Why PJM Should Ma.er to You: Spring 2016 Updates and Issues

Transcription

1 Why PJM Should Ma.er to You: Spring 2016 Updates and Issues Kerry Stroup and Evelyn Robinson PJM Interconnection OHA Energy and Sustainability Conference Columbus, Ohio March 16, 2016 PJM /19/16

2 Scope of Presentation PJM and the nexus of reliability, price and policy Winter operadons review Recent market outcomes Emerging market trends Planning for the Clean Power Plan Current policy issues bearing on future market outcomes Proposed Ohio PPAs and the FERC EPSA complaint Gas/Electric coordinadon IllustraDve issues of interest in the PJM stakeholder process PJM /19/16

3 What is an RTO? PJM, a Regional Transmission Organiza0on (RTO), is: Responsible for transmission grid operadons and reliability Responsible for transmission service within region Independent from all market pardcipants PJM /19/16

4 Key Sta0s0cs Member companies 960+ Millions of people served 61 Peak load in megawatts 165,492 MW of generating capacity 171,648 Miles of transmission lines 72, GWh of annual energy 792,580 Generation sources 1,304 Square miles of territory 243,417 28% of load in Eastern Interconnection 20% of transmission assets in Eastern Interconnection PJM as part of the Eastern Interconnection States served 13 + DC 21% of U.S. 27% of generation in Eastern Interconnection GDP produced in PJM As of 1/2016

5 Evolution of PJM

6 PJM s Mission Ensure the safety, reliability and security of the bulk electric power system Create and operate robust, non- discriminatory electric power markets PJM s opera,on of electric power markets consistent with system reliability exemplifies PJM s implementa,on of a fundamental principle of federal electricity policy: that just and reasonable wholesale rates are realized through compe,,ve market outcomes. PJM s Independent Market Monitor has the authority to mi,gate outcomes in markets deemed non- compe,,ve. PJM /19/16

7 Ultimately, PJM implements rather than makes policy, consistent with its reliability mission Congress and state legislators make policy, or delegate their policymaking authority to regulatory agencies. PJM implements policy established by its regulator, the FERC, although it is empowered to recommend changes in policy and pracdce through its stakeholder process and Board. PJM also strives to enable the implementadon of policy established by state law and state reguladon, consistent with its reliability mission. PJM /19/16

8 Nexus of PJM and Ohio s Electricity Prices and Policy Ohio s high voltage power grid is physically interconnected with the endre Eastern InterconnecDon over which power flows pursuant to laws of physics. Our way of life is dependent on electricity and the reliability of the system that delivers it. Each transmission owning udlity in Ohio is a member of PJM and is contractually obligated to abide by PJM s governing documents. Policies and pracdces authorized by the FERC (and implemented by PJM) directly or indirectly affect about 70 percent of a retail customer s bill. PJM

9 Wholesale Electricity Prices in PJM

10 PJM OperaDons Review

11 2016 PJM Winter Peak

12 Warmest December on record (Eastern US) PJM Winter Overall Winter Sta0s0cs Peak Forced Outage Rate 10.67% 19,100 MW December 9, 2015 Peak LMP (RTO) $ January 18, 2016 HE 19

13 2016 Summer Study Peak Load Base Case Load Forecast RTO Net Interchange 158,178 MW 9,000 MW (ImporDng) PJM RTO Installed Capacity 185,569 MW* (preliminary as of 2/23/2016) Discrete Outages 16,180 MW IN PROGRESS Peak Load Base case study Sensitivity Studies Results expected in April.

14 2016 Summer New GeneraDon / Transmission Infrastructure

15 Emerging Market Trends Demand growth Generation retirement and replacement Capacity market developments Queued interconnection requests Changing energy market trends Declining emissions rates 4/19/16 15

16 Declining electricity demand growth Without EKPC

17 GeneraDon ReDrements, Winter September 2016

18 New generadon as of 9/16, since 12/14

19 Capacity market resources

20 Cumulative Capacity Resource additions

21 December 31, 2015 Queued interconnection requests

22 Changing energy market trends th Quarter * Source: Monitoring Analytics, LLC State of the Market Report for PJM. March 10, 2016.

23 Declining emissions rates th Quarter

24 Implications for Clean Power Plan (CPP) planning Regional markets dispatch EGUs on the basis of cost, providing economic and reliability benefits The Clean Power Plan will internalize carbon costs; this will affect a regional market s economic merit order (EGU dispatch order): Generally, EGUs with higher emissions will be more costly to use ModificaDons to dispatch order may cause electricity generadon and emissions to: Occur in different amounts Occur in different geographic locadons (somedmes in different states) Decision- makers will need to determine: RelaDve advantage of compliance plan structure & path (mass or rate) Benefits of coordinadng compliance plans with neighboring states

25 Clean Power Plan Analysis Update

26 What Are we Being Asked What will be the economic and reliability impacts to states What is my state s bottom line due to trading versus not using a trading option What happens to resource diversity and what does it mean for baseload resources What is the difference between an emissions market trading seam and an electric market seam What happens if my plan diverges from what most of the other PJM states submit in their compliance plans Alright, trading makes sense but rate or mass

27 How is PJM IdenDfying Answers

28 What InformaDon will Answer these QuesDons Detailed Results by Individual State and/or PJM region Reliability Electric Market Environmental Capacity added /retired by LDA and RTO region Transfer capability for reactive interfaces Generation and Load Deliverability tests results Locational marginal prices and energy market load payments Facility level transmission congestion Percentage of generation by prime mover and fuel type Carbon dioxide prices, total allowance supply/ demand Resource entry capital costs Emission rate credit production and consumption

29 Final Rule Analysis Timeline May 31 Publish compliance pathways report March Present Reference Model Results April 30 Complete Compliance Analysis Assessment including high priority sensitivities Through Q3 Additional Reliability Analysis Coordination work with MISO Discussions with OPSI, stakeholders and air regulators Additional Economic Sensitivities PJM State Agencies

30 Proposed Ohio PPAs and EPSA complaint at FERC AEP Ohio, FirstEnergy Ohio, and Dayton Power and Light proposals PJM s pardcipadon in the proceedings PJM s posidon regarding reliability asserdons The EPSA complaint at FERC and PJM s pardcipadon PJM /19/16

31 Gas/Electric Coordination PJM /19/16

32 Market ModificaDons Generator Offer Flexibility FERC Order 206 Compliance Filing allow market pardcipants to submit day- ahead offers that vary by hour and to update their offers in real Dme, including during emergency situadons, and make any associated modificadons to its market power midgadon rules Target Fall 2016 ImplementaDon Day- Ahead Market Timing Changes FERC Order 206 Compliance Filing Propose tariff changes to adjust the Dme at which the results of its day- ahead energy market and reliability unit commitment process (or equivalent) are posted to a Dme that is sufficiently in advance of the Timely and Evening NominaDon Cycles, respecdvely, to allow gas- fired generators to procure natural gas supply and pipeline transportadon capacity to serve their obligadons Target March 31, 2016 ImplementaDon

33 Evolution of gas/electric coordination Coordination 2013 FERC Order 787 Gas/Electric CoordinaDon 2014 PJM formed Gas/Electric Team 2015 Capacity Performance approved EIPC Study Complete Protocol for information sharing with PJM Pipelines MOU with PJM Pipelines FERC Order 809 Modify Dming of the Day Ahead market FERC Order xxx Hourly Gen Offers LDC transparency & informadon sharing CP resources on- line

34 Current Gas/Electric commercial day structure

35 Revised Gas/Electric commercial day structure effective March

36 Gas/Electric industry communication vehicles MONTHLY WEEKLY DAILY ONGOING Monthly coordina0on of gas and generator planned maintenance between PJM and the pipelines Weekly or as needed conference calls with interstate pipelines will commence starting Nov. 1 through Mar. 1 Weekly peak load forecast Projected gas usage Forecasted system conditions Forecasted pipeline conditions Daily review of gas nomina0ons by PJM scheduled generators Daily review of Gas Electronic Bulle0n Boards (EBBs) for critical notices potentially impacting generation in the footprint Ongoing PJM, MMU, and Pipeline MOU discussions

37 Current Issues of Interest in the PJM Stakeholder Process PJM /19/16

38 PJM Committee Structure PJM /19/16

39 Stakeholder process issues of interest ImplementaDon of FERC direcdve to allow resources to vary their offers hourly in the day- ahead and real- Dme markets Increase opportunides for seasonal resources to pardcipate in capacity performance based capacity market, e.g. by considering an aucdon mechanism to combine seasonal capability into annual CP required capability OperaDng parameter definidons and their treatment under Capacity Performance ImplementaDon of a 200 kv voltage level floor for transmission projects to be compeddvely bid pursuant to FERC Order 1000 Update RegulaDon Market structure to ensure that market outcomes provide for reliable operadons and compensate for performance PJM /19/16

40 Stakeholder process issues of interest (2) ReducDon of the voladlity of uplir charges and consideradon of alternadve uplir cost allocadon methodologies ConsideraDon of more effecdve and lower cost soludons for integradng distributed resources, e.g. ba.ery storage, than are currently provided by interconnecdng as a generadon resource under the normal queue process or by being designated a demand response resources with a.endant registradon and cerdficadon requirements PJM /19/16

41 Policy development and implementadon ma.er. Consequences involve the reliability of your electricity supply and its cost. Take-aways RecommendaDons for improvements in wholesale electricity policy implementadon are condnually under consideradon in PJM s stakeholder process. Take heed, as outcomes may have consequences for you. As in the case of the pending Ohio PPAs, there are occasions when PJM s policy recommendadons or implementadon conflicts with objecdves of state policy makers. The FERC (and the courts) are the PJM /19/16 arbiters.