The Maryland Public Service Commission in a Jan. 7 filing at the Federal Energy Regulatory Commission said that a PJM Interconnection effort to restrict the import of outside capacity into its region for reliability reasons would effectively restrict cost-effective generation needed to meet internal PJM load.
PJM Interconnection had on Nov. 29, 2013, requested FERC approval of a Capacity Import Limitation Methodology (CIL) to limit the participation of external generation in PJM’s Reliability Pricing Model (RPM).
“The Maryland PSC views this PJM proposal and the Commission’s consideration of this matter to be of great significance to successful operation of PJM markets, and to the supply of just and reasonable cost electric service in the PJM service territory,” said the PSC in its Jan. 7 comments. “PJM also has a number of other proposals before the Commission (and others remaining for development in various stakeholder processes) which could have significant effects upon end-user cost and reliable service. We urge that the Commission fully utilize its evidentiary procedures before issuing a decision on these interrelated proposals. It is important that a balanced decision be reached, with the objective of reliable electric service at lowest reasonable cost in PJM’s service territory.”
The ability to attract generation capacity and energy supply at reduced cost from outside the service region of any Regional Transmission Organization (RTO), and thereby reduce the overall cost of service in that service territory, is an ostensible benefit of the creation and operation of competitive electricity markets, the PSC noted.
PJM explained to FERC that growth in external generation seeking to participate in the RPM has raised concerns that this, due to transmission capacity limitations, may threaten the reliability of electric service in the PJM service territory. PJM stated that there are two situations in which such threats may arise.
- First, non-PJM transmission system operators may interrupt such service under a FERC-authorized procedure (e.g., Transmission Loading Relief Level 5) to protect service within their own service territories by reducing congestion on their transmission systems and interconnections with PJM.
- Second, external generation suppliers to PJM are not required to contract for firm transmission service to supply PJM at the time that they obtain a BRA reservation to provide that service, but rather must only do so three years later, immediately prior to the RPM Delivery Year in which that service is to be provided, the PSC noted. In seeking to obtain necessary transmission contractual rights, such external suppliers could potentially find them unavailable or too costly to support providing the committed service, and may either default or sell that commitment in a PJM Incremental Auction.
“The Maryland PSC agrees that these matters raise serious concerns and commends PJM for its proposal of possible solutions, and further agrees that a methodology for examining annually the acceptable level of external generation participating in RPM is desirable,” the PSC wrote. “However, MISO and its Independent Market Monitor (IMM), certain Mid-western State Commissions and Consumer Advocates have raised a number of technical issues respecting whether the methodology proposed by PJM imposes too great a restriction on external participation such that service cost levels in PJM markets may be unnecessarily and unreasonably increased. Moreover, review of the PJM filing and comments suggest that the CIL methodology could reduce external generation import levels by over 5000 MW or by approximately 75%, which would significantly increase costs for end-users.”
Data provided in the PJM filing and in comments and protests indicate that 7,400 MW of external generation cleared the 2013 BRA, with approximately 7,000 MW of it to be received from the MISO region. PJM’s CIL methodology limits imports from the MISO region to 3,000 MW, the Maryland PSC said.
Moreover, PJM advises that it will grant special exceptions to permit entities, such as public power, to import power to meet their load requirements where their service operations straddle the PJM/MISO seam, but will reduce allowed maximum imports to make up for that, the PSC added. Public power entities with a PJM load requirement served by MISO generation representing about 1,500 MW have filed protests seeking to protect their existing ability to import such power to meet their PJM load obligations. If generators desiring to serve PJM do not exist outside MISO in large quantities, these facts suggest that existing import levels of 7,400 MW could be reduced to as little as 1,500 MW, the PSC argued.