MRC Talks Next Phase for Seasonal Capacity Resources

Stakeholders at the Markets and Reliability Committee on July 27 launched the next phase of the debate on how seasonal capacity resources can participate in non-capacity markets.

Pete Langbein, manager – Demand Response Operations, introduced a proposed problem statement and issue charge to address  seasonal capacity resources issues that were not included in PJM’s enhanced aggregation proposal. The aggregation proposal was approved earlier this year by the Federal Energy Regulatory Commission.

When PJM filed with the FERC, it recognized that seasonal demand response resources have historically demonstrated the ability to provide operational flexibility to system operators during times of system stress. PJM and agreed to further discussion on those resources.

The new stakeholder group will examine what non-capacity wholesale market mechanisms would best value the flexibility of demand response resources that otherwise would not be able to clear in the capacity market. Stakeholders touched on the value of summer resources in the market, not going back to a summer-only demand response product and what opportunities residential customers still might have to impact their prices. 

Also at the meeting, Patricio Rocha-Garrido, senior engineer –Resource Adequacy Planning, reviewed the work from the Resource Adequacy Analysis Subcommittee on winter season resource adequacy. The subcommittee is examining winter peak load forecasting, winter season resource adequacy and winter season reliability requirements.

PJM introduced an  analysis of various scenarios of the results of the 2020/2021 Base Residual Auction. For the last several years, PJM has analyzed a standard set of simulations – the actual base results and nine different simulations.

Dave Anders, director – Stakeholder Affairs, updated members on several key work activities of the Capacity Construct/Public Policy Senior Task Force. Among the completed activities, the senior task force analyzed potential state actions and their effects on the capacity construct. The task force will review several proposals from stakeholders, PJM and the independent market monitor on market design and the minimum offer price rule. Anders encouraged interested members to submit addition proposals before the task force’s next meetings Aug. 2 and 3.

Suzanne Daugherty, senior vice president, chief financial officer and treasurer, reported on a July 26 Pennsylvania Senate vote for a package of tax code changes, including an electric grid virtual financial transactions tax. The tax on PJM members’ virtual transactions is among other proposed taxes to close the state’s budget gap.

PJM believes the proposed tax would not be in the best interests of Pennsylvania consumers and taxpayers and does not support any new tax on members’ transactions. The bill must now go to the Pennsylvania House of Representatives for consideration.

Earlier this year, PJM learned there were discussions to consider the virtual transaction tax. While there was no proposal at that time, PJM provided members with non-confidential information, as well as materials expressing its concerns regarding any  new such tax.

Other Committee Business

Stakeholders endorsed by acclamation the long-debated agreements and revisions to the Tariff and Operating Agreement on pseudo-ties. The agreements include pro forma pseudo-tie agreements and pseudo-tie reimbursement agreement for pseudo-ties into PJM.

Endorsements

  • Manual 01: Control Center and Data Exchange Requirements
  • Manual 11: Energy & Ancillary Services and Manual 18: PJM Capacity Market (Capacity Performance-related revisions)
  • Manual 14B: PJM Regional Transmission Process and PJM Operating Agreement Updates (TEAC Redesign)

First reads

MC Endorses Regulation Changes

At the Members Committee meeting, members overwhelmingly endorsed changes in how PJM balances regulation signals, passing regulation market enhancements in a sector-weighted vote, with 4.24 in favor.

The changes are designed to correct the value substitution between fast-responding Regulation D (RegD) to traditional resources (RegA), performance measurement and market optimization concerns. The package was also strongly endorsed at the June 22 Markets and Reliability Committee, passing in a sector-weighted vote, with 3.89 in favor.

Other Committee Business

  • Members approved the pseudo-tie agreement package that was approved earlier Thursday at the MRC (also by acclamation). PJM will make a joint filing with MISO to the FERC on Monday.
  • Members endorsed Tariff revisions related the alternate queue and cost allocation for projects less than $5 million (Consent agenda)
  • Vice-chair Mike Borgatti reviewed aspects of the Members Committee Annual Plan