By Suzanne Herel
Environmental groups and others have asked the D.C. Circuit Court of Appeals to review FERC’s approval of PJM’s Capacity Performance model, saying the rules unfairly limit participation by renewables and demand response.
The new rules, created in response to the high number of forced outages during 2014’s polar vortex, aim to improve reliability by increasing the rewards for capacity resources that provide power when called on during times of high demand and increasing the penalties on those that fail to do so.
One of the challenges was submitted by the Natural Resources Defense Council, the Sierra Club, Union of Concerned Scientists and Earthjustice. Another was filed by the Advanced Energy Management Alliance, a trade association representing DR providers and their customers. American Municipal Power, an organization of municipal utilities, filed a third challenge July 6. The court consolidated those petitions.
Then on July 8, another challenge was submitted by American Public Power Association, National Rural Electric Cooperative Association, New Jersey Board of Public Utilities and the Public Power Association of New Jersey.
Also on July 8, FERC suspended its 30-day deadline for acting on requests for rehearing of its May 2016 order rejecting challenges to the CP rules (ER15-623-010, EL15-41-002, EL15-29-006). (See FERC Rejects Challenges to PJM Capacity Performance.)
The environmentalists said that ruling, and FERC’s June 2015 order approving CP, conflict with the Federal Power Act (ER15-623, EL15-41, EL15-29).
“In addition, the new rules will funnel billions of dollars from electricity consumers to fossil and nuclear power plants while severely limiting clean energy participation in PJM’s capacity market,” said Jennifer Chen, an attorney for the Sustainable FERC Project, which is housed within the NRDC.
Competition from more and diverse resources reduces energy prices, Chen wrote in a blog post. The new model will limit the participation of clean energy sources such as wind, solar and DR, driving up costs, she said.
While the new rules allow summer and winter resources to aggregate a single capacity offer, no aggregate offers were submitted in the first Base Residual Auction with CP for delivery year 2018/19.
In the second auction under the new rules in May, only 6% of cleared DR resources qualified as CP, compared with 9% of wind and one-tenth of 1% of solar.
Base capacity resources, which are not held to CP standards, will be eliminated for the delivery year 2020/21.
In addition to increasing prices, the CP rules will “punish the same clean energy and demand response resources that helped keep the lights on during the extreme weather events of the last couple of years,” said Casey Roberts, staff attorney with the Sierra Club.
The impact of CP on capacity prices is not yet clear, however.
PJM’s first auction under CP last August saw prices rise 37% to $165/MW-day in most of the RTO, while the ComEd and Eastern MAAC regions cleared at more than $200.
But in the second auction, prices dropped to $100/MW-day in most of the RTO. Eastern MAAC fell to $120 while the ComEd zone cleared at $203. (See PJM Capacity Prices Fall Sharply.)
The subject of accommodating seasonal resources in the new model has been the subject of much debate.
At PJM’s annual meeting in May, state consumer advocates urged the Board of Managers to change the new rules to allow more participation by DR, energy efficiency and solar resources by procuring capacity seasonally. (See Consumer Advocates, Enviros Press PJM on Seasonal Capacity.)
Also in May, the Markets and Reliability Committee approved a charter for the new Seasonal Capacity Resource Senior Task Force. The motion passed with 68% of a sector-weighted vote, with some members voicing concern over its potential to undermine the CP product. (See MRC Approves Charter for Seasonal Capacity Effort.)
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