A year of tremendous
change for PJM and stakeholders in operations, planning, markets and risk
management was the focus of a five-member “Year in Review” panel which convened
Monday during the annual meeting of members, held via Webex.
In addition to hiring a
new CEO in 2019, PJM welcomed its first Chief Risk Officer, Nigeria Bloczynski,
who spoke Monday about ushering new credit policy rules through the stakeholder
process as well as enhancing the current PJM Enterprise Risk Management
Bloczynski recounted her first
year in the new role, which included the establishment of an executive-level
committee that reaches across PJM to identify market, operational, information
technology, credit, cyber and other risks.
The stakeholder process also reflected
this spirit of collaboration in 2019, the panelists said.
Stu Bresler, Senior Vice President – Market Services, detailed
what he called “three shining examples of the stakeholder process” that
involved hard compromises and deep negotiation:
consensus on demand response load-management testing rules
application of critical fuel-cost policies that determine how market sellers
determine their cost-based offers
streamlined opportunity-cost calculator from what was previously a contentious process
Member Companies Worked ‘Extremely Well’
Mike Bryson, Senior Vice President – Operations,
underscored how “extremely well” member companies worked together last year to
maintain grid reliability, continuing into the present landscape dominated by
the coronavirus pandemic.
Bryson said he is particularly proud of
how PJM staff swiftly repurposed a testing simulator into a third control room
in a matter of days to accommodate any risk to system operations posed by the
A team of grid operators were screened and
then sequestered to work in the new control room to ensure continuity – just one of a
number of precautions undertaken by PJM.
Bryson also highlighted new tools that
enable more accurate modeling of potential stability issues in the system as
well as load forecasting.
Planning’s Busy Year
Consensus-building among PJM and
stakeholders also marked a number of initiatives in planning – from a new
cost-containment feature for competitive project proposals to transparency in
end-of-life facility replacement, said Ken Seiler, Vice President – Planning.
PJM and stakeholders invested significant work around
the area of supplemental projects, he said.
“There’s a lot of
money being spent on the transmission system,” Seiler said. In 2019, projects
addressing baseline reliability needs totaled $1.5 billion, while supplemental
projects ran to $3.4 billion.
surprising, he said, given that two-thirds of the infrastructure on the system
is over 40 years old, and a quarter is older than 60 years old.
As the grid ages,
the generation it serves – and how
electricity is being consumed –
is rapidly changing, Seiler said.
PJM continues to
see generation retirements across all fuel types, but primarily nuclear and
coal. For example, nearly 5,000 MW of coal, and more than 800 MW of nuclear, retired
in 2019 for a total of 6,200 MW of total generation retirements.
For the past several years, PJM has begun
seeing a shift from combined-cycle natural gas generation to larger wind and
Meanwhile, consumer behavior is changing
as well, Seiler said.
“There are a lot of exciting things happening
on the grid that will change what it will look like in the future, including
offshore wind and other high-technology areas,” he said.
New Rules for Capacity Auction
Closer on the horizon is the next PJM
capacity auction, and panelists weighed in on the Federal Energy Regulatory
Commission’s controversial decision to expand the Minimum Offer Price Rule
PJM went to great lengths to solicit
stakeholder feedback for its first compliance filing, and is doing the same for
the second compliance filing due June 1, after FERC recently upheld the bulk of
its ruling but provided some clarifications.
noted the first of such stakeholder meetings will be held Wednesday, May 6.
joined Joseph Bowring from Monitoring Analytics, the independent market
monitor, in saying they believe the short-term
impact of the MOPR order will be relatively minor.
because, they said, PJM hasn’t held a forward-looking capacity auction for two
years, and the FERC ruling exempts existing renewable resources –
and those that have signed an interconnection agreement. In addition, they said,
many renewables are expected to become increasingly competitive.
Bresler said, “From the standpoint of the forward-looking nature of capacity
commitments and looking to gain some sort of stability, we really need to get
on the road of executing these auctions again.”
FERC could rule on the compliance filings by mid-summer, Bresler said. With a
proposed timeline of about six months to prepare, that puts PJM on track to an
auction sometime “very early in 2021.”
auctions would be held about six months apart until they are back on schedule.
Bowring: Markets Work
also said it was essential to get the auctions going again. It’s also
essential, he said, to continue to work with states to look at how policy
initiatives such as carbon pricing or the pursuit of clean energy is affecting
durable market design can be flexible enough to adjust to these preferences, he
said, further cautioning states that their most effective route is to stay in
the market as opposed to pulling out of it.
echoed the results of his State of the PJM Market report: “In 2019, the PJM
markets worked,” he said.
prices were the lowest in PJM history, and congestion and uplift were down, he
Competitive markets have brought
tremendous benefits to consumers, Bowring said, adding, “Now is not the time to
give up on markets.”
Original source: PJM