The PJM Market Implementation Committee last week unanimously endorsed the development of business rules outlining how the RTO would address a market suspension from an emergency or some other incident.

At the MIC meeting Wednesday, Stefan Starkov of PJM reviewed updates to the problem statement and issue charge for the initiative, reflecting changes since the issue was brought to a first read last month. (See “Market Suspension Settlements,” PJM MIC Briefs: Aug. 5, 2020.)

Starkov said PJM acted after realizing it had limited guidance on how to handle settlements during a market suspension with no day-ahead or real-time LMP results. Starkov said PJM doesn’t anticipate that a market suspension would occur, but the RTO wants to be prepared.

Phase 1 work includes defining the term “market suspension,” reviewing consequences to PJM markets from such an event and identifying and implementing any necessary changes to PJM’s business rules to accommodate the impact of a market suspension on settlements.

An additional point was added to indicate Phase 1 of the initiative is focused solely on addressing the lack of energy market clearing prices and does not include forward-looking financial transmission rights and capacity auctions.

Phase 2 work includes identifying and implementing any other business rule changes needed to respond to a suspension.

Work on Phase 1 is expected to take three months, and Phase 2 is estimated to take six months to complete. Work is set to begin in October.

Paul Sotkiewicz of E-Cubed Policy Associates said it was a problem statement and issue charge that was “long overdue” considering the risk of cyber threats. He asked how far the work will go to address systems operations in PJM, including how dispatch would be done in a scenario with no markets.

PJM’s Tim Horger said the idea was to focus narrowly on the settlement process and how to price the market without real-time LMPs. Horger said PJM didn’t want to expand the work scope to look at operations.

Sotkiewicz said he understands and agrees with the focus on market settlements, but he also sees the possibility of a market suspension coupled with computer system problems impacting dispatch and operations. He said the issue could possibly be examined in the Operating Committee.

Gary Greiner, director of market policy for Public Service Enterprise Group, asked why the issue wasn’t being brought to the Market Settlements Subcommittee to be deliberated. He said the scope of the work seemed to be tailored to the subcommittee and would allow stakeholders to utilize experts to discuss the issue more in depth than would be possible at the MIC.

“It allows our subject matter experts to get into the process,” Greiner said.

PJM said the work on the issue was better suited for the MIC because of its scope.

Stability Limits Endorsed

Stakeholders endorsed a joint package between PJM and the Independent Market Monitor of a capacity constraint proposal regarding stability limits in markets and operations.

The proposal, which was reviewed by Joe Ciabattoni of PJM, was endorsed with 64% approval, passing the required 50% threshold. The proposal then won 71% endorsement over maintaining the status quo.

A second package, the opportunity cost proposal put forward by J-POWER, won 58% support and will serve as a secondary package in voting by the Markets and Reliability Committee.

The proposals were the result of several months of discussion at the MIC on potential changes to how PJM curtails generating output when needed to maintain stability during maintenance outages. Generating units must sometimes be reduced below their normal economic max limit if a planned or unplanned transmission outage presents stability problems that could result in damage to the units. (See “Stability Limits in Markets and Operations,” PJM MIC Briefs: May 13, 2020.)

Current rules require the RTO to implement a thermal surrogate to reflect the stability constraint in the day-ahead and real-time markets and to bind the constraint, affecting the unit’s dispatch.

The MIC agreed in August 2019 to consider alternative approaches in response to a problem statement and issue charge by Panda Power Funds’ Bob O’Connell, who said PJM’s decision to remove supply from the market to address stability constraints would result in some units committing at price-based offers, rather than cost-based. Under the RTO’s rules, only the affected generator would know of the constraint, which stakeholders said would lead to a competitive advantage over other units, possibly resulting in greater mark-ups in their offers. (See “Modeling Units with Stability Limitations,” PJM MIC Briefs: Aug. 7, 2019.)

The capacity constraint proposal addresses the allocation of limits to multiple units by stating that the limit will apply to the sum of the output of the affected units plus ancillary service megawatts. Ciabattoni said the units would be dispatched in economic merit order up to the stated stability limitation.

If a stability limitation has been identified during the planning process and the unit chooses not to remedy the stability limitation, Ciabattoni said, the operating restrictions for the unit — as documented in its interconnection service agreement — would be utilized prior to other units being reduced.

Lost opportunity cost (LOC) credits would not be paid for any reduction required to honor the stability limit. Similarly, LOC is not paid for economic megawatts of a resource that cannot produce because of a ramp limitation.

Sotkiewicz, who presented the J-POWER opportunity cost proposal, said the package was fundamentally the same as the PJM-Monitor package except for providing compensation for LOCs. He said payment for LOC is permitted by section 3.2.3f of the Attachment K Appendix to the Tariff.

The compensation measure sends the right price signal to generation to accept being backed down, avoids the modeling problems of the thermal surrogate and avoids the appearance of physical withholding of capacity by forcing a unit to take an outage, Sotkiewicz said.

Tom Hyzinski of GT Power Group offered a friendly amendment to the proposal regarding after-the-fact reporting. The capacity constraint package originally called for reporting the frequency of the use of the capacity constraint on a monthly basis maintaining the confidentiality of market-sensitive data.

Hyzinski requested that PJM report on a monthly basis the number of instances (defined as a generator hour where the capacity constraint was called), the amount of megawatt-hours constrained and the number of generators that were impacted in the day-ahead and real-time markets.

A compromised amendment that was adopted said, “Data will be made available to the market to increase transparency on frequency, location and number of affected units to the extent it is consistent with confidentiality rules. This language will be refined prior to the presentation at the MRC.”

Manual language will now be developed and presented for a first read at the October MRC meeting.

Behind-the-meter Generation

Terri Esterly of PJM provided a presentation and a first read of the problem statement and issue charge addressing clarifications to the behind-the-meter generation (BTMG) business rules as they relate to a unit changing status from netting against its load to participating in PJM markets.

Esterly said a BTMG unit can be designated to be a capacity resource or energy resource in the wholesale markets or be designated as BTMG netting against load on a unit-specific or partial-unit basis. Any BTMG unit seeking to be designated in whole or in part as a wholesale resource must submit an interconnection request.

BTMG rules were developed beginning in 2003 within the Behind-the-Meter Generation Working Group, Esterly said, and there has been limited review of the rules governing them since their development. Esterly said the OC in 2019 endorsed clarification updates to BTMG business rules focused solely on the reporting, netting and operational requirements of non-retail BTMG.

Esterly said the Tariff and Manual 14D updates are needed because of the increased development of distributed energy resources and load-serving entity requests for adjustments to network service peak load and obligation peak load for new BTMG.

The key work activities include providing education on existing BTMG business rules in the Tariff and Manual 14D related to status changes, Esterly said. Work also will include reviewing and identifying business rules related to status changes that would benefit from clarification or additional detail or that may conflict with existing rules.

The review includes:

• clarifying any relevant limitations or restrictions on market participation;
• clarifying market participation impact on the unit’s ability to net against the load; and
• clarifying the paths for participation in PJM markets.

The committee will be asked to approve the issue charge at its October meeting.