Federal regulators have accepted proposed revisions to PJM Interconnection’s long-term financial transmission rights auction rules that will eliminate the three-year, long-term FTR auction product and adjust the treatment of auction revenue rights.
The capacity offered for sale in long-term FTR auctions is the residual system capability after the annual auction revenue rights, or ARRs, allocations and the annual FTR auction.
In July, the grid operator asked the Federal Energy Regulatory Commission for permission to eliminate the three-year long-term FTR auction product because it has garnered little interest and eliminating it would increase FTR software efficiency. PJM also said that eliminating the three-year product will not decrease participant flexibility because auction participants may still purchase FTRs for each of three planning periods covered by a given auction.
PJM also proposed to enhance long-term FTR auction modeling of residual system capability to better preserve capability for ARR holders and modify the long-term FTR auction biddable periods to improve FTR software performance. To prevent overstatement of residual ARRs available for the long-term FTR auction, PJM plans to conduct an additional, offline annual allocation in which transmission outages in the annual ARR allocations are treated as if they are returned to service.
PJM said the proposal will account for the most accurate set of ARRs and help “mitigate concerns that FTR holders can benefit from the uncertainty of transmission topology forecasting in the long-term FTR auction to gain priority over ARR holders."
Trading firm DC Energy generally supported the revisions but expressed concern about the lack of transparency regarding available transmission capacity in the long-term FTR market. It therefore asked FERC to direct PJM to provide market participants with a list of all ARRs that are able to be “feasibly allocated in the long-term planning model” so that market participants can better estimate the transmission capacity available in the long-term FTR auction. DC reasoned that market participants should have access to information regarding the capacity allocated to ARRs and the remaining capacity available to long-term FTRs in order to “behave rationally and efficiently in long-term FTR auctions.”
In accepting the PJM proposal FERC refused to direct PJM to publish a list of all allocated ARRs. Under PJM’s proposal, FERC noted, the long-term FTR auction would more accurately reflect the available residual capability. So “it is unclear how the instant proposal will affect market participants’ ability to behave rationally and efficiently," FERC said. The commission nevertheless urged PJM to continue working with its stakeholders to improve transparency.
FERC said the revised tariff revisions could take effect Sept. 3 so they could be implemented in the next round of PJM’s long-term FTR auction that commenced Sept. 4. (FERC docket ER18-1968)
Jared Anderson is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.