PJM Answers AEMA Complaint on Demand Response to FERC

On July 9, PJM filed a response  with the Federal Energy Regulatory Commission asking the FERC to reject a complaint by the Advanced Energy Management Alliance coalition. The AEMA coalition complaint requested to include demand response and energy efficiency resources in PJM’s upcoming Capacity Performance transition auctions; it filed the complaint on June 29, 2015.

The complaint argues that PJM violates its tariff by limiting the transitional auctions to generation capacity resources. PJM thinks that AEMA’s reading of its tariff is wrong.

PJM believes:

  • Its tariff provisions concerning the transition auctions are limited to general capacity resources.
  • PJM’s decision to limit the transitional auctions to generation capacity resources and to not include demand response and energy efficiency was based on sound reasoning.
  • The provisions at issue are transitional mechanisms for the transitional auctions. Demand response is, by definition, driven by customer decisions and does not require the same level of incremental investment to manage curtailments.
  • In its July 9 decision, FERC found that PJM’s tariff provisions are just and reasonable and not unduly discriminatory.

PJM has alternative proposals, should the FERC reconsider its ruling.

PJM believes the FERC could limit demand response and energy efficiency participation to those megawatts that were offered in and cleared, in any auctions already held for the delivery years 2016/2017 or 2017/2018. However, there are concerns about this limited participation considering the uncertainty surrounding demand response and the current U.S. Supreme Court review of the district court’s EPSA decision.

The second offered alternative is to allow previously offered annual demand response and energy efficiency – even if not previously cleared – to participate in the transitional auctions. This alternative also presents some risks, according to the filing.