After two marathon committee meetings failed to narrow choices, members will vote beginning today on more than a dozen proposals to make demand response more flexible and eliminate arbitrage opportunities in capacity auctions.
Facing a tight deadline for action, members of the Capacity Senior Task Force met in daylong sessions last week and yesterday in a so-far fruitless effort to reach consensus. As a result, members will be voting on six proposals to change the way DR is dispatched and 12 proposals to prevent speculation in the capacity auctions.
The CSTF votes, which will close Nov. 12, are intended to identify which proposals will be brought to a vote of the Markets and Reliability Committee Nov. 21. Voters will be asked to vote on whether or not they can support each of the proposals, with the one prop with the most support in each issue becoming the primary motion to be considered by the MRC.
Multiple Sponsors
Representatives of retailer Direct Energy and independent developer LS Power withdrew their demand response proposals in response to CSTF Chair Scott Baker’s entreaties to prune the unwieldy list. But a late addition from Exelon left the number of proposals at six, including others from PJM, the Independent Market Monitor, DR aggregator EnerNOC and the Maryland Public Service Commission.
PJM, Monitoring Analytics and EnerNOC also were among those proposing changes to the auction, along with industrial consumers and Old Dominion Electric Cooperative (ODEC). Although Calpine withdrew its proposal, EnerNOC posted two, including one that combined its original with that of ODEC.
Tight Deadline
Stakeholder panels often use informal polls to narrow their choices before taking formal votes. That option wasn’t available in this case because of PJM’s desire to enact the changes – which will require the approval of the Federal Energy Regulatory Commission — in time for the 2014 Base Residual Auction.
PJM officials called for changes to the design and dispatch of DR after heat waves in July and September, which they said illustrated the need to make quicker and more targeted use of the resources.
The changes under consideration could reduce DR’s minimum lead and maximum run times as well as allowing subzonal dispatch and eliminating the need to declare an emergency before dispatch.
A proposal outlined yesterday by Market Monitor Joe Bowring would eliminate the six-hour maximum dispatch and the cap of 10 dispatches per year, essentially ending the limited and extended summer DR products.
`Mass Market’ DR Programs at Risk?
Walter Hall, of the Maryland PSC, proposed an alternative that would protect programs for residential and small business customers of the state’s three investor-owned utilities and one cooperative.
Hall said the commissioners and staff believe some of the changes being contemplated would threaten the “mass market” programs, which are responsible for more than 600 MW of demand reduction. (See States, LSEs on Collision Course with PJM over DR Changes)
Hall said the programs may not be able to respond on a subzonal level as PJM desires.
Bowring, however, was unmoved. “I don’t think there’s any reason to exempt anyone from subzonal dispatch,” he said. The monitor’s proposal would seek to go even further, to nodal dispatch.
While Pepco has expressed concerns about the proposed changes, Hall acknowledged Baltimore Gas & Electric has told the commission it believes the utility’s program can adjust to the changes sought by PJM.
Auction Arbitrage
DR providers also would be affected by proposed changes to capacity auctions. Because clearing prices in Incremental Auctions (IAs) are usually lower than those in the Base Residual Auction (BRA), participants can profit by over-committing in the BRA and buying out their commitments in the IAs. (See MIC to Investigate Arbitrage in Capacity Market)
The PJM Industrial Customer Coalition introduced a proposal that it said could reduce procurements in future BRAs by more than 6,000 MW by correcting overly bullish load forecasts. The IMM’s proposal would bar PJM from selling any excess capacity in the Incremental Auctions.
