PJM panel approves quick-start electricity pricing rules ahead of September 1 implementation

Strong points

Increases energy PMTs, prices of ancillary services

Electricity price increase similar to that of other ISO markets

As PJM Interconnection works to implement quick-start pricing on September 1, stakeholders approved rule changes for implementation on August 11 and reviewed data showing that the average price increase of the Energy market from the quick start has been around $ 1.60 / MWh over the past three months. .

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On December 17, 2020, the Federal Energy Regulatory Commission issued its Quick Start Order which included a compliance obligation to address a few items, including the implementation date of PJM’s preferred quick start pricing, according to a presentation by PJM given at a remote conference on August 11. holding a meeting of the Contract Implementation Committee.

PJM filed the requested compliance dossier on February 16 and FERC approved PJM’s filing on May 20, 2021, with an effective date of July 1, but PJM filed a request to move the entry date. in effect in order to avoid implementing the new pricing structure during the peak summer period. said the presentation.

FERC approved PJM’s request with an effective date of September 1.

PJM’s compliance brief in February added a section to PJM’s operating agreement that defines a quickstart resource as being able to start in one hour or less, with a minimum runtime of one hour. or less.

Quick start resources can quickly enter and exit the network and are called upon to respond quickly to unforeseen system needs. But because market rules often prevented them from setting the marginal location price due to their operational limitations, prices for energy and ancillary services did not always reflect the marginal cost of service.

To address FERC concerns, PJM will better align rates and shipping intervals by assigning prices to the same interval for which shipping instructions are scheduled, i.e. approximately 10 minutes into the future.

Price impacts

PJM had to update its software to implement the quick-start pricing changes and closely monitored the impacts before the changes went live.

“PJM monitors the results of the quick start daily from code entry,” Zhenyu Fan, senior engineer II for PJM’s real-time market operations, said at the meeting.

The average increase in energy PMTs over the past three months has been $ 1.60 / MWh, Fan said. And because energy, reserves, and regulation are co-optimized in PJM’s power market, the compensation prices for ancillary services, such as regulation, synchronized reserves, and primary reserve prices, have all increased accordingly, he said.

The monthly average for these products was considerably higher in June and July than in May, in large part due to the warmer weather, particularly in June.

Based on more than 25,000 pricing intervals in the past three months, more than 50% of the time there has been no impact on energy PMTs and about 40% of the time price increases in l energy were less than $ 5 / MWh, Fan said.

Rush hours

Most of the energy price increases in May were $ 3 / MWh to $ 4 / MWh, reaching around $ 6 / MWh at the start of June and $ 8 / MWh at the end of June, corresponding to higher load levels during these times, especially during early and late heat waves. June, he said.

“The impact of the quick start has been mostly during peak hours, which correlates with the load curve,” Fan said.

The daily average of units eligible for quickstart ranged from five to over 50 units per day, and the average percentage of time quickstart units were marginal was 18%, according to the presentation.

Additionally, PJM compared pricing data from neighboring electricity markets administered by an independent grid operator that implemented quick-start pricing and found the results comparable.

“The analysis we have now indicates that the quick start is working as it is supposed to,” said Phil D’Antonio, manager of real-time market operations at PJM.

The committee voted overwhelmingly to approve the rule changes needed for fast-start pricing, with 94% in favor.

Once the manual revisions are approved, the matter will be transferred to PJM’s Contracts and Reliability Committee for approval at the expert group meeting on August 25.

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