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PJM capacity performance auction process facing more challenges

Houston β€” The PJM Interconnection's capacity performance auction process continues to face challenges, and some stakeholders want to take a methodical, comprehensive approach to overcoming those challenges without creating unintended consequences.

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Those were among the points discussed at Wednesday's meetings of the Markets and Reliability Committee and the Members Committee in Wilmington, Delaware.

During the MRC meeting, Asanga Perera, PJM senior lead engineer, presented a proposed problem statement and issue charge about issues related to external resources participating in the CP auction, which PJM staff proposed to be assigned to the Underperformance Risk Management Senior Task Force.

Among the subjects to be addressed would be compliance risks associated with PJM expanding its network model to include "pseudo ties" to external resources, congestion management challenges, operational impacts on neighboring systems, and transmission service evaluation and planning, Perera said.

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A pseudo tie, in effect, is a type of virtual tie that represents an indirect connection between a generator nearby but outside a particular grid seam and load inside that grid seam.

For external resources to be able to qualify as capacity performance resources, they must meet certain deliverability standards involving rigorous transmission service studies by the external resources' grid operator, Perera said, but PJM has found that "some of those studies were not done" rigorously enough.

One stakeholder representing public power utilities said, "Some of our members are living and dying by pseudo ties."

PJM does not permit the media to identify non-staff speakers at stakeholder meetings without the speaker's permission.

Currently, PJM has been implementing temporary solutions, Perera said, but "it's critical that PJM pursue long-term solutions that would be meaningful in planning and in the Reliability Pricing Model [capacity auction] process."

PJM staff hopes that the task force can develop a "set of recommendations" so that the Markets and Reliability Committee can act by September, which would provide enough time to get changes through the Federal Energy Regulatory Commission in time for the May 2017 capacity performance auction, Perera said.

One stakeholder who called in to the meeting said, "It seems like the time line is a little aggressive."

Another stakeholder at the meeting noted that PJM has been using pseudo ties for several years, and he would be "exceptionally concerned" that any changes proposed by the task force might interfere with the ability of existing external units that have been delivering into PJM to continue doing so.

Ultimately, PJM decided to withdraw the problem statement and issue charge so they can be revised to address concerns raised by stakeholders.

During the Members Committee meeting, Stu Bresler, PJM vice president for market operations, told attendees that as a result of Wednesday's decision by the Federal Energy Regulatory Commission to block American Electric Power and FirstEnergy long-term power purchase agreements previously approved by the Ohio Public Utilities Commission, PJM may have to develop new minimum offer price rule tariff language.

In response, a stakeholder said, "If there's anything that should be done at all, I'd like to suggest we expand the scope to the entire construct."

"Since 2010, we've had 24 substantive revisions to the RPM," he said. "We are concerned that the construct is not working."

The stakeholder expressed concern that "one more reactive incremental tweak is just going to result in ... more unintended consequences that we will have to fix."

Another speaker said that if FERC issues an order requiring a MOPR compliance filing, PJM would schedule stakeholder meetings to respond appropriately.

--Mark Watson, Markham.watson@platts.com
--Edited by Richard Rubin, richard.rubin@platts.com