Members yesterday approved PJM’s methodology for limiting capacity imports but soundly rejected the RTO’s proposal to change the way demand response clears in the annual capacity auction.

The import cap passed easily, with 87% support in a sector-weighted vote of the Markets and Reliability Committee. (See related story Members OK Capacity Import Limit; Prices May Rise.)

But PJM was unable to win support for its view on how demand response should be treated in the auction, as members signaled a preference for an alternative by state consumer advocates and the Southern Maryland Electric Cooperative (SMECO). The alternative fell narrowly short of the two-thirds plurality needed to send it to a final vote by the Members Committee, leaving the issue in limbo.

Load Rebels

Representatives of public power, industrial load, retail marketers and demand response aggregators teamed up in a rebuke to PJM management, which had rejected the SMECO/Advocates proposal as not addressing the RTO’s reliability concerns.

The PJM proposal, which was backed by generation representatives, received only 37% support in the sector-weighted vote, while the alternative won 64%. PJM’s proposal had received support of nearly three-quarters of voters at the Capacity Senior Task Force, with 95% calling for a change in the status quo.

As has happened in the past, however, proposals that seem to have wide support at the subcommittee level — where utilities with PJM memberships for multiple subsidiaries can dominate voting — can falter when the vote is weighted by sector at the senior committees.

Only generation owners (11-3) and transmission owners (9-3) supported the PJM proposal. End-use customers (0-13) electric distributors (2-29) and other suppliers (6-20) were overwhelmingly opposed. The coalitions were flipped for the SMECO/Advocates proposal. (See vote tally.)

No Members Committee Vote

PJM Executive Vice President for markets Andy Ott, who had flatly rejected the SMECO/Advocates proposal at last month’s MRC meeting (see States, LSEs on Collision Course with PJM over DR Changes), said after the votes that PJM management would not put the issue on the agenda for next week’s Members Committee meeting.

The PJM Board of Managers ­could act unilaterally to send the PJM proposal to the Federal Energy Regulatory Commission for approval. Given the lack of stakeholder support, however, it would do so at the risk of being rejected. FERC has already signaled uneasiness with a previous change to DR that was approved by stakeholders. (See related story on Wednesday’s technical conference on PJM’s DR “plan enhancements.”)

Under current rules, 4.8% of PJM’s reliability requirement can be filled with limited demand response, with higher levels possible if excess capacity clears against the sloped Variable Resource Requirement (VRR) demand curve. PJM wants to reduce the 4.8% by all of the 2.5% Short-term Resource Procurement Target (STRPT) for a net of 2.3%.

The SMECO/Advocates proposal would reduce the 4.8% by only a portion — to be determined — of the 2.5% holdback.

Failed to Make Reliability Case

Before the vote, several members said PJM officials had failed to make their case: That the current method of clearing DR risked recreating a vertical demand curve that would lead to boom-bust capacity markets and undermine reliability.

“I don’t believe there’s a real issue with the demand curve,” said Bruce Campbell, of demand response aggregator EnergyConnect. Ken Schisler, of DR aggregator EnerNOC, called the proposal a “radical departure.”

Bill Schofield, who represents the PJM Public Power Coalition, said there was a “diversity of opinion” among coalition members but that most thought PJM’s proposal “unnecessarily conservative.”

Compromise Attempt

After the votes, the committee broke for lunch, then returned for first reads on three issues that will be brought to a vote next week. (See next week’s MRC/MC Preview for details.)

At the end of the meeting, Steve Lieberman of Old Dominion Electric Cooperative (ODEC) gave a presentation on what he called a compromise between the PJM and the SMECO/Advocates proposals.

The proposal was greeted skeptically by generation representatives and PJM.

Jason Barker, of Exelon, said it failed to address the problem identified by PJM and was uncompetitive because it values all year-round resources, including annual DR, the same as limited products.

PJM officials said they didn’t understand how the proposal would work without reducing the amount of annual DR. “It’s almost like you’re trying to squeeze a stone,” said Ott.

But PJM’s Jeff Bastian said that PJM might consider incorporating one aspect of the ODEC proposal into PJM’s plan.

Market Monitor Joe Bowring said that would be a mistake. “From our view, the PJM proposal was a compromise that didn’t go far enough. Attempts to move away from that is a move in the wrong direction.”