On September 27, the PJM Interconnection Board of Managers directed PJM to file a number of enhancements to the PJM capacity market with the Federal Energy Regulatory Commission, following an accelerated stakeholder process and advisory vote from PJM members seeking reforms in support of resource adequacy and grid reliability as a result of Winter Storm Elliot.

One of the most significant changes to be filed is "enhance resource accreditation" that would more accurately assess the reliability value of natural gas-fired power plants which accounted for 70% of the power plant outages in PJM during Winter Storm Elliot.

Tom Rutigliano from the Natural Resources Defense Council told Utility Dive-- "The critical reliability issue facing PJM is gas-powered generators not delivering in emergencies.  With this decision, PJM is finally dealing with the dangers of unreliable gas plants.”

However, Rutigliano pointed out, PJM is proposing to lower penalties on non-performing suppliers-- "This means it will remain profitable to sell PJM capacity that you can’t deliver.  Until PJM fixes this, their capacity market cannot guarantee reliability.”

The PJM Power Providers Group, which represents generators, told Utility Dive it is pleased to see the reform process advancing and looks forward to reviewing the pending proposal at FERC, Glen Thomas, P3 president..

In a Sept. 27 letter to stakeholders, the PJM Board outlined the proposed market enhancements that will be filed with FERC by October 13.

The Board initiated the Critical Issue Fast Path – Resource Adequacy stakeholder process in February with the purpose of developing and proposing enhancements to the capacity market, beginning with the 2025/2026 Base Residual Auction.

The Board identified the following areas as priorities:

-- Explore how PJM accounts for reliability-related risk.

-- Ensure that market-seller offers reflect the risk of capacity obligations.

-- Enhance resource accreditation.

-- Better align capacity market and Fixed Resource Requirement rules.

“The Board wants to express its sincere gratitude to our stakeholders for their diligence and thoughtfulness during the CIFP-RA and its predecessor, the Resource Adequacy Senior Task Force,” the letter said. “Between these two processes, PJM and its stakeholders have been discussing capacity market reform for almost two and a half years. This is a sign of our evolving times; namely, the energy transition and how our markets must adapt to meet the transition.”

The Board has given PJM the following direction with regard to the October filing, which is mostly based on the PJM “annual” proposal targeting changes to its existing annual capacity market structure versus a more granular construct.

The Board did direct some additional changes to the PJM proposal, which are summarized below:

-- Market Structure: Maintain the annual capacity market construct for this filing but indicated interest in further exploring sub-annual designs.

-- Resource Adequacy Risk Modeling: Maintain the Capacity Benefit of Ties while evaluating more accurate ways to account for this benefit.

-- Capacity Performance and Alignment of Risk in the Market Seller Offer Cap: Amend the stop-loss to 1.5 times the relevant BRA clearing price.

-- FRR Rule Changes and Transition: Adopt a transition for FRR entities to meet the new requirements that better align FRR with committed capacity resources.

The Board has directed PJM to file these changes to the capacity market with FERC by no later than Oct. 13 in order to be implemented for the 2025/2026 BRA.

PJM is also considering multiple filings to mitigate the risk of a single component of the filing causing the delay or rejection of the entire suite of enhancements, according to the letter.

Click Here for the complete announcement.

[Note: The Old Farmer's Almanac is predicting a cold, snowy winter for Pennsylvania.]

The PJM Interconnection PJM is a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia, including Pennsylvania.

NewsClip - PJM:

-- Utility Dive: PJM Board Calls For Capacity Market Changes To Bolster Grid Reliability, Resource Adequacy

Related Articles - PJM Generator Nonperformance:

-- Federal Energy Regulatory Commission, NERC Final Report On Winter Storm Elliott Says Legislative Action Needed To Establish Reliability Rules For Natural Gas Infrastructure   [PaEN]

-- PJM Interconnection Hears Testimony On Making Electricity Market Reforms To Address Nonperformance Of Natural Gas And Other Generators During Winter Storm Elliot; Transition To Clean Energy [PaEN]

-- PUC Vice Chairman [Now Chair]: During Winter Storm Elliot We Learned Natural Gas Can Be An Intermittent Generator Of Electricity Just Like Renewables   [PaEN]

-- PJM Interconnection Reports Higher Percentage Of Natural Gas-Fired Electric Generation Outages Than Originally Thought During Winter Storm Elliott - 70%  [PaEN]

-- S&P Global: Federal Inquiry Finds Same 3 Causes Driving U.S. Electric Generation Outages In Extreme Cold - Reliability Of Natural Gas System Remains A Concern   [PaEN]

-- Senate Hearing: Wholesale Electricity Prices Too Low To Support Coal, Natural Gas Power Plants In Market; Natural Gas Reliability Issues Will Continue   [PaEN]

-- Senate Hearing On Electric Grid Reliability: Natural Gas Continues To Have Reliability Problems; Renewables Aren’t Coming Online Fast Enough; Energy Office To Be Proposed   [PaEN]

-- PJM This Week Sends Penalty Assessments Of Up To $2 Billion To Electric Generators That Failed To Perform During December’s Winter Storm Elliot; Natural Gas Power Plants Had 63% Of Outages   [PaEN]

-- PJM’s Preliminary Review Of Christmas Storm Electric Generation Failures Shows Natural Gas Units Failed To Provide Power At Over Triple The Rate Of Other Generation   [PaEN]

PA Oil & Gas Industry Public Notice Dashboards:

-- Pennsylvania Oil & Gas Weekly Compliance Dashboard - Sept. 23 to 29; More Abandoned Wells; Oil & Gas Doesn’t Typically Issue NOVs For ‘Routine’ Venting Of Natural Gas, Will Air Quality Under New Regs?  [PaEN]

-- PA Oil & Gas Industrial Facilities: Permit Notices/Opportunities To Comment - September 30   [PaEN]

-- DEP Invites Comments On Title V Air Quality Permit For Eastern Gas Transmission Compressor Station In Westmoreland County At Oct. 31 Hearing  [PaEN]

-- DEP Posted 54 Pages Of Permit-Related Notices In September 30 PA Bulletin  [PaEN]

NewsClips This Week:

-- PennLive Guest Essay: Gov. Shapiro, The Fracking Clock Is Ticking - By Megan McDonough, Food & Water Watch

-- AP: Gov. Shapiro Noncommittal On Greenhouse Gas Strategy As Climate Task Force Finishes Work

-- The Allegheny Front: EPA’s Approval Of 2nd Plum Boro Oil/Gas Wastewater Injection Well In  Allegheny County Raises Fears That More Are On The Way

-- Grist - Will Peischel: Inside The Rough-And-Tumble Race To Clean Up America’s Abandoned Oil & Gas Wells [PA Highlighted]

-- Post-Gazette - Anya Litvak: Same Geology, Same Drilling, Different Resource: Geothermal Energy Interest Simmers In PA

-- Planet Philadelphia Radio: Cleaning Up Our Energy Systems, Oct. 5 At 4:00 p.m.

-- Observer-Reporter: Pipeline Operator Faces $100,000 PUC Penalty For 2020 House Explosion In Greene County

-- WTAE: Natural Gas Pipeline Leak In Collier Twp., Allegheny County Forces People Out Of Their Homes

-- PUC Commissioner Kathryn Zerfuss Appointed To Presidential Task Force On Evolving Natural Gas Infrastructure Planning

-- Utility Dive: PJM Board Calls For Capacity Market Changes To Bolster Grid Reliability, Resource Adequacy

-- Guest Essay: EPA Further Threatens Grid Reliability By Reducing Carbon Pollution From Power Plants, Including Natural Gas-Fired Power Plants - By Sen. Gene Yaw (R-Lycoming), Majority Chair of the PA Senate Environmental Committee

-- Reuters: US Winter Heating Costs To Rise For Most, Natural Gas Customers To See Drop Of -- 1% From Last Year 

-- Pittsburgh Business Times: Marcellus Shale Gas Industry Coalition Highlights Natural Gas Industry’s Economic Impact In PA; Faces Bills Extending Safety Zones

-- Marcellus Shale Gas Industry Coalition: Natural Gas Generates $41 Billion In Economic Activity, Supports 123,000 Jobs, Produced $6.3 Billion In Landowner Royalties

-- Erie Times Guest Essay: Marcellus Shale Gas Coalition Wraps Up Conference In Erie - Natural Gas Delivers For All Pennsylvanians

-- JDSupra: Federal Court In Ohio Makes Important Ruling On Post-Production Costs For Oil & Gas Leaseholders Under ‘Market Enhancement’ Clause

Related Articles This Week:

-- Environmental Health Project: How DEP Issues Permits For Shale Gas Facilities Without Considering Cumulative Impacts - How New Facilities Will Add To Existing Pollution Loads And Impact The Area  [PaEN]

-- Member Of Pine Creek Headwaters Protection Group Briefs DCNR Advisory Council On Siting Of Shale Gas Well Pad On State Forest Land To Accommodate Taking Gas From Private Land In Tioga County  [PaEN]

-- Gov. Shapiro’s Work Group Concludes A Cap-And-Invest Carbon Pollution Regulation Program Would Be Optimal Approach To Reducing Greenhouse Emissions From Power Plants; Scale Up Solar Energy  [PaEN]

-- On Sept. 27 Families Will Hold Town Hall Meeting In Washington County Seeking Policy Changes After Pitt Studies Link Natural Gas Development And Negative Health Outcomes  [PaEN]

-- Guest Essay: DEP Should Invest $33.6 Million In New Federal Funding Wisely To Plug  Conventional Oil & Gas Wells And Not Reward The Industry For Bad Behavior  - By  Russell Zerbo, Clean Air Council  [PaEN]

-- DEP Updates Times Of 2 Hearings On Interim Final Environmental Justice Policy To Accept Comments In Erie, Philadelphia  [PaEN]

-- PJM Interconnection Board Proposes Market Reforms Based Largely On Unreliability Of Natural Gas-Fired Power Plants During Winter Storm Elliot  [PaEN]

-- PJM Interconnection Files Proposed Winter Storm Elliot Settlement With Non-Performing Electric Generators With FERC, Requests Final Action By Dec. 29  [PaEN]  

[Posted: September 28, 2023]

10/2/2023