Federal Briefs

Flow of Emissions Value (Source: The Brattle Group)

Instead of making individual generators or states meet coming carbon emission limits, The Brattle Group proposed that regional transmission operators such as PJM build the limits into their markets. Brattle and Great River Energy, in Minnesota, have broached the idea, and Brattle is developing details of it, as the Environmental Protection Agency prepares to release carbon regulations expected by June.

EPA has been meeting with many stakeholders to come up with a proposal that is effective and can withstand legal challenges.

More: Great River Energy; The New York Times

Congress Eyes Stronger FERC Grid Security Role

Jolted by the armed attack on a Pacific Gas and Electric substation last April, members of Congress are considering making a stronger role for the Federal Energy Regulatory Commission in setting standards for protection of critical grid facilities. The current reliability regime, which governs FERC and the North American Electric Reliability Corp., allows the commission to act on standards submitted by NERC but not to rewrite them or initiate its own standards.

One proposal Congress is discussing would allow FERC to impose interim rules on grid defenses while allowing the industry the opportunity to influence permanent requirements.

More: Wall Street Journal

Previous coverage: Substation Saboteurs ‘No Amateurs’

Nuke Closures Concern DOE

The Obama administration is worried that economic problems that may lead to additional nuclear plant closures will hurt the nation’s ability to reach carbon dioxide emission reduction goals. Assistant Energy Secretary Pete Lyons, a former member of the Nuclear Regulatory Commission, said DOE is studying plant retirement scenarios and is “very, very concerned.” (See related story, Exelon Warns of Nuke Closings.)

More: Greenwire

Landrieu Goes to Energy; Wyden May Aid Wind

Senator Mary Landrieu — Sen. Mary Landrieu

Environmentalists have mixed emotions about the shuffling of chairmanships in the Senate. Sen. Mary Landrieu, a Democrat from oil- and gas-producing Louisiana, is set to chair the Energy and Natural Resources Committee as Oregon’s Ron Wyden moves to Finance to replace Sen. Max Baucus, the new ambassador to China.

Wyden’s move to Finance gives some wind power interests hope that he can win an extension of the production tax credit. Many Republicans want to address extensions as part of comprehensive tax reform; Wyden said he sees them as “a bridge” to comprehensive action.

More: The Times-Picayune; FierceEnergy; Bloomberg

DOE Issues New Standards for Device Chargers

The Department of Energy signed off on new energy conservation standards for external power supplies used to charge devices such as laptops and cellphones. The standards will save consumers up to $3.8 billion on top of $42.4 billion in savings estimated by 2032 from standards implemented in 2007, DOE said.

More: DOE

EPA to Update Radiation Standards for Nuke Plants

The Environmental Protection Agency intends to update and expand its regulations for radiation from nuclear power plants. In addition to addressing radiation emitted to the air, the new standards will cover ground water protection, radioactive waste disposal and decommissioning old plants, subjects that the current regulations do not address.

More: The Hill

FERC Uses Emergency Power To Order Propane Shipments

The Federal Energy Regulatory Commission for the first time used its emergency authority under the Interstate Commerce Act to order priority propane shipments from Mont Belvieu, Texas, to the severely cold and propane-short Midwest and Northeast.

“We’re mindful of the emergency situation that has developed in parts of the country where bitter cold weather has created problems for consumers who need supplies of propane,” Acting FERC Chairman Cheryl LaFleur said. “The problem is acute enough that we feel it is important for us to take this step.”

More: FERC

ITC Bill Would Help Solar Projects Get Tax Credits

Senators Michael Bennet (D-Colo.) and Dean Heller (R-Nev.) have introduced a bill to change the qualification rules for the investment tax credit so that more projects can use it. The bill would allow the credit for projects that are under construction, instead of completed, by Dec. 21, 2016, a change that would aid the solar industry.

More: Solar Industry

February 10, 2014

ATSI RMR Units to Retire Early

Four out of five Reliability Must-Run generation units in the ATSI zone will shut down this year rather than 2015, PJM told the Planning Committee Thursday.

East Lake 1-3 and Lake Shore 18 will be retired Sept. 15, thanks to transmission upgrades in the area that will help maintain reliability in ATSI. Ashtabula 5, however, will maintain generation for the next 16 months.

Lake Shore 18 unit, which was originally slated to be converted to a synchronous condenser at a cost of $20 million, was scrapped in favor of a $34.7 million SVC project due for completion in June 2015. Paul McGlynn, general manager of system planning, said the SVC project should prove more economical when including maintenance costs for the synchronous condenser.

American Transmission Systems, Inc. provides the bulk of its transmission services in northern Ohio and northwest Pennsylvania.

February 10, 2014

PJM to Survey Generators on Resource Flexibility

PJM plans to survey generation owners to determine what can be done to increase resource flexibility.

Adam Keech, manager of wholesale market operations, told the Operating Committee that the survey will “be looking at the decline in generation flexibility in the last five-ten years,” a worrisome trend that recent weather events — and accompanying unforced outages that seriously challenged grid reliability — have brought to the fore.

“We want to know, ‘What are the [barriers] to resource flexibility?’” said Keech. “Is it a case of [older] generators not being able to run as much? Is it market rules or fuel … limitations? It will be a mixed bag of questions for generators.”

Keech said PJM will request feedback by April 1 and evaluate responses during the second quarter of this year. The goal is to offer solutions on how to increase resource flexibility by the end of the year.

February 5, 2014

PJM to Bill Members for $2 Million in Retailers’ Defaults

Then there were two.

PJM announced tonight that it will ask members to pay more than $2 million in defaults by two retail marketers unable to cover high power costs during January’s arctic cold.

Suzanne Daugherty, PJM chief financial officer, told the Credit Subcommittee this afternoon that two – then unnamed ̶ retailers had defaulted on collateral calls Friday and had until 5 p.m. Tuesday to “cure” the defaults.

One was CCES LLC, operating as Clean Currents, which announced its collapse Friday (see High Prices Claim Green Retailer). The company, which reportedly had 6,000 residential and 2,000 commercial customers in Maryland, Pennsylvania and the District of Columbia, owes $1.6 to $1.8 million.

The other – which Daugherty said had hoped to come up with the collateral by the deadline – was revealed tonight as People’s Power & Gas LLC, which was suspended by ISO New England in late December, returning thousands of customers to Public Service of New Hampshire. It owes PJM $400,000 to $600,000.

“For both of these retail companies, in a single day they jumped from below their working credit to above their working credit.” The crunches resulted, she said, from “a combination of prices and volume.”

Daughterty said that PJM had issued calls for more than $2 billion in collateral in January, at least four times the total for all of 2013.

In an interview after the meeting, Daugherty noted that eight of the top ten winter demand peaks in PJM’s history occurred last month. PJM, which billed $33 billion in all of 2013, billed “a lot more than 1/12^th of that” in January, she said.

Mike Bryson, executive director of system operations, told the Operating Committee earlier today that PJM may now have one or two additional winter-peaking zones in addition to East Kentucky Power Cooperative, the only one prior to January. He did not name the zones and said the numbers were tentative.

PJM will ask the Board of Managers at its Feb. 12 meeting to approve an assessment on members to collect the defaults. The allocations will show up in March bills.

Exempt are associate members, municipal members that have received waivers, Emergency and Economy Load Response and ex-officio members, such as state consumer advocates.

The assessment formula, detailed in section 15.2.2 of the Operating Agreement, prorates 10% of the default over all non-exempt members — about $250 to $350 per member. The remainder will be assessed based on total gross activity for the month of the default and the two previous months.

One company, later identified as Peoples, told PJM that an employee had incorrectly entered a day-ahead transaction. It unsuccessfully attempted to raise the collateral within PJM’s grace period, two business days.

The other, Clean Currents, told PJM that it was hopelessly “cash-illiquid.”

“I haven’t seen anything remotely like this, not even in the summer,” Clean Currents Chief Executive Gary Skulnik told The Philadelphia Inquirer. “We were not sufficiently hedged. When the wholesale market started going through the roof, we weren’t able to cover it.”

“There were more members who went into collateral payment default in January but they cured them” Daugherty said. “On any given day there are outstanding collateral calls.”

While PJM isn’t aware of any of other companies in financial distress, Daugherty said that she couldn’t promise “there’s no one else.”

February 4, 2014

Members OK Review of Qualifying Transmission Upgrades Credit Rules

Stakeholders agreed Thursday to consider lowering credit requirements for Qualifying Transmission Upgrades (QTUs).

The Markets and Reliability Committee gave near unanimous approval to a problem statement and issue charge proposed by Janine Durand, attorney for developer H-P Energy Resources LLC.

Durand said current rules require credit postings that can be multiples of the construction cost of QTUs, small transmission projects that can be offered into the capacity market to relieve transmission constraints in Locational Deliverability Areas (LDAs).

A $7 million reconductoring, for example, would require posting of about $32.5 million, she said. She said the majority of QTUs “move ahead quickly” and are relatively low risk compared with generation projects that offer into capacity auctions.

The issue will be considered by the Market Implementation Committee.

February 4, 2014

State Briefs

ICC Demands ComEd Cut Consumption More

Commonwealth Edison must do more for energy efficiency than it has proposed, the Illinois Commerce Commission ruled, requiring the utility to save 25,000 MWh a year more than it currently plans. Even so, ComEd would not come close to the 2% consumption cut that Illinois requires by mid-2015.

The ICC agreed with environmentalists and consumer advocates that the utility was proposing too much spending on consumer education and not enough on efficiency programs. The commission also ordered ComEd to start getting results from its $2.6 billion smart-meter project by planning with smart-device companies to get appliances that interact with the meters.

More: Crain’s Chicago Business

KENTUCKY

Big Rivers Delays Wilson Closure

Big Rivers Electric Corp. found a buyer for half the output of its 417 MW D.B. Wilson plant for two months, and so did not shut it down Feb. 1 as planned. The cooperative hopes it will make another power purchase deal to keep the plant running beyond March. It had said earlier that it was shutting Wilson and would close the 443 MW Coleman plant in June because it had lost its two biggest customers, Century Aluminum smelters.

More: Lexington Herald-Leader

MARYLAND

NRC Inspecting Calvert Cliffs After Recent Shutdown

Calvert Cliffs Nuclear Plant (Source: Constellation Energy Nuclear Group)

The Nuclear Regulatory Commission is doing a special inspection of Constellation’s Calvert Cliffs nuclear plant after an electrical malfunction caused both units at the facility to shut down. The event appeared to be caused by snow and cold that affected a ventilation louver filter. The plant restarted after several days. The company said such NRC special inspections are common, but an NRC spokesman said they were not, explaining that complications in the shutdown prompted the inspection.

More: The Baltimore Sun

NEW JERSEY

Cut JCP&L Rates: BPU Staff

Jersey Central Power & Light not get the $31 million rate increase it wants, but instead should have its rates cut $207.4 million, the Board of Public Utilities staff says. The staff filed a brief that essentially agreed with the Division of Rate Counsel, which started the rate case after accusing JCP&L of overearning.

The company is studying the matter and will file its own brief. This rate case is separate from the one in which JCP&L seeks $580 million for storm-related costs.

More: The Star-Ledger

Wind Developers Seek Offshore Lease Sale Delay

Wind power developers want the U.S. Interior Department to delay sales of offshore leases, but a frustrated state legislator and environmentalists want no delay.

In a letter to Gov. Chris Christie and legislative leaders, the developers asked them to lobby Interior for postponement of a sale, which is expected sometime this year, because Board of Public Utilities regulations have not been written yet to award offshore renewable energy credits to developers. The letter also urged officials to force BPU action.

Environmentalists also have been frustrated by BPU inaction, but they said the federal lease sale should go ahead.

More: NJSpotlight

NORTH CAROLINA

Wind Farm Plan Abandoned

Torch Renewable Energy said it would no longer pursue development of the Mill Pond Wind Project in Carteret County, where its plans had called for about 40 turbines. There were concerns about the project’s impact on nearby Cherry Point military base activities as well as health and safety issues, and the county had placed a moratorium on permits while it reviews its wind turbine regulations.

More: The Daily News

OHIO

NTE Plans 500-MW Plant in Ohio

Florida-based NTE Energy plans a 500 MW natural gas combined cycle plant in Middletown, Ohio, between Dayton and Cincinnati. The company, which said it has entered the project into PJM’s interconnection queue, plans to start construction in 2015, with operations beginning in 2018.

More: Dayton Daily News

Four Finalists for PUC Seat

Gov. John Kasich has four Republicans to choose from to fill the Public Utilities Commission seat being vacated in April by Todd Snitchler. Finalists for nomination to the five-year term are: Tom Johnson, a former state representative; Patrick Donlon of the PUC staff; Stacey Polk, a sustainability attorney; and Tom Waniewski, a Toledo city councilman.

More: Columbus Business First

FE Auction Results Approved

Five competitive suppliers submitted winning bids for the one-year product and four submitted winners for the two-year product in FirstEnergy’s eighth auction to determine its retail generation service rates through May 2016. The one-year average clearing price was $55.83/MWh for June 2014 through May 2015. The two-year average price was $68.31/MW, through May 2016. The results will be blended with previous auctions and two upcoming auctions to establish the retail generation rates.

More: PUCO

Bird Group Opposition Makes Military Cancel Wind Turbine

Opposition by bird-conservation groups has led to cancellation of a wind turbine installation at Camp Perry on Lake Erie. The groups had threated to sue the Air National Guard and had 5,000 signatures on a petition opposing the turbine, which was slated to go up in a few months. The Black Swamp Bird Observatory’s executive director said the groups would use legal research from this case to challenge other projects that endanger birds and would lobby for state laws to better regulate turbine site selection.

More: Toledo Blade

PENNSYLVANIA

Coal Group Wants Hearings

The state’s coal industry called for legislative hearings on the effect of coal plant closures on power supplies, noting PJM’s emergency actions during the January cold snaps. The Pennsylvania Coal Alliance’s statement followed similar calls from two state lawmakers, Sen. Tim Solobay and Rep. Pam Snyder.

More: Pa. Coal Alliance

State Funds CHP, CNG Projects

The Commonwealth Financing Authority approved $4.5 million for seven projects that Gov. Tom Corbett touted as more evidence of the state’s commitment to expanding diverse energy industries. Six of the seven involve compressed natural gas installations. One grant, for $500,000, is for a $3.2 million, 265 kW combined heat and power installation at Cathedral Village retirement community in Philadelphia.

More: Office of the Governor

VIRGINIA

Dominion Rate Hike Bills Pass Committee

The Senate Committee on Commerce and Labor approved two bills backed by Dominion Virginia Power that could increase customer rates. One measure would let the company write off $420 million of the $600 million it has spent on nuclear and wind power development costs over the past six years, much of it development work toward a possible third unit at the North Anna plant. The write-off would reduce Dominion’s profits and allow it to avoid possible State Corporation Commission-ordered refunds in the next couple of years.

Another bill would let Dominion ask the SCC for a rate rider to pay for burying power lines. The utility said power restoration times could be cut in half if only 20% of its lines were buried. It would bury about 350 miles a year, at about $175 million, until 4,000 miles are underground. The state House has already approved the bill.

More: Daily Press

February 4, 2014

Pipelines, PJM to Align Daily Schedules

Natural gas pipelines will move their nominating schedules to later in the day, and PJM will move its day-ahead schedule forward, under plans revealed last week to increase the coordination between the gas and electric industries.

PJM’s Frank Koza told the Markets & Reliability Committee Thursday that gas industry officials offered an early nominating schedule and a third intraday nomination at a meeting with the ISO/RTO Council last month.

Comparison of Gas Day and Electric Day Schedules (Source: NERC)

Rae McQuade, president of the North American Energy Standards Board, confirmed yesterday that the gas industry is developing proposals that will help coordination between the two industries. “I think that everyone is really committed to looking at the market issues and determining what solutions are out there for continued dependence for natural gas generation,” she said.

Natural gas industry officials developed a “straw man” proposal that would move the timely gas nominating schedule from its current 11:30 a.m. Central Time spot to one later in the day. The straw man also proposes a new intraday 3 cycle and modifies the two other intraday cycles to allow nominations during regular business hours.

The proposal was developed by the Natural Gas Council, a group comprised of the American Gas Association, America’s Natural Gas Alliance, the Independent Petroleum Association of America, the Interstate Natural Gas Association of America, the Natural Gas Supply Association and the American Public Gas Association.

“We believe that the NGC straw man addresses in large part the electric industry’s concerns about the mismatch in the gas and electric schedules,” the group said in a statement released yesterday by INGAA communications director Cathy Landry. It said further discussion and approvals on both sides will be necessary for permanent changes.

Fantastic News

Andy Ott, PJM executive vice president for markets, called the proposal “fantastic” news that will help PJM with its daily scheduling of generators. Ott said PJM will also have to move its day ahead scheduling earlier in the day. He said PJM will seek to make a FERC filing by the end of the summer to enact changes in time for next winter.

Ott said the gas industry also needs to provide more scheduling staffing on weekends.

The disparity between the gas and electric schedules has been identified as an obstacle to increasing coordination of the two industries as the growth in power demand has strained pipeline capacities.

A report issued last May by the North American Electric Reliability Corp. highlighted what it called the “planning gap” between the gas and electric days: “…The electric day, in essence, completes its planning for the next day by 6:00 p.m. of the current day. While the completed electric utility plan identifies which electric units will run the next day (which in turn provides the basic information to project the next day’s fuel consumption), the pipeline deadlines for nominations historically have been at 10:00 a.m. of the current day. Thus, there is a six‐or‐more‐hour gap of incompatibility between the two traditional approaches to planning and scheduling.”

“The net result of this scheduling gap is that electric generator nominations, with their relatively large gas loads, are based upon estimates by the individual fuel planners of each Generator Owner (GO) between 24 and 36 hours in advance. The issue could be magnified when scheduling on a Friday, since gas markets are closed for the weekend.”

Other Challenges

The Gas Council said it agreed to make changes although it “would result in material changes and costs” to the industry.

“It is important to recognize that while scheduling enhancements will facilitate greater coordination, this straw man does not address the fundamental issue of how to finance infrastructure additions where capacity is tight and where competitive wholesale market rules do not provide incentives for generators to hold pipeline capacity,” it added.

FERC Action

A November order by the Federal Energy Regulatory Commission allows gas pipeline operators to exchange non-public operational information with PJM and other RTOs to better coordinate operations. (See FERC OKs Gas-Electric Talk.)

Because PJM has not yet amended its rules to accommodate the order, it received a temporary waiver from FERC to allow it to communicate with pipelines during last month’s cold snap. PJM held conference calls with pipelines and individually validated nominations for the RTO’s gas generators.

February 4, 2014

Company Briefs

Dominion is selling the electricity side of its competitive retail energy business and hopes to have a transaction closed in the next several months. “It just doesn’t fit our business model,” CEO Tom Farrell told analysts, according to an earnings call transcript from Seeking Alpha.

Shrinking margins and higher volatility have struck other retailers, too, Farrell observed. “It’s a volatile market out there. We are not going to quantify it for you, but it’s extraordinary to watch.”

At the same time, the company said it would expand its portfolio of contracted utility-scale solar projects by nearly 250 MW, with projects coming online in 2014 and 2015.

More: Dominion

Court OKs Incentives for Dominion Tx Projects

The Fourth Circuit ruled that the Federal Energy Regulatory Commission properly granted incentives to a Dominion unit for five transmission projects, rejecting the claims of North Carolina utility regulators that the commission abused its discretion (case #12-1881).

The North Carolina Utilities Commission had challenged the incentives FERC granted in 2008 to five Virginia Electric & Power Co. transmission projects under FERC order 679. The North Carolina commission contended that four of the five projects didn’t satisfy a three-prong test to determine eligibility for incentives.

More: Law360

Former Duke Chief Rogers Would Be Utility ‘Attacker’

If he were starting in the business today, former Duke Energy chief Jim Rogers would go all out for solar roofs and would be an “attacker, not a defender” of the traditional utility model. In an interview with EnergyBiz magazine, Rogers spoke of “a continuing battle between central and distributed generation.”

The Alliance for Solar Choice welcomed Rogers’ remarks and urged him to persuade Duke and the utility industry to “see a better way forward” instead of defending their central-station model.

More: EnergyBiz; Alliance for Solar Choice

FERC to Audit Duke Merger

The Federal Energy Regulatory Commission told Duke Energy it would audit the utility’s compliance with conditions FERC put on its 2012 merger with Progress Energy. The conditions included making power sales to third parties while North Carolina transmission upgrades that would ease competition concerns were completed. A Duke spokesman said the upgrades were ahead of schedule, and Duke was complying with other conditions.

More: Charlotte Observer

Eyes on Exelon IRS Dispute

Tax experts are closely watching Exelon’s challenge of a $517 million tax bill stemming from transactions in 1999, when the company sold some power plants and acquired others in what it characterized as a tax-free exchange. The Internal Revenue Service says the transactions were taxable and the matter awaits Tax Court resolution. If Exelon loses, such transactions risk being viewed by the IRS as “abusive tax shelters,” tax lawyers said. No trial date been set.

More: Reuters

Exelon Sets Nuclear Record

Exelon Generation’s 10 nuclear plants in Illinois, Pennsylvania and New Jersey produced 134 million net MWh in 2013, their highest output ever, exceeding the previous record set in 2007. The plants operated at a 94.1% capacity factor.

More: MarketWatch

AEP Launches Liquid Cargo Business

AEP River Operations, a subsidiary of American Electric Power, received the first of 20 tank barges that will constitute its new Liquids Division. Starting Feb. 20, the unit’s barges will carry liquid cargoes, including petrochemicals and agricultural chemicals. “Entering the liquid cargo market means we can offer our customers a more complete range of services,” company President Keith Darling said.

More: AEP

February 4, 2014

Price Cap Ruling Could Reverberate for Years

January’s arctic cold lasted only a few days, but its impact could be felt for years depending on how the Federal Energy Regulatory Commission rules on the RTO’s request to waive its $1,000 price cap.

The commission agreed Jan. 24 that PJM could make whole natural gas generators that can prove that the spike in natural gas last month pushed their operating costs above the $1,000/MWh offer limit. (See FERC Lifts Price Cap as Cold Grips PJM.)

Still pending before the commission is PJM’s request to lift the price cap altogether for the remainder of the winter so that generators with costs over $1,000 set the PJM clearing price (ER14-1145). Among the factors the commission will consider in weighing the request to waive the PJM Tariff is whether the request is of “limited scope” and that it not harm third parties.

Windfall

Opponents told FERC in filings last week that PJM’s proposal would provide a windfall to generators at ratepayers’ expense.

“Tens of billions of dollars of obligations among sellers and buyers are committed every year on the basis of market rules, including the $1,000/MWh offer price cap,” NextEra wrote in opposition. “…This is precisely the circumstance in which market participants should be able to rely on a market rule that protects against unlimited price exposure. Indeed, the only time such a rule actually matters is when prices are extremely high.”

Opponents said the price cap was a trade-off consumers won in return for making capacity payments.

“The regulatory and pricing risk associated with exceptions to the offer-price cap rule will increase the cost of hedging instruments long after March 31, 2014,” wrote the PJM Industrial Customer Coalition and consumer advocates for seven states and the District of Columbia.

The consumers group said the waiver would gouge ratepayers as a result of bad business decisions by generators that failed to hedge gas prices or install dual fuel capability.

At the same time that operating costs for simple-cycle combustion turbines hit $1,200/MWh, generators with similar heat rates were producing power at about $310/MWh by burning oil.

The consumers said allowing “the least efficient generators that chose not to hedge” to set the market-clearing price will create undesirable incentives.

A company that owns four generation units — one fueled by natural gas purchased on the spot market and three that are not fueled by natural gas — could have an incentive to pay higher natural gas prices because of the potential gain to its other plants, they said.

Supporters

Among those who filed in support of the waiver were PJM generation owners and the Market Monitor.

“In a time of extreme cold weather events, it’s more important than ever that the market clearing prices reflect the value of resources that are needed to support reliable operations,” wrote Exelon. It said the commission should approve the waiver “to support accurate price formation and reliable operations going forward.”

The PJM Power Providers said the use of a single market-clearing price is a “fundamental tenet” of the PJM market. “Reflecting the marginal cost of fuel in uplift payments is a fundamentally flawed market design that must be stopped as soon as possible.”

It added: “the growth in demand response in PJM since 2002 suggests that there may be good cause to address whether an offer cap is even necessary in today’s market.”

February 4, 2014

Monitor Asks FERC for Must-Offer on Demand Response

PJM’s Market Monitor told the Federal Energy Regulatory Commission last week that rule changes approved by PJM stakeholders to increase the flexibility of demand response are insufficient and that the commission should impose a must-offer requirement similar to that for generation resources.

Monitoring Analytics asked that its complaint (EL14-20) be merged into docket ER14-822, in which FERC is considering the proposed changes.

Current rules require PJM operators to provide two hours’ notice before dispatching DR. Under the proposal approved by PJM stakeholders in December, resources will be dispatchable in 30 minutes.

The new rules also limit the “Emergency DR” designation to resources using back-up generators that are subject to environmental permits. Other resources will be known as “Capacity DR.” In addition, the minimum event duration will be reduced from two hours to one hour and the strike price will be reduced. (See Members OK DR Dispatch Rules after Late Amendments.)

The Monitor said the proposed changes fail to address all of the disparities in PJM’s treatment of DR and other capacity resources. It said FERC should limit DR’s offer cap — now effectively $1,800/MWh — to the $1,000 allowed generators.

“The current rules allowing non comparable demand resources are unjust, unreasonable and unduly discriminatory, and PJM should be directed to take immediate action to correct this design flaw,” the Monitor wrote.

In a filing in December (ER13-2108), four Ohio utilities, FirstEnergy, AEP, Dayton Power & Light and Duke-Ohio, also called on FERC to impose a must-offer requirement on DR. The lack of such a requirement obscures the cost of energy in high demand periods, resulting in higher production costs and uneconomic dispatch of DR, the utilities said. A must-offer obligation would allow PJM operators to dispatch DR economically rather than as a block, they said. (See Generators: Ban Planned DR.)