First Read on Change to FTR Forfeiture Calculations
Brian Chmielewski, manager of market simulation, said PJM and the Independent Market Monitor agreed the current forfeiture rules should be adjusted because they do not distinguish between on-peak and off-peak FTRs.
Chmielewski said the issue was discovered in January but that the RTO determined its code is aligned with the Operating Agreement and Manual 6 and that no rebilling was necessary.
FTR forfeitures are intended to discourage traders from cross-market manipulation — for example, placing increment offers or decrement bids to cause congestion on paths where they hold FTR positions.
Holders subject to forfeiture are credited for the hourly cost of the FTR. Under current rules, a $1,500 off-peak FTR for June 2018 would be credited an hourly cost of $2.08, equivalent to $1,500 divided by 720 hours (30 days x 24 hours). Under the proposed change, the FTR cost would be divided by only 384 off-peak hours, increasing the credit to $3.91.
PJM plans a vote on the changes at the April MIC, with first read at the April meeting of the Markets and Reliability Committee and an effective date in the third or fourth quarter.
Incremental Auction Revenue Rights Funding
Chmielewski also presented the first read on a problem statement and issue charge to address a risk to FTR market revenue funding. The initiative concerns the awarding of incremental auction revenue rights (IARRs) — ARRs created by the addition of required transmission enhancements, merchant transmission or customer-funded upgrades.
IARRs are granted to the customer only if the transmission improvement provides additional capacity that makes the request feasible. PJM guarantees that awarded IARRs are at least 80% of studied IARR megawatts.
Chmielewski said underfunding of interregional IARRs could occur because MISO’s rules cannot guarantee future firm flow entitlements (FFEs) to PJM for upgrades built for IARR requests. Any portion of the FFEs for an affected coordinated flowgate that is less than 80% of the IARR megawatt total will result in inadequate FTR revenues, the RTO has found.
The MIC will vote on the initiative at the April meeting. PJM wants stakeholder work completed by Aug. 1 to allow implementation of the new rules for the 2020/21 planning period.
Gas Contingencies Update
PJM will take its rejected gas contingencies proposal back to the MRC on March 21 for stakeholder input on what a new plan might look like, PJM’s Thomas DeVita told the MIC.
On Feb. 19, FERC rejected PJM’s proposed process for generators to seek recovery for costs resulting from fuel-switching instructions from the RTO (ER19-664). (See FERC Rejects PJM’s Gas Pipeline Contingency Proposal.)
PJM’s filing would have allowed generators to request cost recovery across nine categories, such as overrun charges and exceeding maximum daily quantity.
The proposal would have allowed crediting of non-penalty switching costs prior to commission approval, subject to refund, while penalty costs would be credited only after commission approval.
FERC described PJM’s definition of “penalty” — costs that are designated as such in the pipeline or local distribution gas company tariff — as “unreasonably narrow and unsupported.” The commission said situations that trigger penalties by some pipelines are called switching costs by others.
The commission also said PJM must add events that trigger fuel-switching directives in its Tariff because they “significantly affect rates, terms and conditions.”
PJM staff said Wednesday it was “somewhat telling” that FERC rejected the order without prejudice, leaving the door open for the RTO to tweak the proposal for resubmission.
March 6 Day-ahead Results Rerun
PJM told members it had to rerun the results of its day-ahead market for March 6 but that the changes were minor.
The bidding period was extended by a half-hour because of “challenges” getting up-to-congestion bids into Market Gateway, PJM’s Tim Horger said. Staff had to make some manual transfers of data, which resulted in about 10% of UTCs not being transferred properly.
“The impact was minor. I understand that’s relative to participants as to what minor would be,” Horger said. He said unit commitments for physical generation did not change, although the dispatched megawatts may have. The revised results were posted Wednesday afternoon.
Load Management Testing Requirements
PJM said the RTO’s current testing rules are based on limited demand response (LDR) requirements made obsolete by Capacity Performance.
LDR applied only to summers, non-holidays and weekends, while CP requires the resource on demand year-round. Likewise, CP events can now last up to 15 hours — versus just six under LDR — and lack LDR’s cap of 10 reductions a year.
The Demand Response Subcommittee is expected to take 12 months to investigate the issue and recommend potential changes. Any rule changes would require revisions to the Reliability Assurance Agreement and several manuals, PJM’s Jack O’Neill said. (See PJM DR Subcommittee to Review Capacity Test Requirements.)
PJM’s Chris Advena provided a first read on the update of the Open Access Same-Time Information System (OASIS) tool, which he said has been unchanged since 1990.
Advena said the changes are administrative and cosmetic, including product name changes, additional fields and the automation of annulment request evaluations, a process currently done via email. The MIC will be asked next month to endorse related changes to the regional transmission and energy scheduling practices.
The new tool also will reflect changes to the business practices of the Neptune, Hudson and Linden VFT merchant transmission facilities.
Early Look at Redesigned Homepage
PJM has posted a beta version of its redesigned home page available for visitors to test and provide feedback before its scheduled rollout at the end of March. RTO officials also gave stakeholders a sneak peek at the redesign during meetings last week.
The new design is intended to highlight “more dynamic and up-to-date content,” including announcements and real-time grid conditions, PJM said. The new homepage also includes a new section for filings and orders, streamlines meeting and training information, and includes a reorganized and expanded footer with links and contact information.
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