Tier 1 Synchronized Reserve Billing Adjustments for Some Generators

PJM recently updated the estimates it uses in the Markets Settlements system for Tier I Synchronized Reserve compensation, effective July 1, 2014.

As a result of the new calculations, billing adjustments will be made to the Tier I Synchronized Reserve resources for the period of Oct. 1, 2013 through June 30, 2014. The adjustments reflect more accurate estimates than had been previously calculated.

The adjustment was communicated at the Members Committee Webinar March 23 as well as at the Markets Reliability Committee meeting March 26.

The new estimates are a result of a review of compensation based on poor generator response to a synchronized reserve event during a heatwave Sept. 10, 2013. Tier I Synchronized Reserve estimates are the input to the associated compensation calculations in the Market Settlements system.

The total value of the potential adjustments is approximately $72.5 million. The adjustment will either occur completely in the April 2015 monthly bill (issued in May) or a combination of the April 2015 and May 2015 monthly bills.

Adam Keech, senior director – Market Operations, said PJM is working on the details of the billing adjustment. Initial reports will be available to members shortly in the Market Settlement Reporting System. Market participants will be able to view the preliminary reports in the system and see the estimated dollar amounts from this billing adjustment affecting their accounts.