FERC Filings
Motion for Leave to Intervene and Protest of EPSA re: PJM Interconnection, LLC
Background
On September 30, 2003, the PJM Interconnection filed amendments to the Appendix of Attachment K of the PJM Open Access Transmission Tariff (PJM Tariff) and Schedule 1 of the Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. (Operating Agreement) (PJM filing). PJM’s filing revises market mitigation methods pursuant to directives laid out by the Commission in Reliant Energy Mid-Atlantic Power Holdings, LLC v. PJM Interconnection, L.L.C., 104 FERC 61,040 (2003) (Reliant Order). There, the Commission denied Reliant’s complaint proposing an alternative Formula Price Cap Mitigation. While Reliant’s complaint was denied, the Commission did direct PJM to “re-examine its mechanism to ensure that it is providing appropriate compensation for mitigating market power for must-run services.” This directive came in part due to PJM’s own assertion, in response to the Reliant complaint, that its Local Market Power Mitigation Working Group (Working Group or LMPMWG) was and is committed to developing a long-term solution to local market issues. The Reliant Order stated, “PJM is required to make a filing by September 30, 2003, either to revise its tariff or to justify its existing provisions.” The instant filing modifies PJM’s Tariff, but also attempts to justify PJM’s current practice.
While maintaining that the existing offer-capping mechanism is effective, PJM does propose one modification to its local market rules to address long-term scarcity (#1 below), “should such a condition arise.” To further enhance its Local Market Rules, PJM also proposes three Tariff revisions (#s 2 – 4):
1. establishment of a competitive Local Market Auction for the most economic generation, transmission or demand response alternative to address long-term scarcity and reliability needs in a load pocket;
2. suspension of the offer-price-capping in load pockets that are deemed competitive by the Market Monitor;
3. elimination of the exemption of post-1996 generating units from the offer-capping provisions;
4. requirement that all owners of generation located in PJM become members or otherwise agree to abide by all PJM rules.
These modifications and revisions have been filed with the Commission pursuant to Section 206 of the Federal Power Act because, while the proposed amendments failed to be adopted by the PJM Members Committee, the PJM Board of Managers (PJM Board) determined it would file the proposed modifications under section 206.
While EPSA has specific comments and suggestions on PJM’s filing below, on a more profound level it is troubling that markets, even our most functional market nationally, are moving in the wrong direction. PJM has served as the model for a competitive market that relies on competitive market forces rather than cost-based regimes. The proposed changes to the PJM LMPM are inconsistent with the development of competitive markets, and thus are contrary to the Commission’s vision for workable, efficient competitive markets.