Must-Offer Exception Process Returns to MIC

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The Market Implementation Committee (MIC) on Wednesday embarked on its second review of proposed changes to the must-offer exception process for capacity resources.

The committee previously passed the proposal with 79 percent approval, but the Markets and Reliability Committee in December sent the issue back to the MIC.

Discussion revolved around Capacity Interconnection Rights – the permission to input generation onto the transmission system at the point of interconnection. These are granted to generators participating in the market as capacity resources, which in turn must offer all available megawatts into each capacity auction of the delivery year. 

Under Capacity Performance (CP) rules, certain types of generation are categorically exempt from this must-offer requirement, including intermittent and storage capacity resources. Owners of other generation types must seek an exception to forego the must-offer requirement, which can be granted if the unit is expected to be physically incapable of meeting the performance requirements of CP.

Capacity Performance is a requirement that generators must meet their commitments to deliver electricity whenever PJM determines they are needed to meet power system emergencies.

Pat Bruno, senior engineer – Capacity Market Operations (pictured above), led the stakeholder discussion Tuesday. Some stakeholders said they worried about resources retaining Capacity Interconnection Rights without a clear plan to become capable of offering as CP, and others who want to review the issue “holistically,” including the rules as they relate to intermittent resources.

Bruno said he would be reaching out to stakeholders and the independent market monitor before the committee’s Feb. 6 meeting to determine how to proceed before sending the issue back to the MRC in April.

Laura Walter

Laura Walter, senior lead economist – Advanced Analytics, updated members on PJM’s Dec. 3, 2018, compliance filing to the Federal Energy Regulatory Commission (FERC) regarding energy storage participation in the competitive markets.

In February 2018, FERC Order 841 required each regional transmission organization and independent system operator to devise a plan to facilitate the participation of energy storage resources in the energy, capacity and ancillary services markets.

These enhancements will require manual changes, Walter said, and stakeholders can expect to see proposed revisions by the end of June. Walter requested feedback at the MIC’s next meeting, including what factors should go into cost offers for energy storage, suggesting examples of inventory, opportunity and replacement expenses.

Also at Wednesday’s meeting, Adam Keech, executive director of Market Operations, announced changes to Manual 11 clarifying the details that trigger shortage pricing.

Generally, manual changes go through the stakeholder process, but Keech said the revisions were needed immediately to close a recently identified loophole and address a compliance issue.

The changes stem from the study of a July 10, 2018, low-frequency event marked by an unexplained drop in Eastern Interconnection frequency and poor synchronized reserve response. (See Operating Committee Hears Results of July 10 Low-Frequency Event Study.)