

PJM’s Michael Olaleye presented an update on the implementation of PJM’s redesign of the regulation market, which went live Oct. 1. The changes shifted the market from two bidirectional signals to one, shortened clearing and commitment to 30 minutes, and established the tracking ramp limited desired parameter. (See “PJM Presents Regulation Market Rework,” PJM MRC/MC Briefs: Dec. 20, 2023.)

Since the go-live date, there have been more days with high clearing prices, with Oct. 3 seeing two intervals at $33,897/MWh and $29,636/MWh. There were 11 intervals where the clearing price exceeded $5,000/MWh. Despite performance scoring being tightened to consider only the precision of a resource’s response — accuracy and delay were eliminated as criteria — Olaleye said average scores have remained largely the same.

A handful of market participants said the lost opportunity costs seen during October were shocking and questioned whether this is likely to be the norm.

Rebecca Stadelmeyer, Gabel Associates vice president of wholesale power and market services, said it was not expected that clearing prices would be in the thousands and that participants are working to figure out how to price load deals for auctions in deregulated states and ensure customers are protected. She suggested PJM hold education sessions on the results of the market changes, adding that past discussions relied on theory about how the redesign might play out.