Special Session of MIC Kicks off With Education on Fuel-Cost Policy

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The first special session of the Market Implementation Committee to study potential enhancements to PJM’s fuel-cost policy review and approval process was held on Nov. 2 and featured educational presentations by PJM and Monitoring Analytics, PJM’s independent market monitor.

The forum was created after the MIC in September approved a problem statement and issue charge sponsored by Southern Maryland Electric Cooperative Inc., Old Dominion Electric Cooperative and PPGI Fund A/B Development LLC.

The issue grew from members’ experience with using fuel-cost policies since May 15, 2017, at which point all market sellers were required to have a PJM-approved fuel-cost policy for each fuel type.

Fuel-cost policies are documented in PJM’s Tariff and Schedule 2 of the Operating Agreement. They describe the method used to calculate the price of fuel in the market seller’s cost-based offer. A market seller may only submit a non-zero cost-based energy market offer if it has a PJM-approved fuel-cost policy consistent with each fuel type on which the resource can operate.

Each year, market sellers must submit to PJM and the market monitor an updated policy that complies with the rules, or confirm that their approved policy continues to be compliant. A market seller may be assessed a penalty for submitting a non-compliant, cost-based offer.

Stakeholders are tasked with identifying improvements to the current process as well as potential alternatives.

The next meeting is scheduled for Dec. 4, when members will continue with education and begin looking at design components.

The key work activities have staggered completion dates, with potential filings with the Federal Energy Regulatory Commission slated for June 2019 through the end of the year.