PJM presented results of its informal poll at the June 27 special Markets Implementation Committee meeting on the Quadrennial Review, while stakeholders continued to fine-tune proposals.
In the poll, stakeholder preference was mixed between status quo on some topics and changes to others (such as the positioning of the variable resource requirement curve and debt-to-equity ratio).
A variable resource requirement curve is an essential element of the capacity market. It is the demand formula used to set the price paid to market participants for capacity and the amount of capacity for the base residual auction.
For example, the 89 percent of stakeholders responding to the poll preferred the status quo for the reference resource (a 7 FA frame gas turbine unit), while 69 percent of stakeholders wanted change for gas pricing hubs.
A reference resource is representative of a peaking unit in the energy market that derives a significant portion of its revenues from the capacity market. The reference resource is meant to reflect a realistic standard on which to base the cost of new entry (CONE).
Gary Helm, lead market strategist – Applied Innovations, reviewed recent changes to the matrix, including the updated gas pricing hubs. Jeff Bastian, manager – Capacity Market Operations, reviewed the impacts to the energy and ancillary services offset recommendations.
Energyzt, on behalf of the P3, a non-profit group representing the PJM power providers, presented additional analysis and findings on the Quadrennial Review recommendations. The basis for Energyzt’s presentation is that circumstances in the industry have changed since the Brattle Group’s report, which Erergyzt argued skews the report’s calculations.
Energyzt is offering alternatives to Brattle’s recommendations for PJM’s consideration, including a different assessment of the proposed after-tax weighted average cost of capital, which is a component of the CONE calculation.
PJM has previously indicated it had accepted Brattle‘s assumptions in formulating its gross CONE calculations. PJM will take Energyzt’s recommendations into consideration.
PJM will send out a poll on the proposed packages by July 31 and post the results several days ahead of the Aug. 8 Market Implementation Committee, giving stakeholders time to look at the poll.
At the Aug. 8 MIC meeting, PJM and stakeholders will discuss any changes to the proposed packages and review poll results. Stakeholders will be requested to vote at that time. There will be a subsequent vote at the Aug. 23 Markets and Reliability Committee meeting.
If FERC approves a PJM waiver request to extend the Oct. 1 filing date, a final vote will take place at the Sept. 27 Members Committee meeting. If the waiver is not approved, members will be requested to vote during a special call prior to Aug. 31.
If the waiver is approved, PJM will file Tariff changes resulting from the review process with FERC by Oct. 12 after a presentation at the Oct. 2–3 meeting of the PJM Board.