Stakeholders give final vetting of VOM proposals at MIC

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PJM and stakeholders spent several hours on a thorough review of the four Variable Operations & Maintenance proposed solution packages at the July 11 Market Implementation Committee meeting.

Brock Ondayko, American Electric Power (AEP), reviewed the default VOM package, which included the friendly amendment endorsed at the June Markets and Reliability Committee. Melissa Pilong, senior analyst – Operations Analysis & Compliance, presented the PJM package, and Monitoring Analytics presented its package.

Brian Wilkie from Rockland Electric Company (RECO) presented his company’s package, which at the June MRC was moved and seconded to be the third alternative motion.

The AEP proposal is called the “default proposal” because it allows resources to utilize a default VOM value, published by the U.S. Energy Information Association, in place of using the PJM Package method for calculating VOM.

Stakeholders reviewed a chart comparing each component of the four proposals in advance of voting on the proposals at the July 26 Markets and Reliability Committee.

The default and PJM proposals are similar – the main difference is that the PJM proposal allows energy-only resources, or resources that did not clear in the capacity market, to include fixed costs in their cost-based energy offer.

Both the default and PJM packages gained more than 50 percent endorsement at the April MIC meeting; the independent market monitor’s package did not.  The RECO proposal was introduced as a compromise at the June MRC and was moved and seconded to be the third alternative motion.

The MRC vote must come no later than August, based on a motion brought forth at the June MRC.  The primary reason for this deadline is aspects of the VOM affect the Quadrennial Review (members are supposed to vote by Aug. 31 on recommendations that result from the Quadrennial Review – see below).

Quadrennial Review

Jeff Bastian, manager – Capacity Market Operations, gave a detailed presentation of PJM’s recommendations for the Net Energy & Ancillary Services Revenue (EAS) Offset for the Quadrennial Review of VRR Curve Parameters.

Stakeholders and Bastian reviewed a chart with the EAS impacts RTO-wide and in each load deliverability area, comparing the current Net Cost of New Entry (CONE) with the proposed Net CONE revisions.

PJM is required to have the Members Committee approve the Tariff changes from the Quadrennial Review by Aug. 31 but has asked FERC for an extension  to Sept. 27, 2018. If FERC approves the extension, members will vote at their September meeting. If not, there will be a special Members Committee call in August (normally, there is no August Members Committee meeting).

Offer Cap Balancing Ratio

Pat Bruno, senior engineer – Capacity Market Operations, gave the first read of two draft proposals to address the offer cap balancing ratio issue.  The work should be completed in time for implementation for the May 2019 Base Residual Auction.

Package A focuses on the methodology of calculating the projected balancing ratio (B’) used in the default market seller offer cap of Net CONE (for the locational deliverability area x B’ in the RPM auctions). The proposal is intended to be a straightforward solution that augments the existing methodology by providing reasonable proxy hours and balancing ratios to use when no (or relatively few), actual performance assessment intervals occur.

Package B provides a similar solution as Package A for the balancing ratio, but would also change the estimated number of performance assessment intervals from the current 30 hours (360 intervals) to a historical average number of intervals experienced in the prior three delivery years. The estimated number of performance assessment intervals is used in determining the CP non-performance charge rate and the CP default market seller offer cap.

Endorsements

  • Stakeholders endorsed revisions to Manual 18: PJM Capacity Market, Open Access Transmission Tariff and Reliability Assurance Agreement for registration for aggregated seasonal demand response resources.
  • They also endorsed the PJM financial transmission rights credit proposal and associated tariff revisions, which will go into effect Sept. 4. Two other stakeholder proposals failed and, in a non-binding poll, stakeholders voted 92 percent in favor of the PJM proposal rather than the status quo. The proposal implements a 10-cent-per-megawatt-hour minimum monthly credit requirement applicable to both FTR bids submitted in auctions and cleared positions held in FTR portfolios. Minimum requirements will, by definition, increase credit requirements, but only for members with current low requirements relative to their FTR volume.

Other Committee Business

  • PJM updated stakeholders on the impacts of the settlement agreement (EL05-121-009) approved by the Federal Energy Regulatory Commission in May. PJM will begin billing the settlement agreement in the July 2018 bill issued in August. Ray Fernandez, manager – Market Settlements Development, provided examples of the settlement impacts of the agreement and commented on the timing of providing members with updated Transmission Enhancement worksheets.
  • As requested at the May Markets & Reliability Committee, Susan Kenney, senior consultant – Market Services, provided stakeholders additional information regarding price-based offers greater than $1,000/MWh. Kenney presented both short-term/interim solutions and a long-term proposal in which cost-based and price-based offers over $1,000/MWh are automatically verified upon submission.

 Updates