Faster Path to Market for Distributed Resources to be Studied
WILMINGTON, Del. — A problem statement and issue charge that initially focused on the path for distributed battery storage systems to enter PJM markets failed to gain support at the Markets and Reliability Committee on Thursday until presenter Drew Adams rewrote the documents to address all distributed resources.
Adams, of battery developer A.F. Mensah, also limited the review to behind-the-meter generation of 20 MW or less. Members approved the revised proposal with one no vote and one abstention.
Currently, distributed resources have two options to join the markets: interconnect as a generation resource through the queue process or register as demand response. Going through the queue is cost-prohibitive and time-consuming for distributed resources, while entering the markets as a demand resource limits the value they can provide, Adams said.
PJM Vice President of Planning Steve Herling said a discussion will be useful. “More recently, we’ve had a number of these very, very small projects, but they can get into service much faster than the queue process. We have been trying to work within the bounds of the Tariff. We’re probably at the limit of what the words in the Tariff can accommodate,” he said. “We’re certainly in favor of looking at it in light of the number of requests we’ve had.”
John Horstmann of Dayton Power & Light suggested in the initial discussions that the problem statement be broadened to include other types of generation, including distributed generation. The generation interconnection queue, he said, “was set up to accommodate units that cleared in [capacity auctions] and then had three years to build for the commercial delivery year. There is now generation that can get connected to the grid much faster than three years.”
Tom Rutigliano of Achieving Equilibrium offered a friendly amendment to include similar resources that face the same types of obstacles.
John Farber of the Delaware Public Service Commission asked if there would be any state jurisdictional issues involved in making changes to the current process.
“Yes,” Adams said. “That is one of the challenges, to identify them and properly address the state versus federal jurisdictional issues.”
Because the issue spans several PJM committees and there is no stakeholder forum to study the issue, it will be discussed at a series of special MRC sessions. Once education and background have been completed, action items will be assigned to a new MRC subgroup or other PJM committees.
Members Unanimously Reject Changing RPM Cost Allocation Method
A problem statement and issue charge proposed by PJM to review whether the cost allocation method for capacity charges should be revised did not garner a single yes vote from the MRC, leading CEO Andy Ott to declare the matter closed.
“At this point, we don’t see a need to take further action,” he said.
PJM allocates the cost of procured capacity based on each transmission zone’s peak load forecast. It also posts the five hours with the highest coincident peak load for the entire RTO.
In its Capacity Performance filing, PJM proposed changing that method and using the coincident peak loads from the most recent calendar year. Given the protests and comments received, however, it asked FERC to postpone ruling on that component until the matter could be addressed through the stakeholder process.
“We continue to believe that the current cost allocation approach is appropriate,” said Susan Bruce, of the PJM Industrial Customer Coalition, in comments that appeared to capture the consensus. “Relying on peak load is consistent with cost causation principles. Therefore, no problem exists.”
Seasonal Resources in the Capacity Market to be Studied
Katie Guerry of EnerNOC received a lot of pushback for a problem statement and issue charge regarding incorporating seasonal resources into the Capacity Performance construct. But in the end, the item, which Guerry presented on behalf of the Advanced Energy Management Alliance’s PJM members, passed on a sector vote with 68% support.
Capacity Performance rules allow aggregation of seasonal resources to convert them into “synthetic” annual resources, but none was submitted in the first Base Residual Auction involving CP. Stakeholders will be asked to consider rule changes to encourage seasonal resources to participate.
It’s unclear, Guerry said, whether the lack of participation was due to the rules themselves or the timing of their release before the auction.
What is clear, she said, is that it will be very expensive to make up for the loss of this base capacity in delivery year 2020/21, when the market goes to full Capacity Performance resources.
Bruce said the ICC supported looking at the issue. “What we’re seeing, between Clean Power Plan initiatives as well as many state initiatives, is more and more resources that may have varying [output]. That might come to a head at the time we see base capacity go away. We need to figure out ways to reflect those resources — from an efficiency perspective as well as from a public policy perspective.”
Marji Philips of Direct Energy requested that PJM and stakeholders devise a comprehensive approach to look at all of the issues arising from the implementation of CP, “so we’re not piecemealing it with problem statements.”
Jason Barker of Exelon, among others, noted that at the time Capacity Performance was approved, FERC rejected seasonal products. Because the reason for the lack of aggregation participation is unknown, he said, the “data point” of the 2018/19 BRA results does not show whether there is a market rule problem.
Guerry was undeterred. “The self-limiting reality of any kind of aggregation model exists no matter what,” she said. “Now we have time to use this process to our best ability to devise appropriate and thoughtful solutions to the auction for the 20/21 delivery year.”
Rejection of Tariff Revision Brings Sharp Words from PJM Counsel
The MRC approved most recommendations from the Governing Documents Enhancement and Clarification Subcommittee, tasked with cleaning up inconsistencies and clarifying definitions in PJM’s governing documents.
But members rejected a revision to the term “alternative dispute resolution,” with only 53.4% endorsing it, shy of the 66.8% threshold.
The revision sought to clarify that legal interpretations of the Tariff can’t be mediated by ADR because FERC has jurisdiction over such matters.
PJM General Counsel Vince Duane expressed his disappointment at the following Members Committee meeting.
“The vote to me was perplexing. Nothing that took place in that task force was an indication that we wouldn’t get that approved,” he said. “That was a wrong decision.”
ADR is fine if the dispute is factual, he said. However, he said, ADR can’t be used for other disputes.
“Why? You guys spend a lot of time here coming up with rules that get filed at the commission,” he said. “I don’t think you intend those rules to get put in place and then when a dispute comes up,” it’s settled in private.
“And we settle it with your money,” Duane said. “If it’s a factual billing error, that’s fine. But it’s not our prerogative to have the right to deal with your financial interests behind closed doors.”
Task Force will Examine Role of Virtual Transactions
Over one objection, the committee approved a proposed problem statement and issue charge addressing the nodes at which virtual transactions may be made.
The issue stems from a report PJM published in October, “Virtual Transactions in the PJM Energy Market,” that identified instances in which existing market rules allow virtual transactions to be used in a manner that do not add value to the market commensurate to the costs imposed by them. (See PJM Suggests Changes to Virtual Transactions.)
The problem statement is intended to initiate stakeholder dialogue over whether any market rule changes should be made. Discussion is expected to take no more than 180 days.
Educational Session will Study Unit Commitment
The sponsor of a problem statement investigating the idea of separating financial day-ahead obligations from the physical unit commitment agreed to defer the matter until after an educational session requested by stakeholders.
Barry Trayers of Citigroup Energy agreed to delay action on the problem statement when it became clear that many stakeholders did not fully grasp the scope of the proposal, and PJM staff agreed that the unit commitment process should be reviewed.
PJM already is working on clearing the day-ahead market more quickly, Trayers said, making it an appropriate time to study ways to identify generation needs faster.
“This is just to investigate a way to separate the commitments of physical units, and do it sooner so generators have an idea of what they’re going to have to do tomorrow,” he said.
Direct Energy’s Philips opposed the idea, saying it might be good for generators but not for load-serving entities.
“I’m so confused I don’t really know where to start. It seems like the basis of what you’re asking is for a total reconsideration of the foundation of PJM. If you separate out day-ahead, how am I as load going to hedge on a daily basis under your proposal to separate financial from physical? Do we just create another day-ahead physical market?”
Responded Trayers, “I would think that load would want this done as efficiently as possible.”
Market Monitor Joe Bowring supported the idea of holding an educational session before moving forward.
“I think Barry’s raised a key issue that needs to be thought through,” he said. “It would be appropriate to have education from a variety of sources, including the [Monitor] and sectors that have information to share with the members.”
Low-voltage Projects to be Exempted from Competitive Window Process
With two no votes and one abstention, members approved revisions to the Operating Agreement that exempt transmission reliability projects of less than 200 kV from the competitive proposal windows. The revisions include a friendly amendment making explicit stakeholders’ right to submit comments for PJM’s consideration.
Such projects are almost always assigned to incumbent developers, and PJM said the change would enable its engineers to focus on problems more likely to result in a competitive greenfield project. (See “Voltage Threshold will Exempt Some Projects from Proposal Window,” PJM Planning Committee and TEAC Briefs.)
Sharon Segner of LS Power reiterated her concern. “Our view is Order 1000 very clearly said that when projects have regional cost allocation, there needs to be a competitive window associated with them.”
Brenda Prokop of ITC Holdings, who abstained, voiced similar concern.
But, she said, “We know PJM will implement a number of screenings to ensure that those projects that qualify for a competitive window will continue to qualify. We do have those implementation concerns.”
Long-term Firm Transmission, PAR Manual Changes Endorsed
Members unanimously approved proposed manual changes that modify long-term firm transmission service methods.
Revisions to Manual 14A: Generation and Transmission Interconnection Process add a cost allocation obligation for new service requesters to fund facility upgrades.
Changes to 14B: PJM Regional Transmission Planning Process describe the baseline and new service request studies; the distribution factor and rating limit allowed to contribute to flowgates; and the interaction of baseline and new service request studies on constraints identified in the capacity import limit studies.
Separate changes to Manual 14A were endorsed with two abstentions. They make clear that phase angle regulator (PAR) technology is eligible for transmission injection rights. (See “Phase Angle Regulators Qualify for Transmission Rights,” PJM Planning Committee and TEAC Briefs.)
Manual Changes Approved
The MRC on Thursday unanimously endorsed the following manual changes:
- Manual 27: Open Access Transmission Tariff Accounting. Changes allow for network service peak load values submitted by electric distribution companies to be scaled by the eRPM auction software if they do not add up to the annual network service peak load allocation for the area.
- Manual 38: Operations Planning. Changes resulting from annual review correct typos, revise terms for consistency and update PJM reliability study procedures.
- Manual 40: Training and Certification Requirements. Implements a new process requiring operators and dispatchers not in compliance be removed from their shifts. Also establishes a compliance score scheme that will trigger a violation notice to the company and potentially FERC. (See “New Operator Compliance Rules to Take Effect Feb. 1,” PJM Operating Committee Briefs.)
Members Committee
PJM Files Conforming Cost Cap Tariff Changes with FERC
With one abstention, members approved Tariff and Operating Agreement changes conforming to FERC’s order that revisions to the energy market offer cap exclude the 10% adder from cost-based offers more than $2,000.
The MRC endorsed the changes earlier with the same vote. (See PJM Members OK $2,000/MWh Energy Market Offer Cap.)
PJM filed the changes with FERC on Friday, requesting an effective date of March 29 (ER16-814).
The new cap is likely to be only temporary. FERC last month issued a Notice of Proposed Rulemaking that would cap all generators’ incremental energy offers at the higher of $1,000/MWh or an RTO-verified cost-based offer. (See FERC Proposes Uniform Offer Cap Across RTOs.)
LC Charter Change Allows Leeway to Cancel Meetings
Members endorsed changes to the Liaison Committee charter.
The revisions provide for an LC meeting with the board or the second General Session meeting in a calendar year to be canceled upon a super-majority vote of the sector whips. The Members Committee would need to receive three business days’ notice of such a vote. Any sector voting not to cancel a meeting would be required to provide at least one topic to be discussed.
— Suzanne Herel