Stakeholder Process Drives August MRC

The effectiveness of the PJM stakeholder process was on view Aug. 25 at the Markets and Reliability Committee meeting, as stakeholders discussed potential changes to the fuel cost policy approval process  and a potential review of the capacity market.

A stakeholder group (American Municipal Power, Inc., Delaware Municipal Electric Corporation, Direct Energy, Dominion Virginia Power, Old Dominion Electric Cooperative, PJM Public Power Coalition, Public Power Association of New Jersey) presented a first read of a problem statement and issue charge on examining the PJM capacity market and the Reliability Pricing Model.

Members will vote on the problem statement and issue charge at the September MRC.

“PJM believes in the stakeholder process,” said Suzanne Daugherty, senior vice president, chief financial officer and treasurer. “If stakeholders support the problem statement, then PJM will support that decision.”

According to the problem statement, the group wants PJM and the stakeholder community “to embark on a comprehensive and holistic assessment of RPM and alternative resource adequacy constructs that, in concert with the energy, ancillary services markets and shortage pricing, would be more resilient in the face of constant change.”

Proponents say that examples of these changes include the environmental, political and policy goals of each state that could impact RPM, the EPA’s Clean Power Plan and unforeseen events such as the recent challenges from power purchase agreements in Ohio.

The group wants to identify the objectives of a well-functioning capacity market construct and brainstorm to see if developing alternatives to the existing capacity construct is feasible to better meet the identified goals.

Opponents said that looking at other markets is not a solution and challenged backers to find one that works better than PJM. And, supporters also recognized that certain things may not be able to be done within any market construct.

The authors of the proposed problem statement and issue charge want to examine fully what changes might mean, including any impact on energy and ancillary services markets. Stakeholders on both sides acknowledge that there have been discussions on the subject in other forums and in other contexts so there should be dialogue within the PJM stakeholder process.

The discussion began at the PJM Grid 20/20 forum on Aug. 18 on Public Policy Goals and Market Efficiency.