The Market Implementation Committee last week approved an issue charge to consider modifying the algorithm used for publishing supply curves from the annual capacity auction.
The vote followed MIC’s approval in June of a problem statement by Jason Barker of Exelon to seek improvements to the supply curve currently produced by the Market Monitor, which masks individual price-quantity offers. Barker said the current curves — a compromise intended to balance transparency against disclosure of commercially sensitive data — aren’t accurate enough for use in analysis. (MIC Seeks Better Way to Draw Capacity Supply Curve.)
Comparison of PJM Market Monitor’s Current Capacity Supply Curve & Proposed Revision (Source: Marketing Analytics)
The current method is the result of a Federal Energy Regulatory Commission order in a dispute over PJM’s proposal to publish price-quantity pairs after the 2010 Base Residual Auction. Constellation Energy and the monitor said that the data could be used to reconstruct participants’ offers in the SWMAAC locational deliverability area because of the concentration of generation ownership.
“We’re not opposed to providing additional granularity in the supply curve,” Market Monitor Joseph Bowring told MIC last week. But he cautioned that the FERC order made clear the commissioners’ “preference to err on the side of not providing information that could result in market power and collusion.”
A presentation by the monitor concluded that the moving average alternative suggested by Exelon is “unlikely to pass through the point at which supply equals demand because supply is an increasing function.”
Instead, Bowring offered an alternative to divide the supply curve into segments of equal megawatts, plot the average price within each segment and force the adjusted line through the clearing point. The monitor said the proposal will more closely track the true offer curve as the magnitude of jumps in supply decreases.
FirstEnergy Corp. announced July 9 it will close two coal-fired generators with 2,080 MW of capacity by October 9 because it would be too expensive to retrofit them to meet federal environmental rules.
Hatfield’s Ferry Power Plant (Source: FirstEnergy)
FirstEnergy spokesman Jennifer Young said the decision to close Hatfield’s Ferry, in Masontown, Pa., and Mitchell, in Courtney, Pa., was based on the cost of complying with current and anticipated environmental regulations during a time of low wholesale power prices.
The closure was the first announced in PJM since the Obama administration’s June 25 announcement that it will draft greenhouse gas regulations for existing generating plants.
Timing Coincidental
Young said the timing of the two announcements was coincidental. The $275 million it would cost to bring the two plants into compliance with the Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS) was what triggered the closing, FirstEnergy officials said.
FirstEnergy’s announcement followed NRG Energy’s decision, announced May 15, to accelerate the closing of five coal-fired units in Pennsylvania. The shutdown of Portland units 1 and 2 (401 MW) will be moved from January 2015 to June 1, 2014, while Titus units 1, 2, and 3 (243 MWs) will close Sept. 1 – more than a year and a half earlier than originally planned. Both are in the MetEd transmission zone.
Mitchell Power Plant (Source: FirstEnergy)
The closing of Hatfield’s Ferry and Mitchell will eliminate 380 jobs and reduce FirstEnergy’s generating capacity by about 10%. FirstEnergy’s 18,000 MW generating fleet after the deactivations will still be dominated by coal (56%), with big contributions from nuclear (22%), followed by renewables (13%) and gas/oil (9%).
FirstEnergy announced the closing of nine coal plants last year. The company expects to invest approximately $650 million to bring five other coal-fired plants into compliance with MATS: the Bruce Mansfield Plant in Pennsylvania; Harrison, Pleasants and Fort Martin plants in West Virginia, and the Sammis plant in Ohio.
NRG Closures
NRG and GenOn Energy, which merged last year, are idling nine coal-fired plants through 2015.
NRG is closing the Portland plant as part of a settlement with the states of New Jersey and Connecticut over plant’s air emissions. The company cited environmental compliance costs in the closing of the Titus plant. The plants employ 140 workers.
NRG announced June 24 that it will convert two coal-fired plants, Avon Lake in Ohio (732 MW) and New Castle in Pennsylvania (330 MW) to natural gas. The plants had been scheduled for deactivation in April 2015. Although the repowered plants will have the same peak output, their capacity factors will likely drop as they are dispatched as peaking plants, NRG spokesman David Gaier said yesterday.
Gaier said that the company is evaluating whether to convert Portland to natural gas. Titus is too small and unprofitable to be a candidate for repowering, he said.
Non-Utility Generation Closures
PJM also learned recently of the unrelated closing of two small non-utility generators. The Piney Creek NUG (31 MW) in PenElec told PJM June 25 that it had closed April 12. The Koppers NUG (8 MW) in the PPL transmission territory, notified PJM July 1 that it plans to close Sept. 30.
In all, PJM expects the closure of about 13,000 MW of generation through October 2015.
The 2014/2015 2nd PJM incremental auction opened yesterday and will run through 5 p.m. Friday.
Existing PJM generators with available capacity are required to participate in the auction.
Suppliers must confirm the modeling of their capacity resources before their sell offers are accepted for the auction.
Generation, demand response and energy efficiency resources must confirm zone assignment, locational deliverability area (LDA) and product type. Generators also must verify unit location by state, unit type and fuel type. Instructions for confirming resource modeling and entering offers bids are available in the eRPM User Guide. See also Frequently Asked Questions on incremental auctions.
Were it not for the strong defense provided to us by attorney, Jerry Levine, who represented us pro bono, we might have been forced to shut down before we had a chance to introduce ourselves to those who care about PJM. We can’t thank him enough.
Thanks also to Andy Sellars and the Online Media Legal Network at Harvard University, who connected us with Jerry. OMLN finds lawyers willing to provide free and reduced fee legal assistance for online journalists. If you worry that the demise of the newspaper industry threatens our democracy, this is an organization truly worthy of your support.
Below is a summary of the legal position Jerry laid out in a letter to PJM in April:
PJM Insider’s use of “PJM” in our title is protected by both nominative fair use and the news reporting/news commentary privilege, among other rights. Courts generally recognize three elements of nominative fair use: (1) the trademark owner, product, or service in question must not be readily identifiable without use of the trademark; (2) the defendant must use only as much of the mark as is necessary to identify the trademark owner, product, or service; and (3) the defendant must do nothing that would suggest sponsorship or endorsement by the trademark owner.
PJM Insider is a news service focusing solely on PJM. There is no way to identify PJM Interconnection without directly referring to its name. PJM Insider uses only that much of the mark as is necessary to identify that it is discussing PJM Interconnection. Finally, PJM Insider specifically declares, in multiple locations on the website and in every communication, that it is neither sponsored, affiliated nor endorsed by PJM Interconnection.
Trademark law does not let a trademark owner exert its trademark rights to stop news reporting about it or its products or services. There are several legal rationales for this result: there is no risk of confusion between the news source and the trademark owner; nominative fair use protects this use of the trademark owner’s mark; and the federal dilution statute expressly exempts “news reporting and news commentary” from a dilution claim. See 15 U.S.C. § 1125(c)(3)(B). Furthermore, trademark law does not permit a trademark owner to use its trademark rights to silence commentary and criticism. Congress has created a categorical exemption for “criticizing . . . or commenting upon the famous mark owner or the goods or services of the famous mark owner.” 15 U.S.C. § 1125(c)(3)(A)(ii).
We also pointed out to PJM that many trade publications incorporate the name of the organization that is the focus of their coverage without implying any endorsement or official connection. For example:
Inside FERC, published by Platts, has covered the Federal Energy Regulatory Commission for more than 25 years and no one in the industry confuses it with the commission itself. Platts also publishes a newsletter covering the Nuclear Regulatory Commission, Inside NRC, also without confusion.
SNL Financial LC publishes two publications covering FERC, FERC Power Report and FERC Gas Report.
Inside Washington Publishers publishes several newsletters whose titles incorporate the subject of their coverage, including: Inside EPA, Inside the Pentagon, OSHA Online and FDA Week.
Congressional Quarterly has been covering the U.S. House and Senate since 1945.
We are following in this tradition of focused, institution-specific coverage. PJM’s lawyers say our situation is different because PJM is not a government agency and has trademarked its name.
It is true that PJM and other regional transmission organizations are not government agencies. But as Michael H. Dworkin & Rachel Aslin Goldwasser wrote in the Energy Law Journal, there are several lenses through which to view RTOs: “as agents of the FERC, as monopolists or private regulated entities, as `hybrid’ organizations, as similar to commodities trading markets, as agents of some of the market participants, and as planning processes.”
They elaborated: “RTOs set rules approved by the FERC that determine which plants will be turned on and off, they make short and long-term planning decisions, they ensure reliability, and they monitor the market for abuses. The FERC, through its general orders and rulings on specific issues, sets the parameters for RTO actions and implements the FERC’s directives. In this sense, an RTO is a regional representative of the FERC, acting as an agent for non-regional governmental sectors.” (Emphasis added.)
As a FERC-authorized RTO, PJM Interconnection serves a central role in the both the reliability and the cost of electric service for more than 60 million people in the MidAtlantic U.S. Like FERC itself, it is similarly deserving of coverage by an independent publication.
RTO Insider is an independent publication of RTO Insider LLC. It is neither connected with nor endorsed by PJM Interconnection, LLC.
By Rich Heidorn Jr.
We hadn’t even published our first article when the cease and desist letter arrived via email in February.
PJM Interconnection, LLC was unhappy that we had registered the website PJMInsider.com. We have a trademark on those three letters, said PJM’s lawyers. No one else can use them.
We disagreed, and continue to disagree to this day about our legal right to use PJM to describe our coverage.
But last week, we signed a settlement agreement with PJM agreeing to change the name of our publication to RTO Insider — our corporate name — to avoid PJM’s threatened trademark infringement suit.
All of the lawyers we consulted told us we would likely prevail if the case went to court. Unfortunately, as a new publication — funded by savings, credit cards and sweat equity — we didn’t have the $60,000 we were told it would cost to contest PJM’s suit. So, sadly, we were forced to make a strategic retreat.
PJM officials will tell you their stance was solely motivated by their obligation to “protect” their trademark from infringement. While it is true that trademark holders can lose their rights if they do not defend them, it is also true that the media are treated differently under trademark law.
As much as we tried, we could never come up with a better title for our publication than PJM Insider. And we still haven’t come up with any other way to explain — in just a few short words — what we’re covering than to mention “PJM” in the title.
We had no intention of tricking readers into thinking we were connected with PJM Interconnection. Indeed, our value proposition from the beginning has been our independence — both from individual stakeholder groups and from PJM itself. We have lived up to our word by scrupulously including disclaimers on all of our publications and literature.
Our lawyer explained all this in a letter to PJM. He also explained why PJM’s legitimate intellectual property concerns do not allow it to censor the free press. (See sidebar, Trademark Law and the News Media.)
We hoped PJM would be satisfied with that. We were wrong. On June 6, PJM emailed us a draft of the lawsuit they said they planned to file the next day.
As you will see below, the suit is both hilarious — because the claims are so ludicrous — and infuriating, because PJM was able to get its way solely because it had a bigger bankroll.
We expect this to be about the last time we write about this dispute. But we do feel it important that PJM’s members, who are supposed to run the organization, and PJM’s ratepayers, who pay for it, be aware of the organization’s bullying behavior.
So why did PJM hire an expensive Philadelphia law firm to go after us? Well, PJM and I have a history. As a member of the enforcement staff of the Federal Energy Regulatory Commission, I led an audit of PJM with two other staffers.
During that audit, I met many of PJM’s management and dealt almost daily for months with Chief Financial Officer Susanne Daugherty, who put up with our nettlesome questions with far more patience and grace than most could have mustered. I have tremendous respect for Susanne and most of the people I dealt with at PJM.
Due to FERC rules on the confidentiality of audits, I can’t explain exactly why this experience may have factored into the trademark dispute. The audit report, as released by FERC, didn’t disclose any major problems.
But it’s clear that while PJM’s lawyers claimed to be concerned that our publication could be confused with PJM, it is actually our independence that frightens some in the organization.
We’ll let you be the judge of whether PJM’s suit had merit. Below are some of the more entertaining claims, along with our responses. The full draft of the suit can be downloaded Insider-Draft-Complaint-with-Exhibits-6-6-13.
Pgh. 16: “…The title design of RTO’s publication, “PJM Insider,” is visually similar to the title design of PJM’s publication “Inside Lines,” with the title of both publications appearing on the left in block lettering accompanied by a logo image of power transmission lines on the right.”
We plead guilty to a lack of originality. Sadly, the iconography of the electric power industry is mostly power lines and cooling towers. Dozens of companies and websites employ such images.
But did we copy PJM’s look? Uh, no. The logo was designed by my computer-savvy 14-year-old stepson. And he had never seen PJM’s website before.
Pgh. 30: “As a result of RTO’s acts of infringement, PJM has suffered and continues to suffer damage and irreparable harm…”
Last time we checked, PJM was a monopoly. There’s nothing we could do or write that would give ratepayers in the 13 states within the PJM footprint the ability to choose another electric grid.
In 2012, PJM had 816 members. Current membership is 847. That’s an increase of more than 30, so it doesn’t appear we’ve hurt PJM here.
Pgh. 33: “PJM does, however, object to any implication by RTO that the company or the publication is authorized and/or sponsored by, or in any way related to PJM.”
So do we.
We didn’t launch PJM Insider as a “gripe site.” Most of what we publish is just-the-facts ma’am coverage of meetings and issues, not criticism.
But no one who reads our coverage of the PJM annual meeting or the Board of Managers election could confuse us with a house organ. See also our coverage of the uproar over the board’s plan – since rescinded — to get rid of Market Monitor Joseph Bowring and Monitoring Analytics.
We had to reproduce this paragraph of the suit so readers would know we weren’t making it up. State utility regulators are accused of many things, but we’ve never heard anyone say they can’t read. Moreover, the “consumers” PJM refers to in the same paragraph are people who work for utilities, electric cooperatives, attorneys, electric marketers — hardly an unsophisticated audience.
The fact is, anyone who spends more than a minute with our publication or on our web site will see our ubiquitous disclaimers.
Pgh. 51: “Because of the wide public recognition in the energy sector of PJM’ s registered mark, it is likely that the consuming public who encounter RTO’s use of the domain name and URL www.pjminsider.com/ will be confused, mistaken, or deceived into believing that RTO’s goods and services originated from, or are sponsored, endorsed, or approved by PJM.”
PJM apparently doesn’t like it that when people do a Google search for information on PJM, we also appear (see screenshot). We didn’t get our Google ranking based on the name of our site. We got it because we’ve written nearly 200 stories on PJM since February. People may have looked at us because the word PJM told them what we cover — but they only came back if they found value in what we are writing. And, as you can see, our disclaimer is right there.
PJM’s trademark covers:
Bulk electrical market services in the nature of commodity brokerage and price quotations in the field of electricity.
Management, administration, and operation of electricity transmission, power and energy markets; auction and trading services in the electricity transmission, power and energy markets; and provision of information related thereto.
We’re not running energy markets or running an electric grid— that’s PJM business.
Are we competing with PJM regarding “the provision of information related thereto”? For that, we make no apologies. Transmission of electricity may be a natural monopoly. Information about PJM shouldn’t be.
PJM members and stakeholders need an independent news source to help them keep track of the myriad issues and to serve as an historical record of previous stakeholder actions. Hundreds of you tell us every week that you agree, by opening our emails and visiting our website.
What happens next?
Over the next couple months we will be moving our website to a new URL (www.rtoinsider.com) and changing our email addresses accordingly. Nothing else will change.
We will continue to push for more transparency in the organization. We think it’s outrageous that the Board of Managers rarely meets in public, and that PJM refuses to disclose board members’ compensation. And we think section 4.5 of PJM’s Code of Conduct — which bars us from quoting members by name without their permission at all meetings but those of the Members Committee and Markets and Reliability Committee — is unnecessary and only feeds the distrust of critics who deride the organization as a “cartel.”
We will continue to be in the room when you can’t be – and asking the questions that need to be asked.
The Market Implementation Committee next month will consider proposals to allow network load customers more frequent opportunities to switch to nodal pricing.
Current rules allow network customers to make such switch requests annually, effective June 1st. A stakeholder group formed under a problem statement approved at the request of retail marketer Direct Energy proposed two alternatives to allow such switches monthly. The annual switching rules don’t allow retail marketers to provide innovative products, Direct Energy said.
Both proposals would limit intra-year switches to 5% of the electric distribution company (EDC) network service peak load. The differences between the two proposals are the additional caps on the number of customers per EDC: either five or 50 customers per EDC.
Marji Philips, of Hess Corp., said the intra-year switches could hurt Financial Transmission Rights holders. “If five large industrial customers switch to nodal in the middle of the year, your [FTR] holdings could be seriously impacted,” she said.
David Pratzon, of GT Power Group, questioned the breadth of support for the proposed changes, saying only a small number of stakeholders worked on the problem statement.
The proposals would phase in implementation of intra-year requests with quarterly switches allowed in the first year and monthly switches permitted in the following years. The first switches would be available effective June 1, 2014.
Customers would be required to provide 60 days’ notice before the switch becomes effective, a deadline that could be extended to up to 150 days for complex cases.
As under current rules, customers would be barred from switching from nodal back to zonal.
The MIC is expected to vote on the proposals at its next meeting.
Dominion and PPL will remove three Special Protection Schemes (SPS) while Dominion will add one, PJM told the Planning Committee last week.
Dominion will operate an SPS to control stability at its Bath County pump storage facility to continue operation during the Dooms – Lexington rebuilding project.
The pump storage facility has six generating and pumping units totaling about 3,000 MW. An existing Bath County/Cloverdale SPS is designed to trip either one or two Bath County pumps if the flows on the Cloverdale 6A/6B transformers exceed their temperature-adjusted emergency ratings.
The Dooms – Lexington 500 kV line will be taken out of service about September 2014 for a wreck and rebuild baseline project (b1908). Existing stability restrictions would restrict generation and pumping at Bath to two units, removing about 2000 MW of capacity. The new SPS (PJM Baseline Project b2281) will allow operation of up to five units.
The SPS will not be armed if there are any other 500 kV outages in the vicinity. PJM will determine how many units at Bath will be armed for the SPS based on the operating status of the Bath units (i.e., pumping, generating or condensing).
The target date for completion of the rebuilding project, and removal of the SPS, is June 1, 2016.
The three SPSs being removed are:
Dominion Harmony Village SPS: The SPS was installed in 2007 to prevent an overload on line #65 during loss of towers carrying lines #2016 and #85. The completion of a new 230 kV line (#2122) from Hayes to Yorktown (B0779) in December 2012 eliminates the need for the scheme.
Dominion Virginia Beach SPS: The SPS was installed in 2007 to prevent line #27 from overloading as the only feed to Virginia Beach due to loss of two other feeds. The completion of a 230 kV line (#2118) from Landstown to Virginia Beach (S0375) in December 2012 eliminates the need for scheme.
PPL West Shore 230 KV Automatic Load Shedding SPS: SPS B0718 was installed in 2010 to alleviate an N-1-1 summer peak overload condition at the Steelton Tap on the Hummelstown-Middletown Junction #2 230 kV line. A second Brunner Island – West Shore 230 KV line (B0717) went in-service recently, eliminating the need for the SPS.
Dominion’s new Pleasant View-Goose Creek 500 kV line will be designated as line number 595.
Dominion is building a 500kV ring bus substation, Goose Greek, to install a 150 MVAR capacitor bank. The Doubs-Pleasant View and Pleasant View-Brambleton circuits will terminate at the Goose Creek station.
The project (PJM baseline upgrade b1799) is designed to correct NERC category C3 N-1-1 voltage violations, with completion targeted for spring 2014.
The Doubs–Goose Creek line will keep the 543 line designation while the Goose Creek–Brambleton (Loudoun) line will keep the 558 identifier.
Unable to resolve the disputes themselves, PJM last week asked the Federal Energy Regulatory Commission to settle its standoffs with MISO and NYISO over cross-border reliability projects.
PJM and MISO parted ways in separate Order 1000 interregional compliance filings. PJM balked at the MISO’s request to remove cross-border Baseline Reliability Projects (BRPs) from the cost allocation provisions of the PJM-MISO Joint Operating Agreement.
PJM also said it was unable to reach agreement with the New York ISO on a process to address cross-border tie-in facilities needed for reliability. As a result, it said, “the RTOs have not fully satisfied their Order 1000 compliance requirements.”
PJM did reach agreement with members of the Southeast Region Transmission Planning region (SERTP) on an “avoided cost” mechanism for funding cross-border reliability projects.
MISO Proposal
MISO told FERC (ER13-1943) says its request to amend the JOA is justified by FERC’s March 22 Order 1000 compliance order, in which the commission accepted MISO’s proposal to remove regional cost allocation for BRPs and assign all BRP costs to the pricing zone where the project is located. The change took effect June 1.
Since BRPs are no longer subject to regional cost allocation, cross-border BRPs cannot be eligible for interregional cost allocation, MISO says.
PJM – MISO Tie Lines (Source: PJM Interconnection, LLC)
Instead, MISO proposes that tie lines between MISO and PJM transmission owners be designated as cross-border BRPs. Ownership and responsibility for any upgrades would be shared by the transmission owners — essentially preserving their rights of first refusal (ROFR) on cross-border reliability projects. According to PJM, there are 83 tie lines ranging from 69kV to 765 kV between the two RTOs.
MISO said reliability problems can be addressed through cross-border Market Efficiency Projects, for which interregional cost allocation would continue.
PJM and its transmission owners referred to the dispute only indirectly in their filings with FERC last week, leaving MISO to provide details. The PJM transmission owners “have informed MISO that they do not agree … [that MISO’s request] would be compliant with the requirements of Order No. 1000,” MISO Vice President for Transmission Jennifer Curran said in written testimony included with MISO’s filing.
In a meeting with MISO stakeholders in January, PJM officials and transmission owners made clear their opposition to MISO’s plan. Craig Glazer, PJM vice president of federal government policy, told MISO stakeholders that their proposal was not consistent with Order 1000. “I don’t think that dog’s gonna hunt,” he said. “…You’re doing this because you want to protect the ROFR rights.”
A MISO representative responded that broad cost allocation of reliability projects was not justified because the benefits of such projects are primarily local. In an earlier filing, MISO told FERC that in 80% of its Baseline Reliability Projects since 2006, at least 75% percent of costs were allocated to the local pricing zone.
PJM: MISO Can’t Unilaterally Change JOA
In its compliance filing last week (ER13-1944), PJM told FERC that it should reject MISO’s proposal because the JOA is a contract which can only be changed by mutual consent of the two RTOs. PJM said it would be “damaging” for FERC to “wrest one provision out of this carefully negotiated integrated agreement.”
The 2008 Joint Operating Agreement allocates the costs of cross-border reliability and market efficiency projects between the two regions based on the benefits each expects to receive. Although the two RTOs have had an interregional cost allocation provisions in force since 2005, no cross-border projects have been approved for cost allocation under the JOA, Curran said.
The Order 1000 dispute is one of several points of friction between the two RTOs. On June 20, the RTO officials appeared before FERC to make their cases in a dispute over the way PJM models cross border transmission deliverability, which MISO says is unfairly limiting its generation from competing in PJM’s capacity market. (See: PJM and MISO: Best of Frenemies)
NYISO
PJM also left it to FERC to sort out a dispute with the NYISO.
PJM said the Northeastern ISO/RTO Planning Coordination Protocol, which outlines its relationship with NYISO and ISO-NE, does not provide a mechanism for one region to link to its neighbor’s transmission facilities to solve one region’s reliability need. “These tie-ins are especially critical given the highly intertwined nature of the NYISO and PJM regions, and the unique nature of the NYISO/PJM seam,” PJM told FERC (ER13-1947).
PJM rejected NYISO’s proposal that PJM be subject to the NYISO tariff as a merchant transmission developer or a NYISO transmission owner under the NYISO Transmission Expansion Process. PJM said NYISO’s proposal was unworkable because those market-based processes don’t apply to baseline reliability facilities and would violate commission precedent that coordination between RTOs “should be done at the RTO level.”
PJM asked FERC to order the two RTOs to amend their JOA to add provisions for reliability transmission tie-ins. “Such a directive would help end what has been unproductive debate as to the relationship of this issue to Order No. 1000’s requirements,” PJM said.
SERTP
In a separate filing (ER13-1927), the PJM transmission owners said they reached agreement with the members of the Southeast Region Transmission Planning region (SERTP) to add a new schedule to the PJM Tariff governing cost allocation for interregional transmission expansions. Signing the agreement on behalf of SERTP were Duke Energy, Louisville Gas & Electric/Kentucky Utilities, Ohio Valley Electric Corp. and Southern Co.
The proposal calculates the benefits of an interregional project based on avoided costs — “the cost savings achieved by replacing higher cost regionally-planned transmission projects with the more efficient and cost-effective proposed interregional project,” the PJM transmission owners said.
They acknowledged that the commission previously ruled that the avoided cost methodology does account for economic or public policy benefits of transmission projects. However, they noted, “Order No. 1000 does not require the consideration of public policy or economic benefits at the interregional level.”
The Market Implementation Committee last week soundly rejected a proposal to change the modeling assumptions used in long-term auctions of Financial Transmission Rights (FTR).
The proposal — which would have reduced capability in long-term FTR auctions from 100% to 50% of available capability after reserving Auction Revenue Right (ARR) capability — received support from only 36% of MIC voters.
Bruce Bleiweis, director of market affairs for DC Energy, LLC, said the proposal would hurt the ability of market participants to engage in long-term hedging while providing only small improvements to FTR funding shortfalls. “It will result in a lot less liquidity, a lot less price discovery,” he said.
In May, the MIC gave near-unanimous support to two other modeling changes also intended to reduce the risk of FTR funding shortfalls by reducing or eliminating infeasibilities in the FTR model so that increased counterflow FTRs clear. (“MIC OKs Options to Reduce FTR Shortfalls”)
MIC rejected another proposed change and deferred a vote on the long-term auction proposal pending a ruling on FirstEnergy Corp.’s complaint to the Federal Energy Regulatory Commission over FTR underfunding (EL13-47). FERC rejected the complaint June 5, saying FirstEnergy had not proven PJM’s current practices are unjust and unreasonable. The commission urged the RTO to continue its efforts to address the causes of underfunding.
