FERC on Thursday accepted PJM’s compliance filing on its rules for fast-start resources, allowing tariff changes to take effect by July on an issue that has been before the commission since 2017 (ER19-2722).

The commission determined in a December order that PJM partially complied with its April 2019 ruling that the RTO’s fast-start pricing practices were unjust and unreasonable because they did not allow prices to reflect the marginal cost of serving load. PJM’s second compliance filing in February sought to answer the commission’s directives on several issues. (See Mixed Ruling for PJM on Fast-Start Pricing.)

“PJM’s proposed tariff revisions set forth the physical operating characteristic requirements for fast-start resources, consider certain resource types fast-start resources by default and, for other resource types, set forth a process for determining whether the resource can meet the fast-start resource physical operating characteristics,” the commission said.

Revisions

FERC ruled in December that PJM failed to provide sufficient detail on its process for determining eligibility for fast-start resources. The commission agreed with commenters that the proposed definition, which would have allowed PJM’s Office of the Interconnection to deem a resource capable of meeting eligibility criteria based on its operating characteristics, gave the RTO too much discretion.

In response to the commission’s directive, PJM proposed adding a new section to its Operating Agreement defining which resources are considered fast-start and a description of the process by which a resource may become a fast-start resource or lose its status. The definition states that a fast-start resource is “capable of operating with a notification time plus start-up time of one hour or less, and a minimum run time or minimum down time of one hour or less, based on operating characteristics.”

The new section also includes a list of resource types qualifying as fast-start resources, including economic load response participant resources, fuel cells, combustion turbines, diesel, hydropower, battery, solar, landfills and wind.

For other types of resources capable of meeting fast-start operating requirements, PJM proposed a process where a resource can obtain written approval from the RTO, “after advice and input from the Independent Market Monitor,” to have the fast-start designation. The market seller has to provide documentation supporting the capability to meet required operating characteristics, including historical operating data showing the ability to provide energy on one hour’s notice.

“We find that this tariff language sufficiently identifies those resources eligible to submit fast-start pricing offers and does not provide PJM with too much discretion in identification of fast-start resources,” FERC said in the order.

The December order also found that PJM proposed several new types of uplift payments that were not directed by the commission and instructed the RTO to remove those provisions, including:

• providing for make-whole payments for following dispatch instructions;
• uplift payments for virtual transactions, price-sensitive demand and dispatchable exports; and
• lost opportunity cost payments to day-ahead scheduling reserve resources.

The commission in December also rejected PJM’s proposal to apply the offer cap requirements of Order 831 to the composite energy offers under its fast-start pricing proposal. (See New FERC Rule Will Double RTO Offer Caps.)

PJM’s revisions call for only adjusting fast-start offers in the pricing run “when a fast-start resource has been selected in the dispatch run and the resource’s submitted composite energy offer exceeds $1,000/MWh” and will “continue to independently verify the incremental energy offer, start-up cost and no-load cost.”

Market Monitor Protest

The Monitor argued that PJM did not comply with the commission’s directive to properly define the eligibility of fast-start resources, saying that the revised language still gave the RTO “too much discretion” and that there are “no clear standards for verifying which resources that submit start-up plus notification times of less than one hour and minimum run times of less than one hour are capable or not capable of operating according to those parameters.”

It recommended that the commission direct PJM to define a fast-start resource “based only on operating parameters, require that the parameters be accurate based on the resource’s physical capability and prevent resources that do not start in the defined time period from setting price as fast-start resources.”

FERC rejected the protest, saying PJM “added sufficient detail” regarding the process for determining fast-start resource eligibility.

“We find that the Market Monitor’s general concern regarding the submittal of inaccurate offer parameters by resources and the standards for verification of those parameters are outside the scope of the commission’s [Federal Power Act] Section 206 finding,” FERC said.

PJM said Friday it is currently re-evaluating the feasibility of a July 1 implementation date and “the risk associated with implementing during a summer peak month.” The RTO will update stakeholders on the implementation process at the Markets and Reliability Committee’s meeting Wednesday.