Witnesses for Kentucky Power Co. will testify before the Kentucky Public Service Commission April 9 in an examination of the company’s Fuel Adjustment Clause. The hearing will focus on the company’s coal procurement practices for November 2010 through October 2012. In a filing March 1, the company said it was not seeking a change in its base fuel cost.
Hearing: April 9, 2013, 10:00 a.m., Hearing Room 1 of the Commission’s offices at 211 Sower Boulevard, Frankfort, KY.
Lawmakers gave preliminary approval Wednesday (March 13) to a bill that would allow electric utilities to obtain rate increases for transmission and distribution upgrades outside of a base rate case.
The House Utilities & Energy Committee approved Senate Bill 560 after adding amendments limiting utilities’ transmission and distribution rate hikes under the revised “tracking” process to 2% of its total revenue. Read more in The Indianapolis Star.
The Office of the Ohio Consumers’ Counsel Wednesday asked the Ohio Public Utilities Commission to overturn a motion to compel depositions from the OCC’s witnesses in Duke Energy Ohio’s pending electric and gas distribution rate cases.
The OCC said Duke filed its request for depositions on Feb. 28, nearly six weeks after the Jan. 18 discovery deadline set by PUC rules. The OCC is asking the PUC to overturn an order by Attorney Examiner Katie L. Stenman compelling the depositions.
Duke filed a request in June 2012 seeking an $86 million increase in electric distribution rates and a $44 million increase in gas rates. The company’s last electric base rate increase was in 2009.
The House Monday night (March 18) gave final approval to Gov. Martin O’Malley’s bill to subsidize development of offshore wind energy. The legislation will raise residential bills by $1.50 per month; most businesses would see a 1.4% increase in rates. Read more in the Baltimore Sun.
The Maryland Public Service Commission will begin archiving live-stream broadcasts of its proceedings over the Internet beginning May 1. The archives will be kept for six months.
The Market Implementation Committee voted overwhelmingly March 6 to endorse PJM’s proposals for applying forfeiture rules to virtual transactions, rejecting the Market Monitor’s alternatives.
The PJM proposals create criteria for applying the existing forfeiture rule for increment offers and decrement bids and extends application of the rule to Up to Congestion (UTCs) transactions, previously not covered.
PJM’s package was backed by about 90% support of MIC members voting and will be forwarded to the Markets and Reliability Committee. Market Monitor Joseph Bowring’s alternative proposals won support from only a quarter of the members.
The rules address companies (including affiliates) that submit virtual bids that affect the value of the companies’ Financial Transmission Rights (FTRs). Forfeiture rules would apply when those transactions result in a higher LMP spread in the day-ahead market than in the real-time market.
Bowring called the PJM proposals “a radical change” that should have been subjected to more discussion through issuance of a problem statement. Bowring said PJM’s load-weighted reference bus method would inappropriately penalize some transactions and fail to apply the forfeiture in others when it should apply.
In December 2012, for example, PJM penalized 65 companies a total of about $75,000. The new method would have issued penalties on a single company for only $1,500, a 98% reduction, Bowring said.
Stu Bresler, PJM vice president of market operations, acknowledged that PJM’s changes would reduce the triggering of the rule — which is now applied in less than one-tenth of 1% of transactions — but said the RTO has not quantified the impact.
Bresler said PJM’s proposal simply clarifies how the RTO determines whether a company’s virtual bid is “at or near” the delivery or receipt buses of its FTR.
Under the PJM plan, companies will lose any profit for an FTR if 75% or more of the energy injected or withdrawn is reflected in a constrained path between FTR source and sink points. “We don’t believe this is a radical change,” he said.
PJM proposed using a similar test for UTCs. Bowring’s proposal would have applied the penalty on UTCs based on their net impact. He said the full impact of UTCs are not captured by the PJM proposal.
PJM’s Tim Horger, who presented the RTO’s proposal, said it is not appropriate to use the same “net” impact rule for UTCs because increment and decrement transactions don’t involve a second bus. Increment officers have only a source, and decrement bids have only sinks. UTC transactions include both source and sink.
David Mabry, consultant to the PJM Industrial Customers Coalition, said his group fears the PJM proposal weakens preventions against abuse.
Pat Sunseri, of Twin Cities Power, LLC, countered: “We don’t want to see more forfeitures when the activity might not be market manipulation but legitimate hedging.” Sunseri said the FTR forfeiture rule was created to stop participants from making small virtual transactions as low-cost leverage to impact much larger FTR positions.
Carol Smoots, counsel to the Financial Marketers Coalition, said that the PJM proposal was more reasonable than Bowring’s because it reflects the differences between UTCs and increments and decrements. “It’s very troubling to have this guilty-until-proven-innocent always come up when it comes to these transactions,” she said of Bowring’s proposal.
PJM’s proposed new criteria will be in a new section (8.6) of Manual 6: Financial Transmission Rights. It will also amend Section 5.2.1 of Appendix K to the PJM Tariff and require changes to the Operating Agreement.
The MRC is expected to defer action on the UTC proposal for up to two months pending a discussion to better define UTCs. (See “Facing Opposition, PJM Delays UTC Cap Pending Broader Review.”)
Demand response (DR) providers will face increased scrutiny and be required to provide additional documentation under changes approved by the Market Implementation Committee March 6.
The new rules require Curtailment Service Providers (CSPs) bidding into the capacity auction to have a company officer sign a certification attesting to the company’s intent to physically deliver MWs. Bids will be made through an offer template to increase the consistency of information supplied. PJM also will increase its scrutiny of delivery zones in which CSPs’ bids exceed DR penetration thresholds.
PJM’s transmission planners said the information currently provided by CSPs is not specific enough to allow modeling of the quantity and location of DR in reliability planning.
PJM staff also found that DR offered in the 2015/16 Base Residual Auction (BRA) exceeded 20% of the Preliminary Zonal Peak Load Forecast for some zones, raising concerns that DR providers’ bids are overly optimistic.
The MIC considered four proposals and voted to send two to the Markets and Reliability Committee for further consideration.
PJM staff’s proposal, which was endorsed by 81% of MIC voters, would “flag” a zone for increased scrutiny based on the higher of the following screens:
A zone will be flagged if the projected DR resources exceeds the screen. Once identified, zones will remain flagged for at least three years. CSPs bidding in a flagged zone will be required to provide additional information for their end-use customers. (For commercial and industrial customers: name and address, business segment, and electric distribution company account number if known. For residential customers: estimated number of customers, estimated nominated per customer capacity value.)
Overlapping MWs — those offered by more than one CSP — will not clear in the auction unless supported by evidence, such as a letter from the customer.
The other three proposals considered by the MIC differed from PJM’s only on the application of the screen used to flag zones. Two proposals received less than 25% support.
The fourth, by Market Monitor Joseph Bowring, won support from 73% percent of voters and will be a secondary proposal before the MRC. Bowring’s proposal would calculate penetration levels net of megawatts bought back by CSPs or other participants, as determined based on previous auction results. “The idea is to determine megawatts which need to be documented more clearly,” Bowring explained. Megawatts that are bought back “are not going to physical.”
Bowring had offered his proposal as a “friendly” amendment to the PJM plan. PJM rejected the amendment, saying it could make it difficult for CSPs to fulfill their obligations through long term contracts.
PJM Contacts: Joe Callis, Jeff Bastian
PJM will suspend its Day Ahead market if it loses Internet service under the outlines of a contingency plan approved by the Market Implementation Committee March 6.
PJM’s Tariff and Operating Agreement do not specify procedures for responding to an extraordinary event, such as an Internet failure, that disables the RTO’s eMKT application. Under the problem statement approved by the MIC, all market settlements would be done in real time in such circumstances.
The plan assumes that PJM’s internal processes are working but that eMKT and other Internet-based services are not functioning, said Stu Bresler, PJM vice president of market operations. Generator dispatch may be based on the most recent offers received by PJM before the loss of the web, Bresler said.
The problem statement will be considered next by the Markets and Reliability and Members committees. Changes to the Tariff and Operating Agreement are expected to be completed by July.
PJM Contact: Ray Fernandez
The Planning Committee approved the following manual changes by acclimation March 7. The changes move next to the Markets and Reliability Committee. For more information, contact PJM Member Relations.
Reason for Change: PJM needed to revise the manual to comply with upcoming changes to NERC Reliability Standard TPL-001-4.
Impacts: Changes affect the following sections of the manual:
PJM Contact: Joe Callis, Applied Solutions
