Dive Brief:
- A group of generators has asked PJM Interconnection to reconsider portions of its new capacity performance rules, including forgoing penalties in the event of widespread blackouts, RTO Insider reports.
- The group, calling itself the Supplier Coalition, also asked the grid operator to consider netting underperformance penalties against over-performance.
- But the group may have a tough sell since the enhanced capacity structure was designed to provide both steeper penalties and compensation to enhance reliability.
Dive Insight:
New capacity rules in PJM still need tweaks, say a group of generators, including changes to penalties that could come into play even if power plants have no way to deliver energy.
A group called the "Supplier Coalition" has submitted two problem statements to PJM's Markets and Reliability Committee. The issues are slated to be discussed at the committee's Oct. 22 meeting.
"The current settlement and transaction mechanisms for capacity, shortfalls, and bonus performance values any shortfalls and Bonus Performance based on tariff rules, which do not reflect market conditions," the group said.
One proposed solution would be for PJM to "evaluate potential opportunities to enable valuation of capacity, shortfalls, and bonus performance at a market price," the group said.
Another issue are penalties for not delivering power: The group says generators should be excused from penalties in instances where the transmission owner has failed to provide service.
But there is some doubt PJM will act on the changes. Market Monitor Joe Bowring said "increased risk, increased reward” was part of the capacity rules. “It was an explicit part of the design. It was done on purpose,” he added.
PJM proposed new performance standards following poor generator performance during the polar vortex of the 2013-2014 winter, where at one point more than 20% of generation was unavailable. Federal regulators in June approved PJM's plan, meaning the new procedures can be incorporated into the annual capacity auction for 2018-2019 delivery.