Members approved a new mark-to-auction component that will strengthen credit requirements for financial transmission rights (FTR) at Wednesday’s Market Implementation Committee meeting.
Market value decline can indicate riskier FTR portfolios. Mark-to-auction, the difference between purchase price and most recent auction price, would measure FTR portfolio market-value changes.
Currently, no credit provision provides for a collateral call when the value of an FTR portfolio is deteriorating.
To close this gap, members proposed adding a mark-to-auction component to the current FTR credit requirements. Cleared FTR prices would be marked against auction clearing prices.
The PJM proposal received 93 percent of the vote, the only package which received more than 50 percent. Stakeholders also preferred the package over the status quo (93 percent) in a non-binding vote. None of the other four packages received more than 30 percent of the vote.
If approved by the Markets and Reliability Committee on Dec. 20, the proposal will move to the January Members Committee meeting. If passed, PJM will file changes shortly after that, with implementation in April 2019.
In other business, Bhavana Keshavamurthy, PJM senior client manager – Client Management and chair of the special MIC on Fuel Cost Policy Enhancements, and Diane Antonelli, senior compliance analyst – Reliability Compliance, reviewed the progress from two special MIC meetings on fuel cost policy enhancements and solicited feedback from stakeholders on interest identification.
Fuel cost policies document the process by which a PJM market seller calculates the fuel cost component of a generating resource’s cost-based energy market offer.
Based on the first year of experience with fuel cost policies, PJM and stakeholders identified potential improvements to the rules and process governing fuel cost policies. In 2019, stakeholders will explore alternatives to cost-based offers.
Stakeholders discussed the design components, including simplifying the administrative process and coordinating review standards among the Independent Market Monitor, PJM and stakeholders. Melissa Pilong, senior analyst, reviewed the status quo for each design component of the matrix. Members can send design components and options to Diane.Antonelli@pjm.com.
PJM also provided an update on the RTO-wide black start request for proposal (RFP) process for new black start units to be available in 2020. PJM worked with transmission owners to identify changes to critical load, and issued a request for proposal for any new black starts needs.
The requirement will ensure that black start resources can maintain full black start megawatt capability when the primary fuel source is unavailable, and it will apply both to future RFP processes and existing black start resources.