FERC Accepts PJM Compliance Filings Overhauling Reserve Market and E&AS Offset Calculation
On November 12, 2020, the Federal Energy Regulatory Commission (“Commission”) approved changes regarding PJM Interconnection, L.L.C.’s (“PJM”) reserve market, including how the Regional Transmission Organization (“RTO”) calculates its energy and ancillary services offset (“E&AS Offset”). The order approves a PJM compliance filing establishing categorical exclusions for nuclear, wind and solar resources, which historically have not provided capacity reserves due to their inflexible characteristics. The order also greenlighted a related exemption process PJM will use to determine reserve eligibility for resources that are automatically deselected, recognizing that in some circumstances nuclear, wind, and solar may be able to provide reserves.
As background, on August 5, 2020, PJM submitted a compliance filing containing revisions to its tariff to incorporate a forward-looking E&AS Offset beginning with the Base Residual Auction (“BRA”) for the delivery year commencing June 1, 2022. The Commission accepted the compliance filing and established an effective date of May 1, 2022.
PJM’s compliance filing described which resources may provide synchronized reserves, non-synchronized reserves, and secondary reserves. PJM has established a default rule that nuclear, wind or solar units are ineligible to provide these reserve products. According to PJM, these resources typically do not include a dispatchable range in their energy offers due to their inherent operating characteristics; as a result, PJM’s market engines do not see any reserve capability present. PJM also stated that even when those resources include a dispatchable range, they cannot or do not intend to follow PJM’s dispatch instruction….