Incremental Auction Senior Task Force to hear new proposals at next meeting

The Incremental Auction Senior Task Force expects to review new proposals at its Nov. 10 meeting after being unable to reach consensus on one of the six packages developed since it began in February.

The group is tasked with a two-fold mission: to review the historically low Reliability Pricing Model Incremental Auction prices when PJM has excess capacity to sell and to explore the effects of circumstances when the purchase of replacement capacity is cheaper than the clearing price of the applicable base residual auction.

The problem statement for the first issue was brought forward by Direct Energy and approved by the Markets and Reliability Committee on Nov. 17, 2016. NRG presented the second problem statement, which the MRC approved on March 23.

Task force chair Brian Chmielewski, senior analyst – Market Simulation, told members at their Oct. 31 meeting that he expects another round of voting to take place in mid-November and a proposal to be ready for a first read before the MRC in January.

The main points of debate have been consistent: the elimination or modification of excess commitment credits, the PJM sell offer price and whether PJM should conduct two or three incremental auctions.

Following the group’s Oct. 19 meeting, members responded to a seven-question poll designed to identify a path forward. However, the results of the poll, which represented 225 companies, showed the group remains somewhat divided over key issues.

When asked which of the number of incremental auctions options they supported, 153 chose status quo, while 71 selected “PJM offers to sell capacity only in Final IA.” Only one vote supported selling capacity in both. Regarding the issue of excess commitment credits, 137 favored the status quo, while 88 opted for eliminating the allocation of excess commitment credits.

Further, 122 said they could not compromise on the issue of excess commitment credits, 94 wouldn’t budge on the sell offer price, and 71 said they would hold their ground on the number of incremental auctions.

In addition to collecting final packages to review at the next meeting, Chmielewski said he will be looking to provide further analysis of the poll results with the hopes of providing better clarity for areas of potential compromise.

He reassured members that they would not be voting on the same six proposals that already failed to garner consensus. He will be soliciting new proposals and asking the authors of previous packages if they want to withdraw them.

Once the group knows where it stands with the incremental auction issue charge, it will turn its focus to the issue of replacement capacity.

The next meeting is scheduled for 9:30 a.m. to noon on Nov. 10 at the PJM Conference & Training Center.