PJM Members Approve Intraday Updates to Generator Cost Schedules

Nov 11, 2014

Gas generators will be able to change their cost schedules to reflect fluctuating fuel prices, under a proposal approved by the PJM OC last week.

Beginning in January, gas generators will be able to change their offers to reflect fluctuating fuel prices, under a proposal approved by the Operating Committee last week.

The proposal would allow generators to lock in their fuel prices three hours in advance of the operating hour.

The option would be available to resources that did not receive day-ahead commitments and were not picked up in the reliability assessment and commitment (RAC) run. Units with day-ahead commitments and those selected in the RAC run can switch prices after the end of their last committed hour. Units committed in real time will be unable to change their cost schedules until released.

“It’s not a perfect solution,” PJM’s Chantal Hendrzak acknowledged during a briefing of the Market Implementation Committee Friday. “For right now, we think this would be better than what we have today, where we lock prices at 1800 [the day before] and there’s no way to change.”

Hendrzak said PJM’s security constrained economic dispatch (SCED) engine does not recognize an end to a price schedule. The three-hour “lockout” is necessary to give the engine time to produce the dispatch stack.

The changes are the result of work by the Gas Unit Commitment Coordination (GUCC) group within the Operating Committee.

The Operating Committee approved the new policy Thursday despite abstentions from Dayton Power and Light and PPL, and objections from Dominion Resources and American Electric Power. Dominion’s Louis Slade said that while his company agrees with the increased offer flexibility, he objected because PJM had not given members advance notice of the Manual 11 changes involved.

The OC will hold a conference call at 3 p.m. Nov. 12 to discuss the changes in advance of a Nov. 20 vote by the Markets and Reliability Committee.

PJM’s vendor is expected to deliver the required software changes in December. PJM is planning to put the changes into production in January. The new procedures will be explained during the winter-weather procedure changes webinar Nov. 24.

For a long-term solution, Hendrzak said PJM is considering the technology used by ISO-NE. Beginning in December, the ISO will allow generators to change pricing by hour in the day-ahead market and change real-time offers until 30 minutes before the operating hour. “We know we’re not done yet,” Hendrzak said.

The MIC also received a briefing from Market Monitor Joe Bowring on how generators should submit their fuel cost policies through Monitoring Analytics’ new member-information-reporting application (MIRA) tool.

The Monitor uses the fuel cost policies to review cost-based offers submitted by generation owners. The policy must specify the source of the generator’s fuel cost input. Allowable sources are: