A proposal to boost penalties for resources that fall short of their synchronized reserve commitments stalled at the Operating Committee last week as utilities called for more details.
The proposal by PJM and the Market Monitor failed on a tie 38-38 vote, with utilities including PSEG, PPL, AEP and Dayton Power and Light voting in opposition. Industrial users and other utilities, including FirstEnergy and UGI abstained.
Performance Lagging
The proposal was meant to address concerns over the lack of a qualification process for participation as Tier 2 Synchronized Reserve resources and the increased participation of demand response. Officials said the current penalty structure was insufficient to ensure compliance.
SR resources provided only 73% of the megawatts they were assigned, with less than one-third of units proving 100% or more of their assignments, said PJM’s Kim Warshel, who presented the issue to the committee.
The analysis found that the increase in demand response from 25% to 33% of SR resources had not hurt overall performance.
Penalties Lack Teeth
PJM and the monitor also concluded the current penalties are insufficient because of the decrease in the number of events of 10 minutes or longer (for which performance measurement applies), and the increase in days between events — currently 13 days. “It doesn’t have a lot of teeth anymore,” said Warshel.
Under current rules, if a resource fails to perform in one hour it doesn’t affect its credit for performing in another hour during the same day.
Dave Pratzon, who represents independent generators, said generators could be inadvertently penalized if plant operators fail to update their availability during the day when they are temporarily unable to perform. “I think more needs to be done before we take a vote on this,” he said.
Shortage Pricing Restriction
Other RTOs have qualification standards for resources seeking to offer in the SR market and conduct random tests to validate capability. The “must offer” requirement accompanying PJM’s Shortage Pricing limits its ability to implement similar procedures.
As a result, PJM and the monitor concluded that the best solution was to increase penalties.
The current language of Manual 11 states that:
The resource is credited for Tier 2 synchronized reserve capacity in the amount that actually responded for the contiguous hours the resource was assigned Tier 2 synchronized reserve during which the event occurred, and;
The owner of the resource incurs a synchronized reserve obligation in the amount of the shortfall for the three consecutive, same-peak days occurring at least three business days following the event.
(Emphasis added.)
The proposed change would remove the “contiguous” hours statement from the same-day penalty, meaning the resource’s credit will be reduced for the entire day if there is a shortfall in any hours. “You can’t stop and come back in and your penalty is erased,” explained Stu Bresler, PJM vice president of market operations.
“I can’t support that,” responded Brad Weghorst, market & regulatory policy manager for PPL Energy Plus.
The proposal also would increase the duration of the following-days’ penalty from three to the average number of days between events, as determined by an annual review.
