PJM’s Markets and Reliability Committee (MRC) and Members
Committee Thursday (March 26) endorsed a comprehensive package of amendments to
the Tariff and Operating Agreement to enhance credit and market rules.
By an overwhelming 90 percent majority at the MRC meeting,
and by acclamation at the Members Committee meeting, stakeholders supported the
improvements crafted to protect energy market participants, strengthen risk
processes, and protect, ultimately, the 65 million customers in PJM’s footprint.
The proposed changes will be filed with the Federal Energy
Regulatory Commission (FERC) by March 31. That allows the required 60 days for FERC
to rule on the matter in time for new rules to be in effect for the upcoming
FTR auctions in June and thereafter.
“PJM has worked very hard with stakeholders to develop
mutually agreeable language to adequately address credit risk in the markets,”
PJM Chief Risk Officer Nigeria Bloczynski said after the Members Committee vote.
“I applaud the investment by stakeholders and members in their actions to
protect our energy markets.”
The March 26 vote was the culmination of long-standing,
broad and ongoing reform of PJM’s evolving markets and credit rules, and most
recently, seven intensive months of collaboration in a stakeholder task force
to enhance governing document provisions recommended by an independent
consultant following an FTR market participant default in 2018.
The changes were first presented by the Financial Risk
Mitigation Senior Task Force to the MRC in December, and were the result of
intensive review by members, stakeholders and PJM staff.
The endorsed changes, which now go to FERC, include new and
revised credit risk frameworks to enhance market participants’ reporting
requirements, evaluate internal and external credit scores, and adjust
Bloczynski noted that PJM is committed to continued
transparent, rigorous stakeholder engagement to further examine policies as
they are enacted with the evolving energy markets. PJM is also pressing forward
with the reactivation of the Credit Rules Subcommittee and the newly minted ARR/FTR
Senior Task Force to examine the merit of market structure reform.
PJM CEO Manu Asthana applauded the successful collaboration
between stakeholders, members and PJM staff to navigate the critical milestone
and achieve credit risk frameworks required to protect market participants. “This
is a great example of collaboration with our members and stakeholders to solve
difficult problems. These credit enhancements bring important protections to
our members,” Asthana said.
Original source: PJM