Market issues dominate MRC 

Stakeholders wrestled with a number of market issues – energy price formation, price-responsive demand and the work of the Capacity Construct/Public Policy Senior Task Force at a lengthy Markets & Reliability Committee meeting Thursday.

Energy Price Formation

Stu Bresler, senior vice president – Operations and Markets, presented the first read of the problem statement and issue charge on energy market price formation.  Stakeholders have been providing feedback since PJM issued the energy market price formation paper.

Bresler said that PJM knows that the markets can be improved and the stakeholder comments provide valuable contributions on design decisions. He stressed that stakeholder feedback will be instrumental in assessing what the problems and opportunities are, analyzing them and examining what improvements PJM can make.

He added that the problem statement reflects the issues identified in the whitepaper and the education sessions that PJM is holding are the starting point for the issue charge.

Stakeholders are encouraged to continue the discussions by emailing price_formation@pjm.com and exchanging ideas with each other (including suggested edits to the problem statement and issue charge). Bresler said PJM will evaluate and incorporate comments in preparation for discussions at the Dec. 21 MRC meeting.

Price Responsive Demand

PJM presented two proposals developed by the Demand Response Subcommittee to address price responsive demand, one from PJM and one from stakeholders.

Stakeholders, however, preferred to defer any action on three proposals (including one from the Marketing Analytics, PJM’s independent market monitor) until the new Summer-Only Demand Response Senior Task Force completes its work (either voting on a recommendation or voting to have no recommendation).

The motion to defer needed 3.34 in sector-weighted voting for passage; it received 3.44.

At the November Markets Implementation Committee, the PJM PRD proposal had received 83 percent support, and the stakeholder proposal had received 62 percent support. The IMM proposal had received 15 percent support at the subcommittee level.  PJM felt it was important to review PRD rules and make sure they are consistent with the capacity performance market structure.

The new summer-only DR task force will have its first meeting Dec. 13. It will explore potential opportunities to value summer-only demand response resources through the load-forecasting process or other mechanisms that would serve as an alternative to supply-side participation in the capacity market.

Capacity Construct/Public Policy Senior Task Force

Stakeholders at the Capacity Construct/Public Policy Senior Task Force supported a proposal from Monitoring Analytics, which PJM presented Thursday.

The proposal – extended Minimum Offer Price Rule – posits that nonmarket subsidies for existing generators are not consistent with competitive market outcomes. It extends the MOPR concept to existing resources and applies to all resource types, while providing exemptions for certain state-sponsored Renewable Portfolio Standards programs and for certain public power resources.

A special MRC meeting on Dec. 12, after the Operating Committee meeting, will specifically review the proposed tariff revisions and to ensure that they accurately reflect the proposal endorsed by the task force. That meeting is an opportunity for stakeholders not to change content but to clarify some of the questions on exemptions that arose during Thursday’s discussion.

Other Committee Business

Endorsements

The committee approved the charter revision to convert the Distributed Energy Resources effort to a subcommittee.

The MRC meeting was the November MRC meeting, rescheduled to coincide with the PJM Board meeting and General Session; the December meeting will be Dec. 21.