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Members Work Their Way Through Complex Issues at MIC 

Stakeholders voted on a trio of multifaceted proposals Wednesday at the Market Implementation Committee (MIC), sending them to the Markets and Reliability Committee (MRC) for further consideration.

Gas Contingency Switching Compensation

The lengthy debate at the October MIC over mechanisms for cost recovery from a gas contingency switching event (see Gas Contingency Costs Dominate MIC Meeting) continued on Wednesday. PJM and stakeholders wrestled with the nuances of Package A and Package B, as well as a stakeholder Package C (from Direct Energy) and postponed a morning vote to construct alternative proposals.

Rich Brown, manager – System Operator Training, detailed the differences between Packages A and B. In both of the packages, PJM, with input from Monitoring Analytics, PJM’s independent market monitor, would make the determination as to what costs were recovered. In Package C, the Federal Energy Regulatory Commission (FERC) would make the determination.

PJM worked with package sponsors and other interested stakeholders to revise the original three packages and added a fourth.

In the end, the only package that passed (with greater than 50 percent support) was the modified Calpine package (Package A). The Calpine package garnered 75 percent of the vote. In a non-binding poll, 99 percent of the voting stakeholders preferred the Calpine package over the status quo.

Package A describes a formula-rate approach that allows for compensation of various costs incurred following a PJM Operating Instruction under certain gas contingency scenarios. These include costs incurred if the unit is damaged during switching.

Another aspect of the proposal is the exemption of Capacity Performance non-performance charges from the initiation of the Operating Instruction to switch fuel or fuel source, until the generator returns to the original fuel or fuel source.

Prior to the MIC, PJM staff met with FERC staff, with commission staff providing guidance to PJM that it needed more specificity in its cost compensation examples.

Must-Offer Exception Process

Two packages were offered for vote that address improved efficiency and clarity reforms to the Reliability Pricing Model (capacity market) Must-Offer Exception Process.

Susan McGill, manager – Interconnection Analysis, first explained how Capacity Interconnection Rights (CIRs) can be transferred, giving examples of different analyses for different queues.

CIRs are the rights of a generation capacity resource to input generation into the transmission system at the point of interconnection where the generating facilities connect to the transmission system.

Pat Bruno, senior engineer – Capacity Market Operations, presented the PJM package, which provides clarifying language on the Reliability Pricing Model (RPM) Must-Offer Exception Process in Manual 18: PJM Capacity Market. The package also includes a process for generation capacity resources to become energy-only units and describes the treatment of CIRs.

The PJM proposal received 79 percent of the vote; the alternate package from the IMM did not pass. Seventy-eight percent of stakeholders preferred the PJM package to the status quo.

Financial Transmission Rights Forfeiture Rule

Several packages addressing design changes to the Financial Transmission Rights (FTR) forfeiture rule were offered for vote. The design changes to the rule stem from a 2017 FERC ruling that found PJM’s then-current FTR forfeiture rule unjust and unreasonable. In response to that ruling, PJM submitted revised rules in April 2017, which remain pending. Since then, PJM and stakeholders have examined what the rule does and worked on enhancements.

Stakeholders passed a package from VECO, Exelon and NextEra with 85 percent. The stakeholder package was very close to the PJM package, but modifies two impact tests for FTR forfeiture instead of the one modification in the PJM proposal.

Mark-to-Auction Credit

In the only first read, PJM discussed FTR mark-to-auction credit requirements. Suffolk Fund presented two proposals, H and H’.

Mark-to-auction measures FTR market value changes, the difference between the purchase price and the most recent market price. The Credit Subcommittee is proposing a new component for FTR credit requirements, in which a cleared FTR portfolio would be marked against the most recent auction prices.

Endorsements (Both by Acclamation)

 Other Committee Business

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Author: Mary Ellen Driscoll

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