Task Force to Study Value of Summer-Only DR Outside of Capacity Market

Stakeholders at the Aug. 24 Markets and Reliability Committee meeting endorsed the creation of a new senior task force to study how summer-only demand response may be valued within the PJM marketplace, outside of the capacity market.

Scott Baker, senior business solution analyst – Applied Solutions, said the scope of the problem statement and issue charge had been narrowed from considering all seasonal resources to focus on summer-only DR, given that it was the seasonal resource with the largest amount of offered, but not cleared, megawatts in the 2020/2021 Base Residual Auction.

Items considered out of the scope of the new group also were detailed, including subjects already addressed by the Seasonal Capacity Resource Task Force, which stakeholders agreed to officially close.

Non-supply side market mechanisms to accommodate summer-only demand response were not in PJM’s capacity market aggregation proposal for seasonal resources, which was approved earlier this year by the Federal Energy Regulatory Commission.

Also at the meeting, Lisa Morelli, manager – Real-time Market Operations, presented the first reading of proposed conforming revisions to Manual 11: Energy & Ancillary Services involving the implementation of intraday offers.

The committee will be asked for endorsement at its next meeting, with the changes slated for implementation on Nov. 1.

Morelli cautioned that there may be amendments to proposed manual language resulting from ongoing discussion with the Independent Market Monitor regarding the ability to opt in to intraday offers and the linkage of price-based offers with fuel-cost policies.

Joe Bowring presented the IMM’s position on hourly offer capping, the opt-in process and offer-cap verification.

Current rules sufficiently mitigate market power for daily offers but are not suited to keeping up with intraday offer changes, he said.  PJM and the IMM have therefore proposed additional tariff revisions which, if approved, will be implemented around Jan. 1.

Dave Anders, director – Stakeholder Affairs, provided an update on the work of the Capacity Construct/Public Policy Senior Task Force, noting that the group is on its fourth and final task: developing potential updates to the current capacity market construct to harmonize the market with actual or potential state initiatives.

The task force will review nine proposals divided among three approaches: repricing; various ways the market could be modified to look at different constructs; and applying the minimum offer price rule across the board.

The group will be looking for approval of any recommendations by the end of the year so they may be applied to the May base residual auction.

Other Committee Business

Adam Keech, executive director – Market Operations, shared a summary of PJM’s recent whitepaper, “Energy Price Formation and Valuing Flexibility.”

The paper is among several published recently to study the issue and does not contain a proposal.

“There is a lot of activity around this subject, but not a clear path forward at this time,” he said.

Endorsements

First Readings

  • Draft charter for the Primary Frequency Response Senior Task Force
  • Clean-up of definitions from the Governing Documents Enhancement & Clarification Subcommittee
  • Revisions identified in the periodic review of Manual 03A: EMS Model Updates and Quality Assurance
  • Revisions regarding FTR Forfeitures in Manual 6: Financial Transmission Rights
  • Updates identified in the periodic review of Manual 14A: Generation and Transmission Interconnection Process
  • Revisions to Manual 28: Operating Agreement Accounting associated with the implementation of Intraday Offers