Executive Column: Suzanne Daugherty, CFO, Treasurer and Vice President of Finance
Thanks to the cooperation and collaboration of our members, the transition for members to comply with new minimum capitalization requirements called for by the Federal Energy Regulatory Commission (FERC) went smoothly. I’m happy to report that of PJM’s 738 members, 98 percent of them met the minimum capitalization requirements called for in FERC’s Credit Order 741 when they became effective the first week of October. The remaining 17 PJM members chose not to provide the financial information or financial security required for compliance and instead opted to suspend their market participation rights.
As a result, the 17 members now have either limited transaction rights or no transactions rights, depending on the level of incremental financial security they may have posted with PJM. These members have the option of increasing or re-establishing their transaction rights if they provide the required audited financial statements or incremental financial security.
The results of the transition indicate that the requirements provide greater transparency and improve risk controls for members without having a detrimental effect on the markets. These results are contrary to concerns among a few members that compliance would result in smaller member companies’ inability to participate in the market and a negative effect on liquidity.
For example, the members with reduced or suspended transaction rights represent a tenth of a percent of the aggregate bids in the spring 2011 Financial Transmission Rights auction and approximately two-tenths of a percent of the megawatt-hours of energy market transactions during summer 2011.
None of the non-compliant members serves load, provides demand response, owns generation, owns transmission or receives electricity directly from the wholesale electric grid in the PJM region.
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PJM hosts the Philadelphia Chapter of the American Association of Blacks in Energy
PJM hosted the October monthly meeting of the Philadelphia Chapter of the American Association of Blacks in Energy (AABE).
AABE is a national association of energy professionals, founded and dedicated to ensure the input of African-Americans and other minorities, in the discussion and development of energy policies and regulations and on environmental issues.
The event provided an opportunity for AABE members to meet PJM executives and included a tour of the PJM Control Room. Following the tour, the chapter had its general meeting, which was open to prospective members.
AABE has 37 active chapters in six geographic regions in the United States, including chapters in states in the PJM footprint. AABE members participate in every segment of the energy sector throughout the country. Several local chapters have instituted mentorship programs for college students majoring in energy-related disciplines, including a scholarship program for high school seniors.
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Susquehanna-Roseland transmission line chosen by White House for pilot
The Susquehanna-Roseland line, which connects high voltage transmission from the Susquehanna substation in Pennsylvania to the Roseland substation in New Jersey, was chosen by the Obama administration to participate in a grid reliability pilot. The pilot aims to streamline the federal review processes to get lines built, creating more jobs and ensuring more transmission capacity. The Susquehanna-Roseland line was authorized to be built by PJM’s board.
The 145-mile, 500-kilovolt transmission line was one of seven similar projects chosen by the Administration to be followed by a recently formed Rapid Response Team for Transmission (RRTT). The lines are being built by PPL Electric Utilities and Public Service Electric and Gas. The projects were chosen because electric transmission lines involve coordination among multiple federal, state, and tribal agencies subject to permitting, review, and consultation, an Administration news release said.
According to the White House, improving efficiency of the federal review process will help expedite new transmission lines. Adding necessary transmission infrastructure will integrate renewable electricity sources into the grid, accommodate the growing number of electric vehicles, help avoid blackouts, restore power more quickly when outages occur, and reduce the need for new power plants, the Administration’s news release said.
The RRTT represents nine federal agencies who had signed a Memorandum of Understanding in 2009 to increase coordination to expedite and simplify building of transmission lines on federal lands. The federal entities are: the White House Council on Environmental Quality (CEQ), the Department of the Interior (DOI), the Department of Agriculture (USDA), the Department of Energy (DOE), the Department of Commerce, the Department of Defense, the Environmental Protection Agency, the Federal Energy Regulatory Commission (FERC), and the Advisory Council on Historic Preservation.
The Susquehanna-Roseland line is currently awaiting federal environmental review in order to begin construction. The line is expected to be complete in 2015.
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Stakeholder Roundup
Membership Update
PJM membership as of October 24 is 743 member companies, of which 466 are voting members.
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Consensus-Based Issue Resolution Process
As part of the series of articles about the new Consensus-Based Issue Resolution (CBIR) process, this month’s Inside Lines focuses on the compliance filing process.
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Compliance Filing Process
Many filings made with the Federal Energy Regulatory Commission (FERC) regarding changes to the PJM Tariff, Operating Agreement and Reliability Assurance Agreement are approved by the FERC with no additional work required; however, from time to time, PJM may receive a FERC order that contains a compliance directive.
Once such an order is received, PJM assesses the materiality and timing of the compliance directive. Materiality determines whether the compliance filing implicates significant rights or obligations of the membership as a whole or a defined class of members, such as establishing a methodology to allocate costs among classes of market participants. Materiality also considers the time allowed by the directive in determining whether to recommend a stakeholder process.
A mandated, near-term filing date may not allow sufficient time for a stakeholder process. PJM may call for an expedited stakeholder process or may request FERC grant a time extension, depending on the time required to submit the compliance filing. PJM typically holds a stakeholder process. The exceptions are where the FERC allows no discretion to compliance (for example, directing PJM to make a specific change to a filed rule or language) or the compliance deadline is too short.
PJM notifies members within five days of receipt of a FERC order compliance directive whether a stakeholder process will take place. Components of the stakeholder process are determined based on the complexity of the issue and the time afforded by the FERC. A task force may be designated to address the issue and/or a vote by the higher committees.
PJM will note in its compliance filing whether a stakeholder process was used and any voting results. PJM’s compliance filing transmittal also includes any member-prepared position statements. PJM notifies members of the contents of its intended filing within three days of the final stakeholder process vote on the issue.
Additional details about PJM’s compliance filing process can be found in
Appendix I of the PJM Stakeholder Process Manual (PDF).
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Issue Tracking Spotlight
Issue Tracking helps stakeholders keep informed of significant business issues currently in PJM’s stakeholder process.
The following key issues were addressed at the October 21, 2011, Members Committee (MC) meeting.
RPM-Related Issues Sector-weighted votes were taken on six proposals for potential changes to the Reliability Pricing Model (RPM). The proposals arose from stakeholder discussion of the triennial review of the RPM demand curve. Results will be provided to the PJM Board. PJM is required to submit a filing by Dec. 1, 2011.
Results of each vote, along with the presentation on the status of other RPM issues, can be examined in
Issue Tracking.
(under Associated Documents under 10/20/11 Members Committee Meeting Materials).
Emergency Load Response Cost Allocation Tariff and Operating Agreement revisions were presented that would exempt market participants’ PJM-incurred real-time deviation from its positive PJM net interchange when demand response emergency charge is allocated. Draft language of the revisions can be viewed in this
presentation (PDF). A vote to approve the revisions is slated for the Nov. 22, 2011, Members Committee meeting.
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Regulatory Reports
FERC Filings
10.28.2011 Docket No. ER12-237-000 (PDF)
On October 28, 2011,PJM filed in Docket No. ER12-237-000, proposed revisions to the Operating Agreement clarifying that PJM Board Members that are members of the Finance Committee do not vote on recommendations made by that Committee and revising the election term of sector-elected member representatives.
10.28.2011 Docket No. ER11-3384-002 (PDF)
On October 28, 2011, in Docket No. ER11-3384-002, PJM filed revisions to Sections 1.3.2B and 1.3.17A of Schedule 1 of the PJM Operating Agreement and Attachment K-Appendix of the PJM Tariff, in compliance with the Commission’s October 6, 2011 Order on Compliance Filing, to remove language regarding when outages of self-scheduled resources are taken into consideration in the calculation of Energy Market Opportunity Cost and Non-Regulatory Opportunity Cost.
10.28.2011 Docket No. ER12-xxx-000 (PDF)
On October 28, 2011, in a new docket, PJM submitted to the Commission a filing of the initial allocation of Financial Transmission Rights (“FTRs”) for the Duke Energy Ohio, Inc and Duke Energy Kentucky, Inc. Zone (“DEOK Zone”). An effective date of January 1, 2012 has been requested to be consistent with the integration date of Duke into PJM, established by the Commission in Docket No. ER10-1562-000.
10.26.2011 Docket No. ER12-195-000 (PDF)
On October 26, 2011, in Docket No. ER12-195-000, PJM filed a Request for Limited Tariff Waiver, Shortened Notice Period and Expedited Commission Action seeking a temporary, limited waiver of Sections 14B.1, 14B.2, 15.1, 15.2 and 15.6 of the OA and Sections 7.1, 7.1A, 7.3 and 10.4 of the OATT, in order to permit PJM to temporarily suspend certain retroactive rebilling and payment obligations. PJM requested that the Commission establish a shortened seven (7) day notice period and grant the temporary waiver request by no later than November 4, 2011.
10.21.2011 Docket No. ER12-167-000 (PDF)
On October 21, 2011, in Docket No. ER12-167-000, PJM submitted for filing executed NITSAs (the “DEOK Zone NITSAs”) to convert existing NITS and point-to-point transmission service currently provided under the MISO tariff for service in the Duke Energy Ohio, Inc. and Duke Energy Kentucky, Inc. (jointly, “DEOK”) transmission service areas to NITS under the PJM Tariff to accomplish the integration of the DEOK Zone into PJM. PJM requested that the Commission accept the DEOK Zone NITSAs to become effective on January 1, 2012 to correspond with the integration date of the DEOK transmission service areas into PJM.
10.19.2011 Docket No. ER12-125-000 (PDF)
On October 19, 2011, in Docket No. ER12-125-000, PJM submitted revisions to the PJM Emergency Load Response Program, found in Schedule 1 of the PJM Operating Agreement, as well as in the parallel provisions of Attachment K-Appendix of the PJM Transmission Tariff. PJM seeks implementation of the proposed revisions to clarify that completed PJM Emergency Load Response Registration Forms must be submitted to PJM no later than one day before the tenth business day preceding the relevant Delivery Year, and must be approved on or before May 31st preceding the relevant Delivery Year. PJM requests an effective date of December 19, 2011 for these revisions.
10.14.2011 Docket No. ER12-91-000 and ER12-92-000 (PDF)
On October 14, 2011, in Docket No. ER12-91-000 and ER12-92-000, Duke Energy Ohio and Duke Energy Kentucky (“Companies”) jointly submitted to the Commission proposed revisions to the PJM Transmission Tariff, the Operating Agreement, the Reliability Assurance Agreement, and the Transmission Owners Agreement. The Companies are requesting the revisions to accomplish the Companies’ move from the Midwest ISO to the PJM RTO. An effective date of January 1, 2012 has been requested.
10.13.2011 Docket No. ER10-2283-001 (PDF)
On October 13, 2011, PJM submitted errata filing to correct a factual error in the Motion for Expedited Commission Action filed on October 12, 2011, in Docket No. ER10-2283 regarding the affiliate status of BP Energy Company and Green Mountain Energy Company.
10.12.2011 Docket No. ER10-2283-001 (PDF)
On October 12, 2011, PJM filed a Motion for Expedited Commission Action in Docket No. ER10-2283, requesting the Commission to expeditiously issue an order (i) accepting the MISO Compliance Filing submitted on September 13, 2011; (ii) directing MISO to immediately present to BP Energy Company an invoice for SECA charges due; and (iii) enforcing the Commission’s orders and the MISO OATT requiring BP to pay such SECA charges including interest.
10.11.2011 Docket No. ER12-62-000 (PDF)
On October 12, 2011, PJM submitted to the Commission, in Docket No. ER12-62-000, modifications to the PJM Tariff to revise Schedule 12A, which currently provides for preliminary and final determination of available Incremental Auction Revenue Rights (IARR) associated with regional transmission expansion plan projects (RTEP). PJM proposes, among other things, to remove the need to perform the preliminary assessment of available IARRs associated with RTEP projects. PJM requests that the Tariff revision become effective on December 11, 2011.
10.10.2011 Docket No. ER11-4402-000 (PDF)
On October 10, 2011, in Docket No. ER11-4402-000, PJM filed with the Commission a Motion for Leave to Answer and Answer to Protest of PJM’s filed revisions to Schedule 6A of the PJM Tariff proposing new cost recovery rules and procedures.
10.03.2011 Docket No. ER11-2875-000 (PDF)
On October 3, 2011, PJM filed a status report in Docket No. ER11-2875 advising FERC and interested parties that the stakeholder process on possible changes to the New Entry Pricing Adjustment envisioned by section 5.14(c) of PJM's tariff remains on a productive path and so PJM has determined it is not necessary to file changes to NEPA at this time. PJM advised that it will continue to facilitate the stakeholder process with a goal of developing NEPA changes that could be filed by November 30, 2011 in connection with other RPM changes that must be filed by that date.
FERC Orders
10.28.2011 Docket No. ER11-4702-000 (PDF)
On October 28, 2011, in Docket No. ER11-4702-000, the Commission issued an Order approving PJM’s September 29, 2011 filing to amend Schedule 12 to the PJM OA and Schedule 17 to the PJM RAA to include new members, delete withdrawing members, reflect updates to the list of signatories to the PJM RAA, and reflect corporate name changes.
10.27.2011 Docket No. ER11-4485-000 (PDF)
On October 27, 2011, the Commission issued a Letter Order, in Docket No. ER11-4485-000, accepting an executed WMPA among PJM, Alethea Solar I, LLC (Alethea) and Jersey Central Power & Light Company, a FirstEnergy Company (JCP&L). PJM indicated, among other things, that Alethea intends to engage in wholesale sales in the PJM markets from a 15.0 MW solar facility connected to JCP&L’s distribution facilities located in Stewartsville, New Jersey. The WMPA is effective August 10, 2011.
10.26.2011 Docket No. ER11-4013-001 (PDF)
On October 26, 2011, the Commission issued an Order, in Docket No. ER11-4013-001, accepting an unexecuted generator interconnection service agreement (ISA) among PJM, Bishop Hill Energy LLC (Bishop Hill), and Commonwealth Edison Company (ComEd). The Bishop Hill Project will consist, among other things, of a 200 MW wind farm with one hundred and thirty-four 1.6 MW wind turbine generators and an approximately 28-mile generator tie line. The ISA is effective June 15, 2011.
10.25.2011 Docket No. ER11-4646-000 (PDF)
On October 25, 2011, the Commission issued a Letter Order, in Docket No. ER11-4646-000, accepting an executed WMPA entered into among PJM, Tinton Falls Solar Farm LLC (Tinton Falls), and JCP&L. PJM submitted the WMPA for filing because Tinton Falls intends to engage in wholesale sales in the PJM markets from a generating facility connected to the JCP&L distribution facilities. The WMPA is effective August 30, 2011.
10.20.2011 Docket No. ER11-4367-000 (PDF)
On October 20, 2011, the Commission issued a Letter Order, in Docket No. ER11-4367-000, conditionally accepting in part revisions to the PJM Tariff to update Schedule 12-Appendix. PJM indicated that the revisions were previously accepted by the Commission; but, were not currently reflected in the PJM Tariff. The revisions will be subject to Commission action in Docket Nos. ER10-268-000, et al. and ER11-2141-000, et al.
10.20.2011 Docket No. ER11-4382-000 (PDF)
On October 20, 2011, in Docket No. ER11-4382-000, the Commission issued a Letter Order accepting the August 26, 2011 revisions submitted by PJM to Sections 1.5A.10 and 1.10.1A, found in Schedule 1 of the PJM Operating Agreement, as well as in the parallel provisions of the Attachment K - Appendix of the PJM Transmission Tariff, effective October 25, 2011. These revisions reduce the threshold for Regulation, Synchronized Reserve and Day-Ahead Scheduling Reserve market offers from .5MW to .1MW for all resources, and reduce the aggregation threshold requirement from .5MW to .1MW for demand resources in the Day-Ahead Scheduling Reserve, Synchronized Reserve and Regulation markets.
10.18.2011 Docket No. ER11-4344-000 (PDF)
On October 17, 2011, the Commission issued a Letter Order, in Docket No. ER11-4344-000, accepting PJM’s Certificate of Concurrence to NYISO’s June 16, 2011 filing and August 2, 2011 errata revising Schedules A and B of the NYISO-PJM JOA under Docket No. ER11-3814. The PJM Certificate of Concurrence is effective August 16, 2011.
10.18.2011 Docket No. ER11-4343-000 (PDF)
On October 17, 2011, the Commission issued a Letter Order, in Docket No. ER11-4343-000, accepting PJM’s Certificate of Concurrence to NYISO’s May 27, 2011 filing to revise the NYISO-PJM JOA under Docket No. ER11-3663-000. The filing is to reinstate the May 1, 2012 effective date for the PJM/NYISO JOA Protocol and move the JOA Schedule C from Section 35.20 to reside with its appendices in Section 35.21. The PJM Certificate of Concurrence is effective May 1, 2012.
10.18.2011 Docket No. ER11-4488-000 (PDF)
On October 17, 2011, the Commission issued a Letter Order, in Docket No. ER11-4488-000, accepting an executed Interim UCSA among PJM, Edison Mission Marketing & Trading, Inc., (EMMT) and Exelon Generation Company, LLC (ExGen). PJM indicated that the Interim UCSA is being submitted because EMMT and ExGen wish to begin construction of certain Customer-Funded Upgrades in advance of executing a final Upgrade Construction Service Agreement as set forth in Attachment GG of the PJM Tariff. The Interim UCSA is effective August 10, 2011.
10.17.2011 Docket No. ER11-4558-000 (PDF)
On October 17, 2011, the Commission issued a Letter Order, in Docket No. ER11-4558-000, accepting an executed Interconnection Construction Service Agreement (ICSA) among PJM, Prince George’s County, Maryland (Prince George’s County) and The Potomac Electric Power Company. PJM indicated, among other things, that the ICSA facilitates the interconnection of the 2.5 MW generating facility located at the Prince George’s County Correctional Facility in Upper Marlboro, Maryland to the PJM transmission system. The ICSA is effective August 19, 2011.
10.17.2011 Docket No. ER11-4566-000 (PDF)
On October 17, 2011, the Commission issued a Letter Order, in Docket No. ER11-4566-000, accepting an executed ISA among PJM, Calpine Mid-Atlantic Development, LLC, and Potomac Electric Power Company. The ISA facilitates the connection of a 550 MW generating facility located in Aquasco, Maryland to the PJM transmission system. PJM indicated that the ISA provides capacity interconnection rights and contains other specifications, with an effective date of August 19, 2011.
10.11.2011 Docket No. ER11-4521-000 (PDF)
On October 11, 2011, the Commission issued a Letter Order, in Docket Nos. ER11-4521-000, et al., accepting an executed ISA among PJM, Luke Paper Co., and the Potomac Edison Company, a First Energy Company. On September 14, 2011, PJM also filed in Docket No. ER11-4528-000, a notice of cancellation among the same parties, both with requested effective dates of August 15, 2011, respectively. PJM indicated that the ISA filed in Docket No. ER11-4521-000 supports the 8 MW interconnection at Luke, Maryland and contains no Capacity Interconnection Rights and has non-standard terms and conditions.
10.11.2011 Docket No. ER11-4526-000 (PDF)
On October 11, 2011, the Commission issued a Letter Order, in Docket No. ER11-4526-000, accepting an executed ISA among PJM, North Jersey Energy Associates, and Jersey Central Power & Light Company, a FirstEnergy Company. PJM indicated, among other things, that the ISA supports the continued interconnection to the PJM transmission system of a 260 MW generating facility located in Sayreville Borough, New Jersey. The ISA is effective date of August 15, 2011.
10.06.2011 Docket No. ER11-3384-000 (PDF)
On October 6, 2011, in Docket Nos. ER11-3384-000 and ER11-3384-001, the Commission issued an Order on Compliance Filing accepting in part PJM’s proposed revisions to Schedules 1 and 2 of the PJM Operating Agreement and the Appendix to Attachment K of the PJM Tariff regarding the calculation and recovery of Non-Regulatory Opportunity Costs, including start time limitations, short-term opportunity costs, and out of management control (OMC) fuel limitations. However, the Commission required PJM to submit a compliance filing within 30 days of the date of the order to remove the language proposing to use a 50 percent cut off for determining when self-scheduled generation qualifies as an OMC outage from the definitions of Non-Regulatory Opportunity Cost and Energy Market Opportunity Cost.
10.04.2011 Docket No. ER11-4311-000 (PDF)
On October 4, 2011, the Commission issued a Letter Order, in Docket No. ER11-4311-000, accepting an executed Interim Upgrade Construction Service Agreement (Interim UCSA) among PJM, Exelon Generation Company, LLC and Commonwealth Edison Company. PJM indicated that the Interim UCSA is necessary to begin construction of the customer funded upgrades in advance of executing a final Upgrade Construction Service Agreement. The Interim UCSA is effective July 15, 2011.
10.03.2011 Docket No. ER11-4228-000 (PDF)
On October 3, 2011, the Commission issued a Letter Order in Docket No. ER11-4228-000 accepting PJM’s proposed tariff revisions to section 7.3.6(c) of Schedule 1 of the PJM Operating Agreement, and the parallel provision of the Appendix to Attachment K of the PJM Tariff, to clarify that Financial Transmission Rights (FTRs) with a zero clearing price (zero cost FTRs) will only be awarded if there is a minimum of one binding constraint in the auction period on which the FTR has a non-zero impact. The tariff revisions are effective as of August 5, 2011, as requested by PJM.
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