By Rich Heidorn Jr.
WILMINGTON, Del. — State and consumer representatives grilled PJM officials Thursday over proposed changes to price-responsive demand (PRD) bids, with the head of the Organization of PJM States Inc. accusing the RTO of flouting the 2005 Energy Policy Act.
PJM says PRD bids should be available year-round, the same as generation resources under Capacity Performance rules. But OPSI argues they should be allowed the option to make only seasonal contributions because PJM’s summer peak loads exceed winter peaks by more than 20,000 MW.
“What problem are you trying to solve?” asked OPSI Executive Director Gregory Carmean at Thursday’s Markets and Reliability Committee meeting. “The states obviously would like to see the effectiveness of their demand-side programs reflected in PJM’s load forecasts.”
PRD — a program that lets customers agree to reduce their loads in response to energy prices in exchange for reduced capacity requirements — was developed during 2010-12, before CP rules changed the requirements for demand response. It requires dynamic retail rate structures and advanced metering. PRD providers — electric distribution companies, load-serving entities or curtailment service providers — must be able to remotely curtail load when a PJM maximum emergency event has been declared and LMPs exceed trigger prices.
Because PJM approved its first PRD plans for the 2020/21 delivery year, it must now bring the rules in line with CP, the RTO says.
Thursday’s discussion came during a first reading of three proposals developed by the Demand Response Subcommittee.
The RTO’s proposal would extend DR’s annual requirements to PRD. A second proposal would limit the triggers for assessing CP penalties to just penalty assessment intervals. The third, from DR-participant Whisker Labs, would extend the existing PRD rules to the winter, create a summer-only product and allow it to be aggregated with a winter resource for an annual CP resource.
Carmean said PJM was acting in “direct contradiction of Congress’ intent” in the Energy Policy Act of 2005, which said that DR “shall be encouraged” and “unnecessary barriers to demand response participation in energy … markets shall be eliminated.”
“I have not gone back to read the law,” said PJM’s Pete Langbein, who presented the proposals, which the RTO plans to bring to an MRC vote next month. But he said PJM had made modifications to its monitoring and verification rules and expanded regions to ease requirements for DR. “We are continuing to work on this in the seasonal task force,” he said, referring to the group being created as a result of a problem statement and issue charge approved by the MRC in August.
Greg Poulos, executive director of the Consumer Advocates of PJM States, said he shared Carmean’s concerns. “Residential customers can no longer participate in this program,” he said. “Customers are kind of getting the short end [of the stick].”
“It seems to be a different product now,” added Morris Schreim, senior adviser to the Maryland Public Service Commission.
Carmean said the changes could mean “stranding hundreds of millions spent on [advanced metering infrastructure] meters. … OPSI believe the PRD program as it exists today should be allowed to continue.”
Earlier this month, OPSI drafted a resolution calling on PJM to postpone the imposition of annual resource requirements on PRD “until it has implemented an improved mechanism for summer seasonal resource participation in excess of winter seasonal resource participation, or until such time that winter reliability requirements equal or exceed summer reliability requirements.” (See “OPSI, PJM at Odds over PRD,” PJM Market Implementation Committee Briefs: Oct. 11, 2017.)
On Friday, PJM CEO Andy Ott responded with a letter to OPSI. “PJM agrees demand response resources are valuable, and we seek ways to have them receive compensation in accordance with their contribution to reliability,” Ott said. “For seasonal resources that do not participate as Capacity Performance resources, the new stakeholder group will explore measures to value their contribution to grid reliability.”
