Education dominated the Market Implementation Committee meeting Oct. 11, as PJM and stakeholders delved into a number of multi-layered issues, ranging from price responsive demand to five-minute settlements and including credit to fuel cost policy updates to market path/interface pricing points.
Price responsive demand
PJM presented the first read of three proposals from the Demand Response Subcommittee to address price responsive demand (PRD) and its alignment with capacity performance requirements. Price responsive demand was developed prior to Capacity Performance rules.
While all three proposals have eight components in common, Pete Langbein, manager – Demand Response Operations, and Terri Esterly, senior lead engineer – Capacity Market Operations, detailed the differences (Page 6). PJM also published the Demand Response Subcommittee PRD poll results.
Two of the three proposals leverage demand response rules, which were updated for PRD; the third extends the existing rule for the winter period and allows for seasonal aggregation. PJM anticipates filing endorsed changes with the Federal Energy Regulatory Commission by January 2018 to ensure rule changes are in place well in advance of the 2018 Base Residual Auction.
This will allow members with PRD plans approved in January 2018 under the existing rules to terminate those plans if – because of PRD rule changes – they no longer are viable, and to participate through the aggregation rules as demand response in the Base Residual Auction.
Five-minute settlements
Esterly and Ray Fernandez, manager – Market Settlements Development, presented a number of first-read manual revisions associated with the implementation of five-minute settlements. PJM and stakeholders will continue to work on the manual changes at the next Market Settlements Subcommittee, scheduled for October 30.
- Manual 11: Energy & Ancillary Services Market Operations
- Manual 18: Capacity Market
- Manual 27: Open Access Transmission Tariff Accounting
- Manual 28: Operating Agreement Accounting
- Manual 29: Billing
Capacity market offer cap balancing ratio
Jeff Bastian, manager – Capacity Market Operations, reviewed the problem statement and issue charge, presented to the Markets and Reliability Committee on October 3, that address the capacity market offer cap balancing ratio issue that affects base residual auctions beginning with the May 2019 auction. Because there have been no performance assessment hours under Capacity Performance, a valid offer cap cannot be set under existing Tariff provisions. The problem statement and issue charge address the issue longer term.
PJM presented a short-term solution at the September MIC and Markets & Reliability Committee meetings. That solution addresses the Base Residual Auction to be held in 2018. It includes tariff revisions on the default market seller offer cap and balancing ratio.
Virtual Transactions
PJM announced that, likely at the end of the week, it will file changes to the Tariff and Operating Agreement with the FERC related to virtual transactions. At its February meeting, the Members Committee passed the proposal to allocate uplift to up-to-congestion virtual transactions and, at its meeting in June, passed the proposal to reduce bidding nodes for virtual transactions. PJM held the proposals for filing until there was a quorum at the FERC.
Other committee business
- PJM gave a brief update on the fuel cost policy annual review process (policies become effective Nov. 1) and said it will work with members to resolve any issues that have arisen from, for example, changes introduced by intraday offers.
- First read on proposed financial transmission rights credit requirements for transmission upgrades. The proposed change is designed to reduce the exposure posed by congestion reductions resulting from major transmission upgrades. There also was a stakeholder proposal addressing minimum FTR collateral requirements.
- Update on the integration proposal from the Ohio Valley Electric Corporation (and its wholly-owned subsidiary Indiana-Kentucky Electric Corporation)
- Review by Monitoring Analytics, PJM’s independent market monitor, of the market path/interface pricing point alignment issue (approved in August) and presentation of a proposed solution for expedited resolution
- Education provided by Monitoring Analytics on its problem statement and issue charge on transmission penalty factors (approved at the August MIC). The IMM believes PJM needs more clarity in its clearing process regarding the penalty factors.
- Update on Interregional Coordination activity
Endorsements
Stakeholders endorsed revisions to Manual 11: Energy & Ancillary Services Market Operations, associated with the offer verification process for the implementation of FERC Order 831: Energy Offer Verification. Monitoring Analytics presented its disagreements, including what it perceives as a lack of demand response verification methods and urged delay. The proposal, however, passed by acclamation.
Other endorsements:
- Revisions to Manual 11 and the Operating Agreement to amend the offer capping logic (by acclamation)
- Tariff revisions for a proposed change in credit requirements for regulation resources (by acclamation)
- Stakeholder problem statement and issue charge on demand resources and calculating the winter peak load (by acclamation)
- Problem statement and issue charge from Monitoring Analytics related to the long-term financial transmission rights market (65 percent in favor)