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PJM capacity auction to run with complaint over Dominion's FRR election still pending

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PJM capacity auction to run with complaint over Dominion's FRR election still pending


PJM insists it is not 'bending the rules'

IMM, power supplier groups support complaint

Potential for refunds, auction re-run loom over PJM

  • Autor
  • Jasmin Melvin
  • Editora
  • Rocco Canonica
  • Commodity
  • Energia elétrica

A complaint seeking action that could invalidate PJM Interconnection's approval of Dominion Energy's decision to pull nearly 17 GW of resources and load from the capacity market will not be acted upon ahead of the long-awaited May 19 resumption of PJM's annual capacity auction, potentially throwing into question the finality of the upcoming auction's results.

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The Federal Energy Regulatory Commission issued a notice May 14 setting a May 27 deadline for comments on the emergency complaint (EL21-72) filed by LS Power Development and its affiliate Doswell Limited Partnership. The commission will have to take any comments filed up and to that date into consideration before issuing an order on the matter.

"Since LS Power's complaint predates the auction, refund obligations would appear to attach to the auction results pursuant to Section 206 of the Federal Power Act if FERC grants the complaint after the auction," ClearView Energy Partners said in a May 17 note to clients. "However, the commission has not, to date, ordered an auction to be re-run."

S&P Global Platts Analytics has said Dominion's exit puts "additional downside" pressure of $90-$110/MW-day on its previously assessed clearing price for the May auction, and as such adds to the difficulty for at-risk nuclear and new gas-fired generation to clear the auction.

PJM has already filed a response asking FERC to deny the complaint that accuses the grid operator of erroneously approving a fixed resource requirement (FRR) capacity plan that covers one year of a multi-year FRR election, in alleged violation of market rules governing PJM's reliability pricing model market design.

A load-serving entity that pursues the FRR route must demonstrate to PJM that it either owns or has under its control enough capacity to serve 100% of the load and load growth in its service territory, and each resource included in the plan must individually meet PJM's existing capacity requirements.

PJM's defense

PJM said in a May 12 filing with FERC that "approval of one-year FRR capacity plans is consistent with both the language and intent of PJM's [Reliability Assurance Agreement] and Manual and it would not be practical or reasonable to require a five-year FRR capacity plan given the timing with which certain parameters are determined that define a FRR entity's obligations."

With PJM set to hold its first capacity auction since 2018 on May 19 for the 2022-23 delivery year, the emergency complaint has drawn much attention, with a number of motions to intervene and several comments already submitted to FERC ahead of the comment window deadline.

PJM insisted that it was not "bending the rules" when it accepted Dominion's plan for how it would take over responsibility for resource adequacy in its service territory for the 2022-23 delivery year. While an FRR alternative election must be for a minimum of five years, the RAA "expressly states that a FRR entity 'shall annually extend and update such plan by no later than one month prior to the base residual auction for each succeeding delivery year in such plan.'"

The grid operator continued: "It would be superfluous to include language that requires a FRR entity to annually extend and update such plan if the rules also require a FRR entity to submit a five-year FRR capacity plan. Thus, the RAA language permits FRR entities to submit, and for PJM to approve, one-year FRR capacity plans on an annual basis."

PJM adds that even if the RAA provisions were ambiguous, PJM's Manual language refers specifically to an initial FRR capacity plan "for the first delivery year," and requires an LSE to "annually demonstrate ... for each succeeding delivery year that it has extended the commitment of sufficient capacity resources."

Support for complaint

But PJM's independent market monitor, Monitoring Analytics, came down on the side of LS Power, and encouraged FERC to invalidate Dominion's FRR election for the May auction.

"PJM's past practice and interpretation of the Manuals cannot supplant the required application of the filed rate, which provides for extending and updating an initial FRR capacity plan that covers the five year term of the election," Monitoring Analytics said. "PJM does not have the discretion to eliminate the tariff requirement that the entity" demonstrate the capacity to satisfy the entire capacity obligation for the full five-year term of the FRR election.

The Electric Power Supply Association, PJM Power Providers Group and Vistra also filed comments in support of the complaint.

The complaint contends that PJM's approval of a capacity plan spanning just the first year of the FRR term "violates the terms of the filed rate, disregards the clear direction of the commission when it approved the FRR alternative rules, and jeopardizes reliability by failing to enforce a core requirement of the FRR alternative rules."

The complainants had hoped FERC would fast-track the matter and issue an order by May 17 invalidating any FRR alternative elections approved on the basis of non-compliant FRR capacity plans.

Comments from Advanced Energy Economy and Advanced Energy Buyers Group took no position on the complaint but urged FERC not to delay the upcoming auction.