Tariff Change Would Allow PJM to Sell Excess Capacity for 2016/17

WILMINGTON, Del. — Members overwhelmingly endorsed a Tariff change that would allow PJM to release Base Capacity resources to reflect the Capacity Performance resources it acquired in the transition auction for the 2016/17 delivery year.

While it planned to include the 2017/18 delivery year in the changes, staff decided to hold off pending a Supreme Court ruling on the Electric Power Supply Association’s challenge to FERC’s jurisdiction over demand response. (See FERC Jurisdiction over DR in Peril as Supreme Court Splits.)

PJM plans to craft the request for the Tariff change to FERC in a way that would permit it to pull it back if the Supreme Court rules that DR could not be used in energy markets and FERC applied the ruling to capacity markets as well.

“There’s some argument out there that jurisdiction is jurisdiction. The hesitancy we have is if EPSA is upheld at the Supreme Court, we don’t know what FERC would do, so we want to leave ourselves open with a safety valve,” said Stu Bresler, PJM senior vice president for markets.

In addition, PJM Assistant General Counsel Jen Tribulski noted that FirstEnergy has a case before FERC regarding DR in capacity markets (EL14-55).

“FERC could take both and make a decision regarding both markets,” she said.

The filing is expected to be made in early December. The third incremental auction is set for February.

Committee Endorses Increase in IRM

With five “no” votes and 19 abstentions, the committee approved an increase in PJM’s Installed Reserve Margin.

The Reserve Requirement Study increased the IRM for delivery year 2016/17 to 16.4% from 15.5% in the 2014 study. IRMs also rose for 2017/18 and 2018/19.

Some members expressed misgivings over PJM’s methodology, saying the rise seemed counterintuitive given the new Capacity Performance product and other efforts to ensure generator reliability. (See “IRM, FPR Rising; PJM Methodology Challenged” in PJM Planning Committee Briefs.)

Steve Lieberman of Old Dominion Electric Cooperative opposed the proposal.

“We don’t take resource adequacy lightly,” he said. “We’re not looking to make things less reliable; we’re just not comfortable with the assumptions made this year. We feel that the IRM that was in place last year is a fair and reliable value to use next year.”

Tom Falin, manager of resource planning, said that CP alone does not automatically result in a lower IRM.

“We have already assumed that generators will perform at the CP standard,” he said. “Our planning studies assume that the forced outage rate applies every day of the year, regardless of how hot and cold, that generators will have about a 7% unavailability rate.”

Winter Peak Studies to be Added to Planning Process

The committee unanimously endorsed changes to Manual 14B: PJM Region Transmission Planning Process adding the RTO’s first criteria for reliability studies focused on meeting winter peaks.

The parameters define the winter peak period as 6 to 9 a.m. and 5 to 8 p.m., from Dec. 1 through Feb. 28.

The studies will include thermal and voltage evaluations; solutions to identified problems will be developed through the Transmission Expansion Advisory Committee.

The criteria will be effective for baseline studies on Jan. 1 and for interconnection queue requests received after the effective date of the revised manual language.

Traditionally, the use of energy in PJM has peaked in the summer, but in the past couple of years, it has seen operational issues “during a lot of other times,” said Mark Sims, manager of transmission planning.

He said new transmission planning standards going into effect will require PJM to study more extreme events.

Regulation Market Proposal, Task Force Charter Approved

Members approved an interim solution to the over-procurement of RegD resources that will be reflected in changes to Manual 11: Energy & Ancillary Services Markets Operations.

The solution moves the benefits factor curve to the left so that it is at zero at 40%. A cap of 26.2% also will be implemented during identified excursion hours — hours when dispatch frequently moves the regulation signal manually.

It also features tie-breaker logic to rank RegD self-schedules or zero-cost offers. (See “Solution, Task Force Proposed to Curtail RegD Resources” in PJM Markets and Reliability Committee Briefs.)

The changes, which take effect Dec. 1, will be reviewed quarterly while a senior task force will seek a long-term solution.

“We believe this proposal goes in the right direction,” said Susan Bruce of the Industrial Customer Coalition. “It’s certainly a good placeholder until the next group does some long-term work.”

In a related vote, the charter for the task force also was approved. Some key activities were added after the issue was discussed at the Operating Committee, including evaluating the causes and effects of prolonged control deviations and identifying common causes for operators manually adjusting the regulation signal.

The group also will re-evaluate:

• the regulation requirement;
• regulation signal formation, including the potential of RegB and RegD neutrality;
• self-schedule and zero-offer resources in the commitment process and impacts on energy market;
• the scoring method for regulation testing and regulation service; and
• the schedule used in the calculation for the regulation lost opportunity cost.

Subcommittee Formed to Review Governing Documents

The former Tariff Harmonization Senior Task Force will become the Governing Document Enhancement and Clarification Subcommittee, members agreed.

The change was recommended because it turned out that the task force’s work was significant enough and was intended to be ongoing, said facilitator Janell Fabiano. (See Task Force Proposed to Resolve Inconsistencies in PJM Governing Documents.)

The group will review, identify and propose solutions to substantive and non-substantive inconsistencies and confusing language in PJM’s governing documents.

Members Committee

Nominating Committee Members Elected

Members elected the Nominating Committee for 2015-16. The sector representatives are:

• Electric Distribution Sector: Lisa McAllister, American Municipal Power
• End Use Customer Sector: Ruth Ann Price, Division of the Public Advocate of the State of Delaware
• Generation Owner: Joe Kerecman, Calpine
• Other Supplier Sector: Marji Philips, Direct Energy
• Transmission Owner Sector: John Horstmann, Dayton Power & Light