By Rich Heidorn Jr.

WHITE SULPHUR SPRINGS, WV — Public interest groups Tuesday scolded PJM for excluding them from the MOPR stakeholder process and for setting its annual meeting at the exclusive Greenbrier resort here.

At their annual meeting with the PJM Board of Managers, the public interest groups and state regulators also praised PJM for its handling of generation retirements and lobbied it to increase use of demand response and energy efficiency.

The meeting included about a dozen representatives from state consumer advocate offices and regulatory commissions as well as several environmental organizations. Others listened via phone.

Robert Mork, attorney in the Indiana Office of Utility Consumer Counselor, said he was able to attend the meeting thanks to funding from the newly formed Consumer Advocates of PJM States (CAPS) because there was no state funding available.  He said the location of the event also created image problems for state officials like him.

While he said the setting “probably isn’t extravagant by private industry standards,” he said the cost and reputation of the Greenbrier — which advertises itself as “one of the finest luxury resorts in the world” — made it difficult for consumer advocates to get approvals to attend.

Rooms at the hotel cost $315 a night at PJM’s discounted rate. A take-out sandwich set you back $12.

“At the Table”

“I think any concept of RTO inclusiveness needs to have people like us at the table,” Mork said, asking the RTO to consider a less expensive, more accessible location for future meetings.

Board Chairman Howard Schneider told the organizations that the annual meeting with them is important to the board. “Anything we can do to make your job easier, we’re certainly open to suggestions.”

Asked after the meeting whether he had a comment on the criticism of the meeting location, however, Schneider said simply, “no comment.” Would the board discuss the matter later? “I said: `no comment,’” he repeated.

Asked for his response, board member John McNeely Foster reacted like he had been tossed a live grenade: “Nah, I don’t have a comment, sorry.”

Board Member Jean Kinsey was more expansive: “I could have been sympathetic to their plight, but it is what it is,” she said. “Everybody is cost-conscious. But they have smaller resources. I applaud them for doing what they can to get here.”

Room for 500

PJM CEO Terry Boston said PJM staff “will take [the criticism] into consideration for future meetings.”

“There’s very few places in our footprint that can handle our size,” he added, noting that 480 attendees registered.

Actually, there are more than 50 facilities in the PJM territory with facilities to host 500 people, according to the Cvent Supplier Network, which has an online database. But few of them have a noted golf course like the Greenbrier’s Jack Nicklaus-designed links –- a big draw for the mostly-male attendees at an event that is at least as much social as substantive.

The locations for the next two annual meetings are already set:  next year at the Hyatt Regency in Cambridge, Md., and 2015 at for the Borgati Hotel Casino and Spa in Atlantic City.

Boston added that staff got an “attractive price” for the Greenbrier conference space with a multi-year contract for this year’s event and the one in 2010. He noted that the leisure activities — including free spa treatments and golf — were paid for by sponsors.

The state officials, not allowed to participate in the free activities, were offered a training session Wednesday afternoon instead. Most of them stayed in cheaper lodging off of the resort’s gated grounds.

MOPR Still Rankles

PJM also came under criticism for the stakeholder process that resulted in changes to its minimum offer price rule (MOPR), a tool for preventing buyer-side market power in PJM’s capacity market auctions.

Con­sumer advo­cates and state reg­u­la­tors were out­raged when they learned last September that PJM and the mar­ket mon­i­tor had par­tic­i­pated in con­fi­den­tial set­tle­ment nego­ti­a­tions among seven gen­er­at­ing com­pa­nies and five load-serving enti­ties over more than two months. The result­ing set­tle­ment won an 89% sector-weighted vote.

On May 2, the Fed­eral Energy Reg­u­la­tory Com­mis­sion issued a split decision on the changes, allow­ing the RTO to exempt two cat­e­gories of resources but deny­ing its request to elim­i­nate its cur­rent unit-specific review. FERC rejected state officials’ complaints that the process vio­lated PJM’s Code of Conduct. (See “FERC Upholds PJM Exemptions; Rejects End to Unit-Specific Review.”)

“We felt that the stakeholder discussions were not adequate,” said Bill Fields, an attorney in the Maryland Office of People’s Counsel. “It creates at least an appearance of a lack of independence to announce simultaneously that PJM has a concern about an issue and that a proposed solution to that problem has been agreed to by a group of stakeholders.”

Praise for Staff

The groups praised PJM’s staff for its professionalism and expressed relief that the board had agreed to seek a new three-year contract with Independent Market Monitor Joseph Bowring and his firm Monitoring Analytics.

Attorney Will Burns, who represents environmental groups, praised PJM’s transmission planners for their “herculean job of dealing with a lot of retirements dumped on them all at once.” He also gave PJM credit for its implementation of FERC Order 745 on compensation for demand response and increasing the cap for demand response’s share of the synchronized reserve market from 25% to 33%.

“Thanking PJM is really unlike us,” he said, drawing laughter — a rare light moment in the cordial but tense meeting.

Relief over Market Monitor Contract Extension

The meeting would have been far more contentious had the board not backed off from its original plan to open the monitoring role to competitors.

The board announced last month it was nego­ti­at­ing a new con­tract with the mar­ket mon­i­tor and drop­ping plans to put the con­tract out for bid. The board acted after receiving letters of protest from state reg­u­la­tors, indus­trial con­sumers and coop­er­a­tives, who said the draft request for proposals con­tained terms that would under­mine the inde­pen­dence and qual­ity of the mon­i­tor­ing function. (See “PJM Working on New Deal with Monitor; Backs Down on RFP.”)

“If [a new contract] comes to fruition it will ensure the continued well functioning of the PJM markets,” said Dave Evrard, an attorney in the Pennsylvania Office of Consumer Advocate.

Jackie Roberts, Deputy Consumer Advocate for the West Virginia Public Service Commission, said she was relieved that PJM would not repeat the turmoil of 2007, when Bowring accused PJM’s then-pres­i­dent of attempt­ing to muz­zle him by squelch­ing his reports and cut­ting his budget.

“It was a very difficult time for all of us,” Roberts said. “I think I did a happy dance when I heard [about the board’s decision to extend the contract]. I think we may have avoided some uncertainty in bringing in a new market monitor.”

Environmental Groups Lobby for DR and EE

Environmental groups in attendance pressed their case for energy efficiency and demand response as alternatives to new transmission and generation.

“We believe PJM has an affirmative obligation to identify and evaluate non-transmission alternatives under the Federal Power Act,” said John Moore, senior attorney for the Natural Resources Defense Council’s Sustainable FERC Project.

The Regional Transmission Expansion Plan (RTEP) doesn’t “capture fully all the locational benefits” of non-transmission alternatives, Moore said. “We think waiting for developers to propose these solutions is insufficient.”

Moore said PJM’s requirement that generators provide 90-days notice of plant retirements is too short for energy efficiency and demand response providers to offer alternatives to new transmission lines.

Debate over DR “Saturation”

Environmentalists also said PJM was premature in worrying about the potential for demand response “saturation” – the fear that DR providers will reduce participation as their resources are called on more often.

“We shouldn’t assume there’s a problem until we see some more evidence of it,” said attorney Will Burns.

Board members Sarah Rogers and Ake Almgren insisted their concerns were well founded. “Subscription to DR can fall off and fall off very rapidly,” Rogers said.

Boston said he had seen DR participation decline in Florida. “We found that DR did not stay with us during the boom times” when it was called on more, he said.

Stephen Whitley, president and CEO of the New York ISO, provided his own testimonial in a speech to the Members Committee Thursday. Whitley said New York has lost some of its demand response since calling on those resources five times last year.  “After the fifth time, I got a lot of phone calls from DR participants asking, `What’s going on?’ So that’s a big concern to me.”