PJM presented stakeholder education related to the implementation of Order 825 at the Market Implementation Committee on Oct. 5. Order 825, issued by the Federal Energy Regulatory Commission in June, standardizes some market designs associated with market settlements and shortage pricing.
PJM is seeking stakeholder feedback on a conceptual proposal and options to address the Order, while recognizing the need to evaluate all requirements and causes. PJM is required to submit a compliance filing for Order 825 in early January 2017.
Within the final rule, the FERC ordered that shortage pricing must be triggered in any five-minute interval in which a shortage of energy or operating reserves occurs.
PJM wants to examine two particular issues on implementation. The first is the effect of triggering shortage pricing on a five-minute basis; the second, if using the current operating reserve demand curve to price shortage on a five-minute basis would spike reserve prices.
PJM asked stakeholders for feedback on options, which included a range from doing nothing to changing demand curves to moderate potential price spikes. PJM plans to create curves for all operating reserve demand curves and provide details and analysis at a future MIC meeting.
PJM also updated the stakeholders on the five-minute settlement implementation timeline. In addition to keeping the MIC informed, PJM will provide updates and obtain feedback through the Market Settlement Subcommittee and the Tech Change Forum.
Stakeholders endorsed with a 75 percent favorable vote, a joint proposal from PJM and the Independent Market Monitor, which established a new parameter for soak time. The proposal was one of several proposed packages on Operating Parameter definitions in Manuals 11, 15 and 28.
One other stakeholder package also passed with a 57 percent vote. The PJM/IMM proposal was chosen over the status quo to be the main motion that moves forward to the November Markets and Reliability Committee meeting.
Financial Transmission Rights and Auction Revenue Rights
PJM held discussions related to balancing congestion and necessary reforms for FTRs and the Day-Ahead Market surplus allocation in response to a FERC ruling on a PJM filing from October 2015.
The filing revised the Operating Agreement and tariff, addressing unwarranted revenue shifts and cross-subsidies between and among ARR and FTRs. PJM will submit a compliance order by Nov. 15 with a tentative implementation date of June 1, 2017.
In a related presentation, stakeholders discussed and learned more about solution packages for enhancements to the residual auction revenue rights process.
PJM provided an update on inter-regional coordination, including a status update on the new operating protocol for the PJM/NYISO interface. PJM and NYISO have published a joint, high-level white paper and plan a joint filing with the FERC early in 2017.
In other business, the committee:
- Endorsed changes to Tariff Attachment Q – Credit Policy
- Endorsed minor changes to the Market Implementation Committee Charter
- Reviewed proposed revisions to Manual 15 : Cost Development Guidelines, regarding fuel cost policies (contingent upon FERC approval of PJM’s related compliance filing)
- Reviewed revisions to Manual 28: Operating Agreement Accounting Revisions for changes to descriptions of a fully metered electric distribution company
- Gathered stakeholder interests related to Annual Revenue Requirements for new black start Units