PJM, Stakeholders Revisit Opportunity Cost Calculator


In advance of a possible vote at the Sept. 27 Members Committee meeting, PJM and Monitoring Analytics, PJM’s independent market monitor, continued to discuss a path forward for opportunity cost calculators at a special Market Implementation Committee meeting Sept. 25.

At the center of the debate are the PJM-approved methods of calculating the opportunity cost adder in cost-based energy market offers. Currently, market sellers may calculate the opportunity cost adder via the Opportunity Cost Calculator tool available in Markets Gateway (PJM’s preferred method) or a PJM-approved alternative method (per the Operating Agreement).

PJM, the IMM and stakeholders looked at the language for using the two calculators on Tuesday. Several stakeholders said they would like to get to the point where they would not have to run the costs on two calculators and take the lower results.

Per the Federal Energy Regulatory Commission, PJM has ultimate approval over the cost calculator.  PJM said it is open to changes to the calculator, if that is the will of the stakeholders.

At the end of August, Stu Bresler, senior vice president – Operations and Markets, sent a letter to Joe Bowring of the IMM outlining PJM’s position on why it currently does not recommend alternative methods for calculating the adder without approval from PJM. Bowring presented what he termed the standard model on Tuesday.

PJM later presented results of a sensitivity study. The IMM then presented its proposal for additions to the opportunity cost calculator going forward. Stakeholders provided feedback, adding  components to the matrix.