Educational considerations dominate MIC 


Stakeholders discussed a number of topics on a variety of topics at the June 6 Market Implementation Committee (MIC) meeting. Topics included offer-cap balancing ratio, fuel assurance for restoration, variable operations & maintenance costs, and the financial transmission rights forfeiture rule.

Christina Stotesbury, senior engineer – Advanced Analytics and outgoing secretary of the committee, said that the amount of weighty issues currently facing the MIC has spawned a number of special committee sessions.

Another was added on Wednesday following an extended discussion on the market seller offer cap balancing ratio. The special session will be 2-4 p.m. on June 19. It joins MIC sessions on the Quadrennial Review, gas contingency costs, electric storage (Order 841) and transmission constraints.

Pat Bruno, senior engineer – Capacity Market Operations, presented proposed packages from the solutions matrix.

PJM and stakeholders are working to develop a more comprehensive methodology of calculating the balancing ratio used in the capacity performance default market seller offer cap and review the Capacity Performance (CP) non-performance charge rate.

Balancing Ratio

The balancing ratio is calculated during a performance assessment interval to determine each capacity resource’s obligation to deliver energy. Prior to each Base Residual Auction, an estimate of future balancing ratios is determined for use in the default market seller offer cap.

PJM proposes to change the methodology used to calculate the estimated balancing ratio in the Capacity Performance default market seller offer cap. PJM also is recommending changes to the CP non-performance charge rate and default market seller offer cap formulas.

Fuel Assurance for Black Start Resources

PJM presented a problem statement and issue charge to address fuel assurance requirements for black-start resources. The scope will include discussions on current black start fuel requirements, potential changes, testing, transition plans, and compensation issues.

Initial analysis of PJM’s existing black start fleet indicates that approximately 50 percent of the units demonstrate fuel assurance, through dual-fuel capability, on-site fuel storage or multiple gas pipeline connections. This means approximately 50 percent of existing black-start resources do not have assurance of fuel beyond their primary source.

Black start units can start their own power without support from the grid in the event of a major system collapse or a system-wide blackout. Right now, PJM has no specific fuel-assurance requirement for black-start units other than an existing tariff provision that black start units maintain fuel to allow for 16 hours of run time.

Variable Operations & Maintenance Costs

PJM and stakeholders discussed the analyses from PJM and Monitoring Analytics, PJM’s independent market monitor, associated with estimated variable operation & maintenance (VOM) cost impacts of the proposals that have been endorsed by the MIC.

Tom Hauske, senior lead engineer – Operation Analysis and Compliance, reviewed the proposals and provided PJM’s estimate and rationale for the estimate of the MIC-endorsed VOM packages.

For most generators, the longer-term maintenance costs (up to 20 years), may be included in the maintenance adder of the generator’s cost-based energy offer. Such costs include major inspections and turbine and boiler overhauls

Combined cycle and combustion turbine units are treated differently, however. Since 2015, their long-term overhaul and major inspections have been excluded from their offers in the backward-looking energy market.

PJM believes that combined cycles and combustion turbines should be allowed to include major inspection and overhaul costs in the energy market like other unit types. Currently, they can only submit estimated future costs into the forward-looking capacity market. PJM has taken the position that the energy market is the proper location for the units to recover these costs, since the generator can only include actual expenses.

Financial Transmission Rights Forfeiture Rule

PJM and stakeholders continued to work on the Financial Transmission Rights (FTR) forfeiture rule. Brian Chmielewski, senior consultant – Market Services, presented an additional sensitivity analysis on the current FTR impact test for the month of September 2017.

Stakeholders presented additional education and examples.

The FTR Forfeiture Rule is intended to deter market participants from using virtual transactions to create congestion that benefits their FTR positions. Under the FTR Forfeiture Rule, an FTR holder forfeits the profit from its FTR when its portfolio of FTR virtual bids results in a higher LMP spread in the Day-Ahead Energy Market than in the Real-Time Energy Market (net impact on a constraint related to a FTR position).