PJM to file shortage pricing changes with FERC
FERC directed implementation of Order 825 by May 11, 2017. PJM filed a request with FERC to implement the change at the same time it implements a shift to five minute settlements on Feb. 1, 2018. FERC has yet to respond to that request, and lacking a quorum, the agency might not be able to respond before May 11.
PJM says it plans to make a 205 filing with FERC, which refers to the section of the Federal Power Act that governs wholesale power tariffs, that would include a permanent second step in its demand curve.
The grid operator says adding that step would “create better price signals when prior to when synchronized reserves are less than the largest contingency,”
Under current practice when PJM triggers shortage pricing, the penalty is $850/MWh, which is the economic maximum of the single largest contingency. That penalty determines the market clearing price. In a second step, a $300/MW penalty is applied to any additional megawatts of primary reserves.