VALLEY FORGE, Pa. — PJM proposed modifying an initiative on spot-in transmission by expanding it to all borders.
The proposal came despite reservations from Vitol’s Joe Wadsworth, who had won approval for a problem statement and issue charge specific to transactions between NYISO and PJM. (See PJM, NYISO Still Seeking Spot-in Tx Solution.)
PJM held a special session of the Market Implementation Committee on Wednesday, where stakeholders also debated implementing unlimited service along the NYISO-PJM seam. The seam is unique among PJM’s physical interfaces because all transactions are economically evaluated via NYISO’s clearing engine. Imports over other seams are price-takers that are paid PJM’s real-time LMP.
John Dadourian of Monitoring Analytics, PJM’s Independent Market Monitor, reiterated the IMM’s previous criticism of the unlimited service proposal, saying any market changes should apply uniformly across all borders to avoid any unintended market consequences. The Monitor is “not interested in creating a different methodology for handling [such transactions] at different borders,” he said.
Unlimited service, however, is opposed by other grid operators worried that extensive cross-border transfers could create constraints on the transmission lines of uninvolved operators. They cite language from joint operating agreements and discussions before the North American Energy Standards Board that call for limiting such transfers.
The proposal also potentially introduces new costs (and perhaps revenue) that NYISO has insisted also be shared by PJM.
As an alternative, PJM and Wadsworth have considered moving PJM’s earliest request time for spot-in service to 10 a.m. from the current 9 a.m. The delay would allow potential market participants to know if their NYISO bid has been approved before requesting service into PJM.
While Wadsworth called the alternative proposal “not great,” PJM pointed out that such service has been available in excess of 959 MW every hour since July 2015.
The Monitor asked that this proposal also be expanded to apply across all borders, which Wadsworth eventually agreed to “in the spirit of considering different solutions.”
“I don’t want to end up in a situation where we were five years ago, where we’re precluded from implementing a good solution for one seam just because it doesn’t work for all seams,” he said.
The modified problem statement and issue charge will be presented for approval at the Jan. 11 MIC meeting.
FERC upheld its order approving funding for PJM’s state consumer advocates, rejecting contentions by Talen Energy and Essential Power that the commission exceeded its authority (ER16-561-001).
The commission in February approved PJM members’ vote granting the Consumer Advocates of the PJM States (CAPS) an initial annual budget of $450,000 to fund the advocates’ stakeholder activities through a charge to electric customers. Former Commissioner Tony Clark dissented from the vote, saying CAPS should be funded through the appropriations of state legislatures. (See FERC Approves PJM Funding of Consumer Advocates.)
Talen and Essential sought rehearing, saying the order exceeded the commission’s authority under Section 205 of the Federal Power Act because CAPS’s participation in the stakeholder process was not a jurisdictional service nor a practice that has a “direct effect” on jurisdictional rates.
In its Dec. 21 order, the commission said its authority came under Section 205’s direction to ensure just and reasonable rates. “The Supreme Court has held that this jurisdiction extends to rules and practices that directly affect wholesale rates. … The PJM stakeholder process is a practice that directly affects wholesale rates, and thus approval of a proposal that would enhance that process falls within the commission’s jurisdiction. … For example, stakeholder input is an essential element of a just and reasonable regional transmission planning process, a process that the courts have agreed is one that directly affects jurisdictional rates.”
The commission cited the Independent Market Monitor’s comment that “PJM consumers have been systematically underrepresented” in the stakeholder process, and that the funding was “a meaningful first step to obtain needed balance.”
In response to the complainants’ contention that the funding violated cost causation rules, the commission repeated its conclusion that funding CAPS benefits PJM’s ratepayers by increasing its responsiveness to customers and other stakeholders. “We disagree with Talen/Essential Power that making the stakeholder process more inclusive, transparent and robust through CAPS’s participation is not a legitimate reason to accept a tariff funding mechanism for CAPS,” FERC said.
FERC also rejected Talen and Essential’s complaint that the funding constituted “compelled speech” in violation of the First Amendment. “By contributing to funding CAPS’s participation in the stakeholder process, neither Talen/Essential Power nor any other stakeholder becomes identified with CAPS’s views in a way that causes them to become an instrument for fostering public adherence to them,” FERC said. “On the contrary, all stakeholders remain free to express their views within the stakeholder process and to support or oppose any position that CAPS advances.”
MISO has selected LS Power’s Republic Transmission to build the RTO’s first competitive transmission project.
St. Louis-based Republic and partner Big Rivers Electric, a generation and transmission cooperative in Henderson, Ky., beat out 10 other qualified developers for the Duff-Coleman 345-kV transmission project in Southern Indiana and Western Kentucky. Hoosier Energy will acquire a share of Republic in exchange for providing maintenance and operations for a segment of the project located in Indiana.
Priti Patel, regional executive for MISO North and executive director of MISO’s Competitive Transmission Administration, said Republic’s $49.8 million proposal was “the clear and decisive winner” among the 11 proposals, which ranged from $34 million to $55.7 million. MISO had estimated the project at $58.9 million. (See 11 Developers Vie for MISO Duff-Coleman Project.)
“Republic Transmission’s project proposal exhibited the best balance of high-quality design and competitive cost, best-in-class project implementation and top-tier plans for operations and maintenance,” Patel said. She said the proposal carried the highest sense of certainty, the most details, the lowest risk and a low cost. “It comes down to providing the greatest value,” Patel added. “That encompasses more than just cost.”
Republic will be required to deliver quarterly status reports to MISO. The company also must execute a binding developer agreement using commitments from its bid proposal and competitive requirements from the MISO Tariff.
“With the evaluation and selection phases of the competitive developer selection process now over, we look forward to working closely with Republic Transmission, stakeholders and the Organization of MISO States to ensure the success of this project,” said Patel.
The project, approved as part of the 2015 MISO Transmission Expansion Plan, is expected in service no later than Jan. 1, 2021. Construction includes a pair of substations and a 28.5-mile 345-kV connecting line in Southern Indiana and Western Kentucky.
‘Decisive’ Winner
MISO used four FERC-approved criteria to weigh the proposals: cost and design, project implementation, operations and maintenance and participation in the planning process.
Alongside Tuesday’s announcement, MISO published a 135-page selection report that said all competitive bidders “demonstrated the necessary breadth and scope of capabilities, and the financial wherewithal, to design, finance, construct, operate and maintain the project.” However, MISO said Republic’s proposal scored a 95 out of 100 possible points, while other proposals scored between 41 and 80 points.
Proposed route lengths varied from 28 to 36 miles. All proposals scored an ‘acceptable’ or better rating from MISO. Republic’s proposal scored a ‘best’ due to a “well-thought-out” route; “ample” right-of-way width; a specific operations-and-maintenance plan; and a “strong cost cap” with a 9.8% return on equity for the life of the project.
Brian Pederson, a senior manager in MISO’s competitive transmission unit, said the report seeks to explain the analysis behind the RTO’s selection, be transparent “within the bounds of the Tariff confidentiality provisions” and encourage future participation in the Order 1000 competitive process.
Review Begins
Pederson said MISO will convene a new Competitive Transmission Task Team reporting to the Planning Advisory Committee to suggest potential improvements and lessons learned from the first solicitation.
“In January, we want to focus on attaining stakeholder feedback,” Pederson said during MISO’s Dec. 14 Planning Advisory Committee. By mid-2017, he envisions stakeholders and MISO finalizing Tariff revisions to the competitive developer selection process.
MISO will also use 2017 to continue to refine the minimum design requirements required of competitive projects in Business Practices Manual 029. The RTO is expected to sunset its Minimum Design Requirements Task Team and funnel final design requirement changes through the Planning Subcommittee in January. Changes to BPM 029 should become effective in the spring. The new rules establish a more detailed set of ratings that projects must meet. (See “MISO Releases Minimum Requirements for Competitive Tx Projects,” MISO Planning Subcommittee Briefs.)
The RTO has also committed to reaching out to the bidders of the 10 rejected proposals to explain its decision in one-on-one meetings during January and February.
VALLEY FORGE, Pa. — PJM is expecting “typical” temperatures and almost 50,000 MW of capacity beyond its projected peak load for the first winter using Capacity Performance, PJM’s Chris Pilong told the Operating Committee last week.
While recent winters were impacted by anomalies such as El Nino, weather this season is likely to be about “average,” he said. PJM’s installed capacity for the winter is 183,665 MW, with 177,525 MW committed through the Reliability Pricing Model. The forecasted peak load is 135,548 MW.
“Average temperatures aren’t going to be what’s driving us as far as peak-load days,” he said. “It’s going to be the outliers.”
Natural gas-fired capacity has increased by 17,225 MW since the polar vortex nearly three years ago to 61,513 MW, he said, about 35% of committed capacity. Of that, about half — 31,946 MW — is committed through CP.
| PJM
An Operations Assessment Task Force assessment of pipeline-disruption sensitivity found no reliability issues for base and N-1 analyses, Pilong said. “The good news was even under the worst-case scenario, everything was solid,” he said.
By the end of the year, an additional 2,800 MW of generation will have been brought online since this summer, he said. The system also will have the benefit of transmission upgrades on the Baltimore Gas and Electric, Dominion, Commonwealth Edison and American Electric Power systems.
PJM Moves to Cut Operator-Training Grace Period in Half
The grace period for dispatchers at utilities’ market operations centers and small generation plants to complete initial training will be reduced from 12 months to six months in revisions PJM is proposing for Manual 40.
“Our long-range plan is to get that number [for the allowable grace period] to zero,” PJM’s Glenn Boyle said. “What we’re saying is that’s too much exposure risk.”
He said PJM is hoping to have the grace period removed entirely by next year.
Regulation Requirement Changing from ‘Peak’ to ‘Ramp’
PJM is proposing to change the way it sets regulation requirements, replacing the targets for on- and off-peak periods with those for on- and off-ramp intervals to better capture seasonal system conditions.
| PJM
The revisions, which will be incorporated in Manuals 11 and 12, were recommended by the Regulation Market Issues Senior Task Force.
The lower regulation requirement of 525 effective MW, which currently applies during off-peak hours of midnight to 04:59, would apply during off-ramp hours. The requirement for the on-peak hours of 05:00 to 23:59 would be applied to the on-ramp and increase from 700 to 800 effective MW.
On- and off-ramp periods will vary by season. From Sept. 1 through Nov. 30, for example, the on-ramp period will be hours ending 6:00 through 8:00 and 18:00 through 24:00. For the winter, the morning ramp starts one hour earlier and ends one hour later while the evening ramp begins an hour earlier.
The seasonal periods will be posted on the RTO’s website. PJM’s Eric Hsia said he plans to also announce them at the Operating Committee meetings starting two months prior to the beginning of the affected season.
PJM Won’t Pay for Frequency Response Under FERC NOPR
FERC’s Nov. 17 rulemaking that would require most new generators to have primary frequency response capability left it to individual RTOs to decide if compensation is warranted for the service, and PJM currently believes it’s not, Hsia said.
The rule would apply to both synchronous and nonsynchronous facilities as a condition of interconnection. Nuclear units are exempt.
Hsia said he didn’t agree with the argument that generators should be compensated for lost-opportunity costs, noting that the Notice of Proposed Rulemaking would not require them to preserve “headroom” for the frequency response when offering their output for sale (RM16-6). (See FERC: Renewables Must Provide Frequency Response.)
He acknowledged “ongoing conversation” on the topic, however. Comments on the NOPR are due to FERC on Jan. 24.
Members Question Redundancy of Pseudo-Tie Efforts
Members asked PJM staff why the RTO is seeking to create a pro forma pseudo-tie agreement when the issue of pseudo-ties is already being discussed by the Underperformance Risk Management Senior Task Force.
“The lack of this agreement has resulted in a lack of uniformity,” PJM’s Jacqui Hugee said.
Staff wanted to develop such a document for the task force but couldn’t complete it fast enough to avoid delaying the task force’s progress, she said. The effort to develop a pro forma document is being done in coordination with the task force, she said, and PJM doesn’t plan to make multiple filings on the topic with FERC. (See related story, MISO Stakeholders Narrowly Support New Pseudo-Tie Rules.)
FERC on Thursday ordered hearing and settlement procedures in a dispute between Entergy and its customers over the company’s accounting for income taxes and post-retirement benefits in its formula rates tariff (ER16-1528).
The commission said the dispute raised unresolved factual issues and that Entergy’s proposed formula rate changes may be unjust and unreasonable. It made the changes effective June 2015 and June 2016 but suspended them pending the settlement proceedings. The order consolidated two dockets, ER15-1436 and ER15-1453, with ER16-1528.
The multiple dockets stem from February 2013, when Entergy first filed proposed transmission formula rate templates to recover its transmission revenue requirements as a MISO member. The proposed rates were modeled on MISO’s Tariff but incorporated practices established under Entergy’s previous tariff for its operating companies.
In July 2015, Entergy reached a partial settlement on the formula rate templates with several customers, including the South Mississippi Electric Power Association and Arkansas Electric Cooperative Corp. By then, however, Entergy had already proposed two changes to the rate templates related to income taxes and retirement costs that were not reflected in the settlement.
The customers protested, contending that the changes did not reflect established practices under the Entergy tariff and were unsupported by its “grossly deficient” filing. They said Entergy’s claim for recovery of $612.7 million in prepaid pension costs was unjustified and could increase its transmission revenue requirement by $8 million annually.
Entergy said the pension costs would increase rates by only $1.3 million per year.
GridLiance moved one step closer to joining CAISO as a participating transmission owner after the ISO’s Board of Governors voted Dec. 15 to approve the company’s membership.
GridLiance says its purchase of Valley Electric’s 230-kV network represents a long-term commitment to the co-op and California’s energy development. | Valley Electric Association
Nevada-based Valley Electric is the ISO’s only transmission-owning member outside California. The cooperative provides power to about 45,000 customers in a 6,800-square-mile service territory along the California-Nevada border.
The transmission assets being transferred include 164 miles of 230-kV lines linking Valley Electric’s base in Pahrump, Nev., with both Las Vegas and the Mead substation — a major delivery point for power wheeled into California. Valley Electric completed the network in 2013 in order to improve reliability for its sprawling but sparsely populated service area.
As part of the deal, GridLiance has said it will reinforce the ISO’s interconnection with Nevada’s Eldorado substation, another major wheeling point into California.
Valley Electric saw the value of its network increase significantly after the co-op joined the ISO in 2013. It will recover about 2.4 times its investment.
Chicago-based GridLiance acknowledged that it is paying top dollar for the assets, saying they will provide the company with a foothold in an area that bridges the California market with the interior West.
“We did pay a premium to enter this relationship,” GridLiance CEO Ed Rahill told the CAISO board ahead of its vote. “And if you think about that, it’s only because our commitment is so many decades into the future that it becomes insignificant.”
Under the agreement, Valley Electric will still operate and maintain the system. The acquisition is not expected to affect the co-op’s distribution system.
“Our relationship with Valley is going to continue as a long-term partnership to help the region and the community through economic development and energy projects that benefit not just Valley but the California ISO and California,” Rahill said.
Valley Electric CEO Thomas Husted said the co-op joined the ISO because it is a “strong proponent” of regionalization.
“The sale of those assets does not change that position,” Husted said. “We will continue to be a load-serving entity and a [participating transmission owner] within the California ISO.”
Husted said the network was built to serve Valley Electric’s load, provide reliability and foster development of renewable assets that will continue to support regionalization.
“That [regionalization] now is growing beyond Valley Electric’s original mission and beyond our charter,” Husted said.
The board’s approval is conditioned on GridLiance executing a transmission control agreement with the ISO and FERC accepting the company’s transmission owner tariff and revenue requirement.
GridLiance would be the 17th transmission owner to join the ISO.
Launched in March 2015 with backing from the Blackstone Group, GridLiance bills itself as the nation’s first competitive transmission company focused on collaborating with public power entities. It made its first two acquisitions — 420 miles of 69-kV and 115-kV lines in Missouri and Oklahoma — a year ago. (See GridLiance Makes First Acquisitions.)
VALLEY FORGE, Pa. — PJM is preparing several proposed rule changes in response to FERC Order 825, which requires RTOs to align their settlement and dispatch intervals and implement shortage pricing.
PJM’s Ray Fernandez walked the Market Implementation Committee through planned Operating Agreement and Tariff revisions that would be part of a compliance filing planned for Jan. 11. The changes would calculate balancing operating reserve deviations in five-minute intervals but aggregate charges and credits daily for allocations. (See “More Adjustments for Five-Minute Settlement,” PJM Market Implementation Committee Briefs.)
Fernandez’s presentation included an example in which a unit with no net deviations during a day would have incurred balancing charges under the current process but wouldn’t under the proposed one.
“With the proposal that PJM has, we wouldn’t be breaking down [imbalances] to the bus level,” he said. “It minimizes the pot of dollars that we’re charging.”
Stakeholders, however, voiced skepticism on multiple points. Brock Ondayko of American Electric Power expressed concern that units might not be able to follow generation signals so precisely and risk incurring additional penalties.
Generators are “basically chemical factories whose byproduct is energy” and “don’t necessarily follow things perfectly,” he said. “We’re never right on. … I’m concerned that the quantity of operator imbalance could be increased significantly.”
Other members questioned who would lose out on the changes, noting that reduced charges for one unit implies reduced credits for someone else.
“Whether it’s a positive impact on balancing congestion or a negative one is unclear,” Direct Energy’s Jeff Whitehead concluded. “I’m trying to understand the tradeoffs.”
In a separate presentation, PJM’s Lisa Morelli unveiled proposed revisions to the operating reserve demand curve, which PJM believes are necessary to appropriately implement Order 825’s five-minute interval requirement. PJM hopes to submit the revisions as a Section 205 filing around March 1.
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The revisions would add an additional step in the curve at the $300 penalty factor that would allow the reserves to be “extended,” or increased. Currently, reserve requirements can only be extended in specific situations related to the issuance of hot or cold weather alerts.
PJM increased the day-ahead scheduling reserve requirement for 901 hours between January 2015 and September 2016, almost 6% of total hours. On average, PJM increased the requirement by 5,000 MW.
While Order 825 specified a May 11, 2017, implementation date, PJM plans to request implementation of its proposals on five-minute settlements and shortage pricing simultaneously on Feb. 1, 2018. It would seek a response by Feb. 15.
If FERC approves the delayed implementation date, PJM would relax its timeline for the 205 filing until April. Otherwise, it will keep its March 1 target for the 205 filing and request shortage pricing be implemented simultaneously with five-minute settlements.
Rules on Fuel-Cost Policy Revocations Continue to Hang Up Approval
Despite assurances from PJM that the revocations are very unlikely to be used and are meant as a last resort in the event of fraud or some other egregious problem, members were not satisfied.
“I think we’ve spent more time talking about this than we will ever spend using it,” PJM’s Steve Shparber said. “This is not expected to occur likely ever.”
“From a culture standpoint, it strikes me as something we should not be doing to write things up that we think will never occur,” countered American Municipal Power’s Ed Tatum. “I just think it’s inappropriate. It’s impossible. And if we’re going to do it, let’s do a good job of it. … What we’re talking about right now is some language that is unclear as to how it’s going to work.”
He and other stakeholders argued that PJM hadn’t clearly defined parameters for issuing a revocation. Bob O’Connell of PPGI Fund A/B Development expressed concern that PJM appeared to be implying it would be making judgments about whether operators were committing fraud.
Joe Bowring, PJM’s Independent Market Monitor, questioned the RTO’s insistence on getting the fuel-cost policy revisions approved prior to any requirement from FERC.
“Why wordsmith it now when there’s no order?” he asked.
Bowring also said his office is “remaining agnostic” on variable operations and maintenance costs and “not focusing on VOM primarily at the moment.” He later clarified that he was talking about whether it should be included in fuel-cost policies, not whether he planned to investigate them as part of validating cost-based offers.
“We haven’t done a lot of work on validating” offers, PJM’s Adam Keech said. A multi-phased approach may be adopted, depending on the result of the fuel-cost policy proposal, he said.
The rule’s effective date is Feb. 21, but PJM’s compliance filing isn’t due until May 8, so the RTO intends to implement its final plan immediately following the compliance filing.
Bowring suggested asking FERC to clarify its wishes on the topic. The current plan “doesn’t seem like a great process,” he said.
Exelon’s Sharon Midgley spoke passionately in opposition to PJM’s proposed alternative to the current credit requirements for participation in financial transmissions rights auctions, but she found no other vocal support.
Under current rules, FTR credit requirements are calculated in two parts: one based on price and the adjusted historical values of individual FTRs, and the second a portfolio-based “undiversified credit adder” applied to net counterflow portfolios.
Some FTR holders sought an alternative, saying the undiversified adder caused clearing delays and credit uncertainty.
The alternative, previously approved by the Credit Subcommittee, eliminates the portfolio adder in exchange for increasing the historical adjustment factor in underlying credit calculations for historically counterflow paths from 10% to 25%.
“We do think they increase our credit requirements,” Midgley said. No one shared her concern, however, and the proposal was endorsed 88-34 with 15 abstentions.
PJM, IMM Partner on Capacity-Replacement Revision
In a swift response to rule changes they felt weakened market safeguards, PJM and the Monitor presented a jointly developed proposal to again revise Manual 18.
At November’s Markets and Reliability Committee meeting, members ignored objections from both PJM and the Monitor and approved Manual 18 revisions that allowed for immediate replacement of capacity obligations. PJM had offered an amendment to the proposal that would have addressed its concerns, but it never came to a vote, as the original proposal was endorsed. (See “Citigroup Wins Change on Capacity Resales,” PJM Markets and Reliability and Members Committees Briefs.)
The Monitor filed a complaint with FERC in response and joined PJM in proposing the newest revision, which is similar to their original amendment. At least some stakeholders were receptive.
“The IMM has convinced Calpine that we do need to put something in place,” said David “Scarp” Scarpignato in noting his company’s support of the new proposal.
Bowring said it was “not as strong as the optimal rules” and suggested returning to the previous protocols if the current proposal wasn’t satisfactory, but stakeholders said the proposal broached issues that needed to be addressed.
Operating Parameters, ARR Enhancements Endorsed
Members endorsed by acclamation and with little discussion new definitions for operating parameters and rule changes regarding residual auction revenue rights.
The updated definitions for “soak time” and “minimum run time” affect several manuals and governing documents. (See “Monitor Concerns Delay Operating Parameter Revisions,” PJM Market Implementation Committee Briefs.)
The changes on residual ARRs, proposed by Exelon and Direct Energy, will require PJM to run another simultaneous feasibility test proration with all negatively valued bids removed. (See “Stakeholders Debate ARR Changes,” PJM Market Implementation Committee Briefs.)
Below is a summary of the issues scheduled to be brought to a vote at the Markets and Reliability Committee on Thursday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.
RTO Insider will be in Wilmington, Del., covering the discussions and votes. See next Tuesday’s newsletter for a full report.
NOTE: There is no Members Committee meeting this month.
PJM Manuals (9:40-10:10)
Members will be asked to endorse the following proposed manual changes:
Manual 10: Pre-Scheduling Operations. Revisions reflect periodic review and clarify rules around maintenance outage recalls.
Members will be asked to endorse revisions to Manual 18: Capacity Market regarding the immediate replacement of capacity obligations. (See “Citigroup Wins Change on Capacity Resales,” PJM Markets and Reliability and Members Committees Briefs and “PJM, IMM Partner on Capacity-Replacement Revision” in this edition’s PJM Market Implementation Committee Briefs.)
Residual ARR Enhancements (10:40-10:55)
Members will be asked to endorse a rule change concerning residual auction revenue rights that was approved last week by the Market Implementation Committee. The changes, proposed by Exelon and Direct Energy, will require PJM to run another simultaneous feasibility test and pro rata distribution with all negatively valued bids removed. (See “Stakeholders Debate ARR Changes,” PJM Market Implementation Committee Briefs.)
FTR Undiversified Credit Adder (10:55-11:15)
Members will be asked to approve proposed revisions to the undiversified credit requirements for participation in financial transmissions rights auctions that were approved last week by the Market Implementation Committee. Under current rules, FTR credit requirements are calculated in two parts, one based on price and the adjusted historical values of individual FTRs, the second a portfolio-based “undiversified credit adder” applied to net counterflow portfolios — a process that some said caused clearing delays and credit uncertainty. The new rules eliminate the undiversified portfolio adder in exchange for increasing the adjustment factor in underlying credit calculations for historically counterflow paths from 10% to 25%.
Market Implementation Committee Charter (10:25-10:30)
Members will be asked to approve the updated MIC Charter, which eliminates references to “working groups.” (See “‘Working Groups’ Removed from MIC Charter,” PJM Market Implementation Committee Briefs.)
Summer resources in PJM’s market are approaching a tipping point. After April 2017, resources such as demand response and solar generation will effectively no longer be able to participate in PJM’s capacity market. As a result, they will no longer be able to earn the revenues that many rely on to stay in operation and to remain available during periods of peak customer demand.
This outcome is precipitated by PJM’s requirements that all resources meet strict winter performance requirements, or otherwise partner with winter-performing resources like wind generation, in order to bid into its next three-year forward capacity auction.
PJM has recognized this problem regarding retention of seasonal resources, and they have made moves to prevent the undesirable outcome. (See PJM to Seek FERC OK for Seasonal Capacity Proposal.) Under a recent proposal pending before FERC, PJM would make certain modifications to its summer-winter resource aggregation approach (ER17-367). However, past auctions have not yielded any viable participants in its resource aggregation program.
Musical Chairs
Even if all seasonal resources participated, aggregation can never fully solve the problem: Nearly 10,000 MW of summer-only DR and approximately 300 MW solar generation currently participate, in contrast to the 2,300 MW of available wind generation.[1] In the best-case scenario, with perfect aggregation, up to 8,000 MW of summer-performing resources are left with no winter aggregation partner. Like a game of musical chairs, when the music stops, some participants have no place to land. A mismatch exists, and the issue cannot be fully solved by aggregation.
The loss of summer resources will likely result in a significant cost impact to customers. PJM’s Independent Market Monitor estimated that without seasonal resources, costs could increase between $1 billion to $5 billion across PJM. Besides the customer impacts, the market will also lose some of its cleanest sources of generation. Unlike year-round DR resources that typically have backup generators, summer-only DR often relies on reductions in onsite consumption, such as by lowering air conditioning. Solar generators previously allowed to participate based on their higher summer output also will be excluded, absent pairing with scarce winter resources.
These cross-cutting issues motivated Rockland Electric to join environmental groups, including the Natural Resources Defense Council and the DR industry group Advanced Energy Management Alliance, in a joint protest at FERC. In separate responses, state agencies and other energy companies also expressed displeasure with PJM’s proposal and the loss of summer resources.
FERC Support Should not Waver
FERC has historically supported demand-side resource and renewable generation participation in wholesale markets. FERC proposed a rule in November that would open up access for smaller resources like batteries, which often have limited runtimes, to wholesale market revenues. In Orders 719 (2008) and 745 (2011), FERC enabled market participation by DR, while recognizing its benefits for creating just and reasonable rates. Through Order 764, FERC encouraged promulgation of market rules to better include variable energy resources. Allowing PJM to block access to these summer-only resources would undermine past efforts and effectively dismantle one of the country’s largest DR markets. Instead of allowing PJM’s untested approach, FERC should direct PJM to return to their summer, winter and annual resource comparability standards.
Shelly Lyser and Joel Yu are senior energy policy advisors for Rockland Electric. Rockland Electric, a wholly owned subsidiary of Orange and Rockland Utilities, which in turn is owned by Consolidated Edison Inc., is a transmission owner within PJM.
In a MISO first, the RTO has integrated a solar farm into its day-ahead and real-time markets.
North Star, a $180 million, 100-MW solar farm outside of Minneapolis, joined MISO’s wholesale markets on Dec. 16. Xcel Energy will purchase power generated by the facility in a 25-year deal that helps the utility meet its 1.5% solar energy requirement in Minnesota.
North Star Solar Farm | D.E. Shaw Renewable Investments
The RTO said months of planning and testing went into the project to ensure a “smooth integration of solar power into MISO’s day-ahead and real-time markets.” MISO tapped forecasting firm Energy and Meteo Systems — the same firm already handling the RTO’s wind forecasting — to forecast day-ahead solar.
“This project furthers the integration of renewable resources into our markets,” said Todd Ramey, MISO vice president of system operations.
MISO said that while several large-scale solar farms have been built in the footprint in the past few years, North Star is the largest in the Midwest, with more than 440,000 solar panels on 1,000 acres of former corn and soybean fields.
“Solar power from North Star is a key element in Xcel Energy’s plan to deliver more than 60% carbon-free energy for our customers by 2030,” said Chris Clark, president of Xcel Energy-Minnesota, North Dakota and South Dakota.
MISO filed the generator interconnection agreement between North Star and Xcel on Nov. 9 (ER17-329).
The solar facility is not allowed to exceed 100 MW. The project entered MISO’s interconnection queue as a variable energy resource last September. MISO mandated about $2.2 million in network upgrades, including grading, two new 115-kV breakers and four 115-kV switches as a condition of the agreement. Xcel spent about $260,000 for interconnection facilities.
Xcel and project partners D.E. Shaw Renewable Investments and Community Energy Solar reported completing the project in mid-October after six months of construction.
MISO said this year that it has about 1,700 MW of solar generation at various stages of its interconnection queue.
St. Louis-based Republic and partner Big Rivers Electric, a generation and transmission cooperative in Henderson, Ky., beat out 10 other qualified developers for the Duff-Coleman 345-kV transmission project in Southern Indiana and Western Kentucky. Hoosier Energy will acquire a share of Republic in exchange for providing maintenance and operations for a segment of the project located in Indiana.
