MRC Discusses Energy Cap Proposals

The PJM Markets and Reliability Committee at its August 27 meeting discussed the first reading of a stakeholder proposal – as well as several other proposals – to address a fix for PJM’s cap on offers in the energy market. The Members Committee meeting followed the MRC meeting.

The proposals address raising PJM’s $1,000/megawatt-hour energy offer cap, which was put in place 18 years ago.

During the Polar Vortex, some generators with a requirement to offer into the energy markets incurred verifiable costs in excess of the energy offer cap. The FERC approved waivers from PJM to address the issue for the remainder of the 2013/14 winter.

Last year, PJM’s stakeholders failed to gain consensus on a proposal to raise the cap, and PJM filed a tariff change to increase the cap. The tariff change was removed after the winter of 2014/15. PJM had hoped for a national solution from the FERC in advance of winter 2015/16.

“This is a serious issue,” said PJM CEO Terry Boston. “The California energy crisis was a financial crisis first. As we look at this, it’s good for the generators to know their costs will be covered.”

Boston pointed out that not raising the energy cap is “not something that can just lay on the table” indefinitely.

The PJM Board requested that the stakeholders develop a consensus solution in advance of the October board meeting. There will be continued discussion on the proposals through both existing stakeholder meetings and a special session scheduled for the afternoon of September 9.

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Stu Bresler, senior vice president – Market Operations, addresses the MRC as Dave Anders Director, Stakeholder Affairs looks on. Mike Kormos, Chief Operations Officer, is at right. Banner photo: Suzanne Daugherty, vice president, CFO and Treasurer, addressing the MRC.

Presentations:

  • Stu Bresler, senior vice president – Market Operations, presented on the results of the base residual auction
  • Suzanne Daugherty, vice president, CFO and Treasurer, provided an overview of the proposed 2016 PJM capital and expense budget.

The MRC endorsed proposals regarding:

  • Minor language changes to Manual 37: Reliability Coordination
  • Capacity transfer rights for fixed resource requirement entities with resources external to PJM
  • Transparency of operational changes for giving advanced notice of new closed loop interfaces
  • Tariff revisions on the eMkt move to Markets Gateway

The Members Committee approved the following:

  • Draft minutes of the May 21, 2015 meeting
  • Proposed tariff revision related to FERC Order 1000 previously endorsed proposal fees
  • Proposed tariff revisions related to merchant network upgrades
  • Proposed Operating Agreement and Reliability Assurance agreement revisions developed by the Tariff Harmonization Senior Task Force

The MC did not endorse a proposal from ODEC related to solutions developed, but not endorsed, by the FTR/ARR Senior Task Force.  Following discussion, the main motion (with a friendly amendment) failed in a sector-weighted vote with 3.30 in favor.