VALLEY FORGE, Pa. — After months of debate on proposed definitions for operating parameters, PJM and the Independent Market Monitor rankled some Market Implementation Committee members last week by introducing an unexpected, last-minute compromise package that included one key change but largely maintained the status quo.
The proposal leaves many of the definitions untouched, except for minimum runtime and soak time. The endorsed definition of minimum runtime replaces a unit’s “breaker closure” with simply when a unit is “dispatchable” as the starting point. It also “un-nests” soak time from minimum runtime, differentiating it as its own parameter.
“We think it’s a big step forward,” Monitor Joe Bowring said.
Several stakeholders said they wouldn’t have enough time to give the proposal a reasonable review that day, but a seconded motion to vote on the issue forced them to act. The vote, which was planned for the morning session, was delayed until the afternoon to provide extra time.
It was enough: The joint package received support from 75% of stakeholders — far exceeding competing proposals. It also won more than 60% support in a head-to-head vote against the status quo, meaning it will be forwarded to the Markets and Reliability Committee. (See “Members Hear First Read on Plan to ‘Un-Nest’ Operating Parameters,” PJM Market Implementation Committee Briefs.)
The last-minute proposal by PJM and the Monitor caused several stakeholders to question the functionality of the stakeholder process. “Do we just not care about the stakeholder process anymore?” Ed Tatum of American Municipal Power asked during the initial discussion. “What’s the idea of bringing something that no one’s been able to look at?”
After the vote, PJM’s Dave Anders thanked the members “for working through the issue.” He acknowledged their frustration, but he said this was an example of “the stakeholder process actually working.”
He invited members who have thoughts on reforming the process to attend the Stakeholder Process Forum Oct. 24.
Stakeholders Debate ARR Changes
In response to a problem statement approved earlier this year, PJM has begun revisiting its procedures for allocating residual auction revenue rights and hopes to file a solution with FERC on Dec. 31.
Exelon and Direct Energy issued a proposal last week for reducing potential revenue fluctuations under the current allocation. Their proposal would eliminate any residual ARR paths that could receive negative values based on monthly financial transmission rights clearing prices. PJM would then rerun the simultaneous feasibility test before allocating residual ARR megawatts for the month.
PJM’s proposal would give stakeholders the opportunity to opt out of allocations on a path-by-path basis. Sharon Midgley of Exelon said both proposals solve the issue but differ on the approach taken to address the current forced allocation of negative paths to customers. The Exelon/Direct Energy package puts an additional administrative requirement on PJM, while the RTO’s proposal places new analytical requirements on load-serving entities.
PJM’s Asanga Perera explained that the stakeholder proposal puts a heavy burden on PJM staff to process the data for negative pathways within a few days to have the results back to stakeholders in time for the next round of ARRs. He said it creates the potential for PJM to miss a deadline and leave stakeholders without the information necessary to identify negative pathways.
He pointed out that the process for stakeholders under PJM’s plan uses what they already do for the annual ARR process.
However, several stakeholders criticized PJM’s plan, saying their companies don’t have the staff to analyze the thousands of potential pathways each month. “I think PJM’s proposal with the burden placed on the stakeholders, that would be too overwhelming,” said a stakeholder who asked not to be identified. “It would give an advantage to the stakeholders that have the staff and the resources available to do that.”
PJM Looks to Revise Shortage Pricing Procedures
PJM’s Adam Keech presented a shortage pricing proposal to avoid potential volatility posed by implementation of FERC Order 825 (RM15-24).
Under the order’s transient shortage pricing rules, even brief shortages will trigger the maximum penalty factor, which could cause volatility as market participants attempt to respond. (See FERC Issues 1st RTO Price Formation Reforms.)
PJM’s proposal would create steps below the maximum penalty factor based on historical performance so that the maximum penalty does not apply until the reserve is down to the largest single resource’s actual output as opposed to its economic maximum. The measurement would change every five minutes.
Keech noted that in the past 21 months, PJM has observed 845 instances where, under the rules in Order 825, reserve prices would have hit the maximum $850/MWh penalty factor in the Mid-Atlantic and Dominion regions. He hadn’t analyzed the data enough to explain why 759 of them were in 2015 compared with 86 in 2016.
Attachment Q Modified; Credit Requirements Unaffected
Stakeholders endorsed by acclamation changes to PJM’s credit policy. The revisions to Attachment Q of the Tariff reorganize provisions and make five minor changes to them, none of which affect credit requirements, according to PJM’s Harold Loomis.
The changes also specify that collateral may not be encumbered or restricted and provide PJM “reasonable time” to investigate breaches of credit requirements before implementing remedies, ensuring the RTO’s action is not foreclosed if it does not act immediately.
The revised attachment also replaces a section on peak market activity (PMA) collateral requirements with one specifying PMA credit requirements.
‘Working Groups’ Removed from MIC Charter
Stakeholders endorsed edits to the MIC charter that removed references to “working groups,” as they no longer exist. Working groups were eliminated as part of a larger reorganization of the stakeholder process starting in 2009 that standardized the purposes for and creation of task forces and subcommittees.
Stakeholders Develop Interest List for Black Start Requirements
PJM is soliciting stakeholder feedback on the priorities that should be considered in developing annual revenue requirements for new black start units. The current interest identification includes 13 concerns, including that the Monitor calculate revenue within six months of units entering black start service.
Bowring said the calculations can’t be made without explicit documentation to support “every penny of requested revenue changes” and that documentation must be submitted in a timely fashion. Members asked Bowring to specify what documentation is required.
– Rory D. Sweeney