Capacity Interconnection Rights Review Ahead
VALLEY FORGE, Pa. — The PJM Public Power Coalition will draft a problem statement and issue charge that examines capacity interconnection rights in the wake of a new rule permitting the RTO to take them from generators under certain circumstances.
Carl Johnson, representative for the coalition, said his group wants a broader discussion about CIRs and whether the current structure makes sense.
“The reason I want to have a broader conversation is so that we can get to some sort of agreement about what those rights are,” he said. “We argue a little about what those rights represent.”
The decision came after stakeholders debated whether to revise the existing must-offer exception process problem statement to address CIR relinquishment, or create an entirely new document for approval during Wednesday’s Market Implementation Committee meeting. Stakeholders at both the MIC and the Markets and Reliability Committee have expressed concern over a joint plan from PJM and the Independent Market Monitor that revokes CIRs from generators without plans to become Capacity Performance-capable after seeking a must-offer exception. (See Load Interests Endorse PJM-IMM Must-offer Proposal.)
The new rule, however, doesn’t apply to renewable resources because those generators don’t have a must-offer requirement. The Monitor said it will prevent others from “hoarding” CIRs indefinitely.
“All resources should not be able to hoard CIRs,” David “Scarp” Scarpignato of Calpine said Wednesday. “If you are going to have a rule like that, it should apply to everyone.”
Sharon Midgley, Exelon’s director of wholesale development, argued the conversation can move forward but with its own approved problem statement and issue charge. Exelon lobbied against the mandatory revocation of CIRs during the stakeholder process, including the presentation of its own proposal to do exactly that. Despite earning a majority of MIC support in March, the PJM/IMM plan won out at the April MRC meeting.
“They should define the problem and not try to piggyback off this process, which was supposed to deal with a very narrow administrative issue,” she said.
PJM Offers Peek at Carbon Pricing Study
PJM’s Gary Helm offered stakeholders a peek inside the RTO’s methodology for its ongoing internal carbon pricing study and said staff chose the social cost of carbon (SCC) as a simulation metric.
“We don’t care what the price is; we just want a significant price for simulation,” Helm said of the choice, noting a number of states have been using the SCC since August 2016. “[The Regional Greenhouse Gas Initiative] is a few dollars, so it’s not really impacting dispatch. What if we have a carbon price that is such a level that it impacts dispatch?”
PJM’s simulation will observe the impacts of a $52.79/ton price on the market, including cases where prices rise or fall within 25% of that baseline.
Helm said one simulation will divide PJM into a non-carbon zone and a carbon zone — Maryland, Delaware and New Jersey, the three states the RTO expects to be participating in RGGI. Another simulation will measure a regionwide carbon price, ultimately considered the simplest policy to accommodate.
Staff will research the effects of one-way and two-way border adjustments to minimize both environmental and economic leakage between the regions.
Stakeholders Lukewarm on Revisiting Market Seller Offer Cap
As members await a FERC ruling on PJM’s market seller offer cap (MSOC), the RTO said it would consider alternative measurements for performance assessment hours (PAHs) — if stakeholders want to revisit negotiations.
The change of heart comes after PJM asked FERC to dismiss the Monitor’s complaint that its default MSOC was overstated, arguing that a lack of stakeholder consensus and prior commission approval of CP proved otherwise. (See PJM: Dismiss Monitor’s Offer Cap Complaint.)
In August, the Monitor concluded that ratepayers were overcharged by $2.7 billion (41.5%) in the 2018 Base Residual Auction because of economic withholding encouraged by the inflated MSOC.
The timespan for measuring performance was changed from PAHs to five-minute performance assessment intervals (PAIs) in compliance with FERC Order 825 in 2018. PJM triggers a PAI when it determines a supply reliability issue exists, providing credits for generators that overperform their capacity commitments and penalties for those that underperform.
So far, only one load shed event has occurred within PJM since the CP overhaul in 2015. The event spurred stakeholder action to revise the MSOC calculation, with four proposals failing to garner enough support for inclusion in the Tariff. PJM subsequently dropped the issue, insisting no further investigation was required. (See Monitor Defends Offer Cap Complaint.)
Stakeholders, however, expressed a mix of appreciation and hesitation on Wednesday at the offer to reopen negotiations.
“Does PJM believe in its heart of hearts that its answer is where we should be or is PJM open to other constructs?” Johnson said. “If we are just going to have the same conversation we had last year, then I think we are just better letting the complaint play out at FERC.”
“We don’t want to rehash the stakeholder process and use time to discuss matters that have already been discussed,” said Jason Barker of Exelon. “We keep having the conversation go around and around. I think we should get guidance from the commission first.”
Monitor Presents Updated 5-Minute Dispatch Problem Statement
The Monitor presented a revised problem statement about review processes for real-time security-constrained economic dispatch (RT SCED) and market pricing that PJM uses to send dispatch signals to generators and calculate LMPs.
Siva Josyula of Monitoring Analytics said a publishing price delay on April 8 — as well as a July 10, 2018, low area control error (ACE) event and corresponding Manual 11 revisions — call into question the transparency of PJM’s RT SCED processes.
The Monitor added work activities to the issue charge that ask the MIC to review the triggers for price-bounding violations and the timeline of publishing LMPs, as well as potential updates to LMP thresholds and procedures for validation checks and publishing prices. Stakeholders must also identify metrics for operator actions, including — but not limited to — biasing in the intermediate-term SCED, RT SCED and locational price calculator.
Double Payments Extend Beyond Fast-start
Adam Keech, executive director of PJM’s market operations, said a recent FERC order saying that current accounting practices provide double payments to fast-start resources puts the RTO in a difficult position.
“The issue is more of a day-ahead uplift issue,” he said. “We are left in this issue of how do we address it. If we just apply it to fast-start, it could be conceived as discriminatory. If we apply it everywhere else, it could be out of scope.”
The problem arises when PJM pays a generator for uplift in the day-ahead market but then dispatches that same resource in real time at a higher commitment. The generator has the ability to recover uplift costs PJM already paid it for a day earlier — except the issue is far broader than just fast-start resources.
Keech presented the issue as the first of several MIC educational sessions about the impacts of FERC’s recent order on the RTO’s fast-start pricing rules. (See FERC Orders Fast-start Rules for NYISO, PJM.) The RTO loses “tens of millions” annually on double payments — a relatively small problem by PJM’s standards, he said.
FERC wants PJM to address this matter in a compliance filing due July 31, as well as an informational report due Aug. 30 about how the new rules don’t raise market power concerns.
– Christen Smith