US FERC approves changes to PJM demand response performance measurement
Washington (Platts)--7Nov2011/242 pm EST/1942 GMT
The US Federal Energy Regulatory Commission has approved PJM
Interconnection's proposal to change the way it measures performance by
demand response resources during system emergencies, conditioned on PJM
proposing a way to mitigate the impacts of the change on participants that
have already been committed in capacity auctions.
FERC on Friday gave the regional transmission organization 60 days to
clarify several aspects of its plan and ordered it to report within one year
on how stakeholder discussions are going on a handful of related issues.
The commission found that PJM's proposal to measure demand response
based on the participant's reduction in consumption below its historical peak
load contribution benchmark, or PLC, "provides a just and reasonable
methodology for measuring demand response performance within the structure of
PJM's capacity market."
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Moreover, "we find that the reliability concerns giving rise to PJM's
filing have been sufficiently supported by PJM," the commission said.
The PLC is the average load of the demand response participant during
the five system peak hours of the prior year. PJM argued that because PLC
represents a customer's contribution to the system peak load and is the
maximum amount of capacity that a customer can offer into the capacity
market, only reductions in consumption below the PLC should count as demand
response capacity performance.
The changes mean that a participant will no longer be able to use the
guaranteed load drop measurement method for compliance, although it may still
be a GLD resource. The GLD previously ensured that all of a demand response
provider's curtailments would be counted in the capacity market, even if PJM
had only intended the customer to reduce from a defined megawatt amount to a
specified lower megawatt amount.
For example, a customer with a 15 MW PLC could be at 16 MW at the time
it is dispatched to reduce consumption, but under the PLC measure it would
only get paid for the amount under 15 MW that it lowered its load. Yet if
that same demand response provider had been able to use the GLD method, the 1
MW reduction from 16 MW to 15 MW would be compensated in the capacity market
FERC accepted PJM's proposal to measure compliance by GLD customers
based on the lesser of: comparison load used to best represent what the load
would have been if PJM did not declare a load management event, minus the
metered load; or the PLC minus the metered load. Noting that PJM did not
define what would qualify as a "best" representation of what load would have
been, FERC directed the RTO's compliance filing to include in its description
of a comparison load a list of options and a reference to the manual where
those options are described.
Because PJM auctions capacity obligations three years in advance of the
delivery year, demand response providers that are committed in the capacity
years through 2014-2015 "may have made some commitments based on an
assumption that they could count reductions from actual load levels above the
PLC as part of their performance," FERC said. PJM's proposal to add a 1.25
multiplier to the PLC threshold through the 2011-12 delivery year "may not
provide sufficient protection" for those committed resources in part because
the measure would expire before the commitment years do, the commission said.
Therefore, PJM must propose an interim measure "that applies more
broadly from the 2012-13 delivery year through the 2014-15 delivery year."
PJM also must clarify how aggregation of demand response will be handled
under the changes and how penalties will be determined for under-compliance
of aggregated customers.
The commission also directed PJM to explain its claim that demand
response providers could be compensated for their full reduction through the
--Esther Whieldon, email@example.com