PJM Drops Plan To Create Real-Time Reserve Market
September 11, 2014
PJM has dropped a plan to create a real-time reserve market, bowing to stakeholder concerns over the cost and complexity of a solution that would be implemented only a few times a year. Instead, it is finalizing a proposal it says is a more flexible version of the short-term fix approved by stakeholders in May to limit uplift and capture reserve costs in energy prices. The proposal would not add new reserve products, require changes in settlement or cost-allocation procedures, or increase the energy price cap ($2,700 effective June 2015). Instead, it would add a second, lower step to the existing operating reserve demand curve for synchronized and primary reserves. It would increase synchronized and primary reserve requirements under emergency conditions (hot and cold weather alerts, maximum emergency generation alerts) when additional intraday resources are scheduled. The volume added to reserves would be based on the Eco Max rating of the resources committed as opposed to the static 1,300-MW adder included in the short-term fix. If PJM is short of the extended requirement, the lower penalty factor ($300) would set the clearing price; if it is short of the reliability requirement, the higher penalty factor ($850) would set the clearing price.