VALLEY FORGE, Pa. — The Market Implementation Committee unanimously approved a problem statement and issue charge to consider changes to rules governing day-ahead scheduling reserve eligibility.

Current rules allow resources to clear DASR even though some — nuclear, run-of-river and self-scheduled pumped hydro, wind and solar units — cannot fulfill their obligations in real time. If such units are made ineligible, cleared DASR megawatts will be able to reliably fulfill their obligations in real time.

The issue will be worked at the MIC and is expected to result in updated language to Manual 11.

Price Floor for Incremental Auctions?

Jeff Whitehead of Direct Energy suggested PJM establish a price floor for incremental auctions and said he will return to the MIC with a problem statement.

The large amount of capacity released in incremental auctions has led to low clearing prices — giving supply resources the opportunity to buy out of their obligation and net profits that are financed by load, he said.

Whitehead raised the issue following a PJM presentation on the release of base capacity for delivery year 2017/18.

In the third incremental auction for delivery year 2016/17, PJM released 4,556 MW of prior capacity commitments. PJM said more than double that amount — 10,000 MW — would be included in the third incremental auction for the 2017/18 delivery year. (See PJM Transition Auction Capacity not Included in Incremental Auction.)

PLS Exception Process Proposal Presented

PJM presented the first read of a proposed parameter-limited schedule (PLS) exception process.

The revisions would allow for exception requests to be submitted after the Feb. 28 deadline and for a temporary exception to be extended to a period exception under certain circumstances.

The changes would give PJM and the Independent Market Monitor more time to review requests and provide determinations to market sellers. The persistent PLS exception option would be eliminated. (See “Manual Changes to Detail Unit-Specific Operating Parameter Adjustment Process Under CP,” PJM Operating Committee Briefs.)

PJM Seeks to Clarify Terms of Auction Specific Bilateral Transactions

Members will be asked at the next MIC meeting to endorse rule clarifications to preserve the physicality of auction-specific bilateral transactions.

The changes clarify that performance bonus payments related to such transactions accrue to the buyer, and the obligation to perform remains with the seller. In addition, the buyers would be required to indemnify PJM Settlement against seller performance defaults.

The buyer would be the party to enter into a replacement transaction if desired, and there would be no restrictions on the source of replacement.

CPower Proposes to Study Necessity of DR Registration Submission Deadline

Bruce Campbell presented a problem statement and issue charge on behalf of CPower to review the demand response registration submission deadline.

Currently, DR may only register for capacity auctions from Jan. 1 to May 15 and only for the delivery year that follows the May 15 deadline. That prevents customers who may be willing to contribute to reliability during the delivery year but after the deadline from participating as a demand resource, Campbell said.

The registration window is a legacy of seasonal performance requirements and penalty structures, he said.

“The implementation of [Capacity Performance] has changed demand resource obligations and penalties, which may allow for more flexible registration submission timeline requirements,” Campbell said.

Widening the registration window could increase reliability and reduce provider risks and customer costs, he said.

The goal would be to present proposed changes to the Markets and Reliability Committee in November.

Exelon, Direct Energy Suggest Studying Residual ARR Process

Direct Energy’s Whitehead and Sharon Midgley of Exelon presented a problem statement and issue charge to discuss potential enhancements to the residual auction revenue rights process.

“The current residual ARR process poses a risk that’s unhedgeable,” Midgley said.

Currently, PJM may allocate residual ARRs that become feasible after the annual allocation process in specific months where transmission capability becomes available to accommodate them, according to the problem statement. Market participants have no choice regarding whether to accept or reject them.

Residual ARRs for a portion of the planning year can have vastly different values from the same ARRs allocated across the entire planning year; in some cases they can be negatively valued.

“As a result, LSEs may be saddled with an undesired, unexpected and unhedgeable reduction in expected ARR credits,” the problem statement said.

“We’re looking to firm up ARR credits to what it was three or four years ago so you can know what kind of cash flow you can expect,” Whitehead said.

– Suzanne Herel