Market Settlements - Advanced

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1 Market Settlements - Advanced RPM Module PJM State & Member Training Dept. PJM 2017

2 Capacity vs. Energy Capacity A commitment of a resource to provide energy during PJM emergency under the capped energy price Capacity revenues paid to committed resource whether or not energy is produced by resource Daily product Energy Generation of electrical power over a period of time Energy revenues paid to resource based on participation in PJM s Day-Ahead & Real-Time Energy Markets Hourly product Capacity, energy & ancillary services revenues are expected, in the long term, to meet the fixed and variable costs of generation resources to ensure that adequate generation is maintained for reliability of the electric grid PJM

3 Common Terminology in RPM Installed Capacity (ICAP) value of a unit is based on the summer net dependable rating of a unit as determined in accordance with PJM s Rules and Procedures Unforced Capacity (UCAP) value of a unit is the installed capacity rated at summer conditions that is not on average experiencing a forced outage or forced derating UCAP = ICAP x (1-EFORd) Equivalent Demand Forced Outage Rate (EFORd) is a measure of the probability of a generating unit will not be available due to forced outages or forced deratings when there is demand on the unit to operate UCAP Concept is extended to value demand resources, energy efficiency resources, qualifying transmission upgrades in RPM PJM

4 Objectives of RPM Resource commitments to meet system peak loads three years in the future Three year forward pricing which is aligned with reliability requirements and which adequately values all capacity resources Provide transparent information to all participants far enough in advance for actionable response Purpose of RPM is to enable PJM to obtain sufficient resources to reliably meet the needs of electric consumers within PJM PJM

5 Resource Adequacy Requirement Determines the amount of capacity resources required to serve the forecast peak load and satisfy the reliability criterion The reliability criterion is based on Loss of Load Expectation (LOLE) not exceeding one event in ten years An Installed Reserve Margin (IRM) = 16.9% satisfies the reliability criterion for the 2020/21 Delivery Year Base Residual Auction Resource Adequacy ICAP Requirement = Forecast Peak Load * (1+ IRM) PJM

6 RPM Structure 3 Years 20 months May May be scheduled at any time prior to DY Sept July 10 months 3 months Feb. June May Base Residual Auction EFORd Fixed Delivery Year Conditional Incremental Auction First Incremental Auction Second Incremental Auction Third Incremental Auction Ongoing Bilateral Market PJM

7 RPM Auctions Activity Purpose Cost of Procurement Base Residual Auction Procurement of RTO Obligation less an amount reserved for short term resources, less FRR Obligation Allocated to LSEs through Locational Reliability Charge 1 st Incremental Auction Allows for: (1) replacement resource procurement 2 nd Incremental Auction 3 rd Incremental Auction (2) increases and decreases in resource commitments due to reliability requirement adjustments; and (3) deferred short-term resource procurement Allocated to resource providers that purchased replacement resources and LSEs through Locational Reliability Charge Conditional Incremental Auction Procurement of additional capacity in a LDA to address reliability problem that is caused by a significant transmission line delay Allocated to LSEs through Locational Reliability Charge PJM

8 Variable Resource Requirement (VRR) Curve A VRR Curve is defined for the PJM Region & each constrained LDA PJM

9 Base Residual Auction Resource Clearing Prices PJM

10 What is a Supply Resource in RPM? In RPM, Resources are = Generation Resources Demand Resources (DR) Energy Efficiency Resources (EE) (Effective with 11/12 DY) Qualifying Transmission Upgrades (QTU) PJM

11 Capacity Performance PJM

12 Capacity Performance Resource Capacity Performance Resources must be capable of sustained, predictable operation that allows resource to be available to provide energy and reserves during performance assessment hours throughout the Delivery Year Subject to Non-Performance Charge assessed during emergency conditions throughout entire Delivery Year PJM

13 Capacity Performance Assessment The non-performance charge/performance credit provisions will apply to all Generation Capacity Resources committed as Capacity Performance Resources; however, the magnitude of non-performance charges for the 2016/2017 and 2017/2018 Delivery Years is reduced to 50% and 60%, respectively, of the nonperformance charges that become effective with the 2018/2019 Delivery Year implementation of these provisions a. For 2016/2017, the Non-Performance Charge Rate is $1,896.30/MWhr (established as (50%)*($311.72/MW-day)*(365 days)/30 hours); and, the annual stop-loss is $85, times the resource s committed CP UCAP MW (established as (50%)*(1.5)*($311.72/MW-day)*(365 days)] b. For 2017/2018, the Non-Performance Charge Rate is $2,420.23/MWhr PJM 2017 (established as (60%)($331.54/MW-day)*(365 days)/30 hours); and, the annual stop-loss is $108, times the resource s committed CP UCAP MW (established as (60%)*(1.5)*($331.54/MW-day)*(365 days)] PJM

14 Balancing Ratio Balancing Ratio (BR) is used to calculate a Capacity/Base Performance resource's Expected Performance value Total Actual Generation and Storage Performance + Net Energy Imports + Demand Response Bonus Performance All Generation and Storage Committed UCAP Ratios are calculated for each PAH declared by the Emergency Action and is based on the issuance reason If Pre-Emergency LM is issued for both PPL and PECO, then PAH area is the combination of PPL and PECO PPL/PECO PJM 2017 If Pre-Emergency LM is issued for PPL and Maximum Generation is issued for PECO for a different reason, then two different PAH areas are created PPL and PECO PJM

15 Non-Performance Assessment Example PJM 2017 PJM

16 Performance Assessment Hour Settlements Non-Performance Assessments are billed within three calendar months after the calendar month that included the Performance Assessment Hour. For example, if a Performance Assessment Hour (PAH) occurs on June 30, Charges and Credits are billed starting with the September monthly bill. If a PAH occurs on July 1, Charges and Credits are billed starting with the October monthly bill. PJM

17 Performance Assessment Hour Settlements Charges and Credits are billed by dividing the total dollar amounts owed/due by the number of months remaining in the Delivery Year. See the illustration below for the timing of settlements: PJM

18 Non-Performance Assessment Timing Example PJM 2017 PJM

19 Billing Line Items PJM

20 Locational Reliability Charge Locational Reliability Charge = LSE Daily Zonal UCAP Obligation Final Zonal Capacity Price Transitional IA Cost Component Each RPM LSE that serves load in a PJM Zone or load outside PJM using PJM resources (i.e., Non-Zone Network Load) during the Delivery Year must pay a Locational Reliability Charge Charges calculated daily and billed weekly during Delivery Year BLI: 1610 Supporting MSRS Report: Locational Reliability Charge Summary PJM

21 CP Transitional Locational Reliability Charge CP Transitional Locational Reliability Charge = LSE Daily Zonal UCAP Obligation Transitional IA Cost Component Effective for the 2016/2017 & 2017/2018 CP Transition IAs CP Transition IA cost component ($/MW-day) = Additional Auction Credits required /Total RTO UCAP Obligation CP Transition IA cost component will be the same for all zones in the RTO BLI: 1611 Supporting MSRS Report: Locational Reliability Charge Summary PJM

22 Auction Specific MW Transaction Charges & Credits (Bi-Lateral Transaction) selling position ahead of the delivery year Seller of a Auction Specific MW Transaction will receive a Charge (BLI 1650)= Transaction Amount Weighted Avg. RCP Weighted average of the resource clearing prices of the resourcespecific, auction-specific Cleared MWs identified in the transaction Buyer of a Auction Specific MW Transaction will receive a Credit (BLI 2650)= Transaction Amount Weighted Avg. RCP Auction Specific MW Transaction Charges/Credits will be calculated daily and billed weekly for the duration of the transaction during the Delivery Year Supporting MSRS Report: Auction Specific MW Transaction Charges and Credits PJM

23 Buy Bid Transaction Charges & Credits Purpose: Resale or support position Seller of a Buy Bid Transaction will receive a Credit (BLI 2650)= Transaction Amount Auction Clearing Price Applicable Auction and LDA Buyer of a Buy Bid Transaction will receive a Charge (BLI 1650)= Transaction Amount Auction Clearing Price Applicable Auction and LDA Buy Bid Transaction Charges/Credits will be calculated daily and billed weekly for the duration of the transaction during the Delivery Year Supporting MSRS Report: Auction Specific MW Transaction Charges and Credits PJM

24 Auction Credits RPM Auction Credit (BLI 2600) = MW Amount Cleared* Applicable Resource Clearing Price If cleared Sell Offer in an RPM Auction, Market Seller will receive an Auction Credit Credits calculated daily and billed weekly during the Delivery Year *MW Amount Cleared will be adjusted for Unit Specific Bilaterals for Cleared MW Supporting MSRS Report: RPM Auction Credits PJM

25 Auction Charges RPM Auction Charge (BLI 1600) = MW Amount Cleared in LDA Resource Clearing Price in LDA If cleared Buy Bid in a Scheduled Incremental Auction, Market Buyer will receive an Auction Charge (i.e., Resource Substitution Charge) Charges calculated daily and billed weekly during the Delivery Year Supporting MSRS Report: RPM Auction Charges PJM

26 Resource Make-Whole Credit Make-Whole Credit (BLI 2600) = Resource Clearing Price Minimum MW Offered Cleared MW Resource Make-Whole credit is paid to the marginal resource in an RPM Auction as appropriate to ensure that Market Seller is paid the sell offer MW times the sell offer price Make-Whole credits are charged to LSEs through Final Zonal Capacity Price or to buyers of replacement capacity in an Incremental Auction (pro-rata allocation based on MWs cleared in buy bid) (BLI 1600) Credits calculated daily and billed weekly during the Delivery Year All CP Transitional IA Credits will be added to this line item Supporting MSRS Reports: 1. Auction Specific MW Transaction Charges and Credits 2. RPM Auction Make-Whole Charge Summary 3. RPM Auction Charges and Credits PJM

27 Why Capacity Transfer Rights Resources in the unconstrained LDA (and capacity imported into constrained LDAs) are paid the Unconstrained (lower) Resource Clearing Price Unconstrained LDA RCP = $111.92/MW-Day LSEs pay a Locational Reliability Charge for their entire UCAP obligation (including imports) at the higher zonal capacity price Import Constrained LDA FZCP = $150.53/MW - Day of UCAP Obligation Capacity Transfer Right (CTR) Credit reduces the LSE load charge by recognizing the economic value of less expensive resources imported from outside the constrained LDA. PJM

28 How are CTR Rates Determined? Rate Equation When posted? Base Zonal CTR Credit Rate ($/MW-day of obligation) = Base Economic Value of CTRs allocated to LSEs in a zone from BRA/Base Zonal UCAP Obligation With BRA clearing results Final Zonal CTR Credit $/MW-day of obligation) = Final Economic Value of CTRs allocated to LSEs in a zone as determined after the Final IA/Final Zonal UCAP Obligation With Final IA clearing results Final CTR Settlement Rate ($/MW-day of CTRs) = Final Economic value of CTRs allocated to LSEs in a zone as determined after the Final IA/Final Zonal CTRs allocated to LSEs With Final IA clearing results Final Sink LDA ICTR Settlement Rate ($/MW-day of ICTRs) Participant-Funded Project ICTRs Regional Project ICTRs = Final Economic Value of ICTRs in Sink LDA/Final ICTRs MWs in Sink LDA With Final IA clearing results PJM

29 Capacity Transfer Rights Credits Zonal CTR Credit (BLI 2630) = Zonal CTRs Owned Zonal CTR Settlement Rate Each zonal CTR owner will receive a daily Zonal CTR Credit ICTR Credit (BLI 2640) = Incremental CTRs Owned in Sink LDA ICTR Settlement Rate for Sink LDA Each incremental CTR owner will receive a daily Incremental CTR Credit Both credits will be calculated daily and billed weekly during the Delivery Year. Supporting MSRS Reports: 1. Capacity Transfer Rights Credit Summary 2. Incremental Capacity Transfer Rights Credits 3. Incremental CTR for Required Transmission Enhancement Credits PJM

30 Non-Performance Charge and Bonus Performance Credit Non-Performance Charge (BLI 1668) = Under- Performance MW Non- Performance Charge Rate Non-Performance Charge Rate = Net CONE * 365 Days/30 hours Bonus Performance Credit (BLI 2668) = Over- Performance MW Over- Performance Credit Rate Over-Performance Credit Rate = Total Non-Performance Charge $ / Total Over-Performance MW Charges and Credits are billed by dividing the total dollar amounts owed/due by the number of months remaining in the Delivery Year. The MSRS Reports will consist of Summary and Detailed Reports. PJM

31 Resource Payment and Performance Assessment with Stop Loss Resource Revenue Calculation: BLI:2600 1,000 MW Resource Auction clearing price $119/Mw day Annual Capacity Revenue 1,000Mw x $119 x 365 = $43,435,000 Non Performance Charge Example: Resource availability = 0 (Forced Outage) Emergency in effect = 6 hours Non-Performance Charge for 2016/2017 1,000Mw x $1,896.30/Mwh x 6 = $11,377,800 PJM 2017 Stop Loss Calculation for DY 2016/2017: $85, x Committed Capacity 1,000 Mw x $85, = $85,333,700 Note: Balancing Ratio = 1 31

32 Deficiency & Penalty Charges Charge Rate MW Amount Assessed Billed Allocated Capacity Resource Deficiency Charge (BLI 1661) Daily Deficiency Rate = Party s WARCP for such resource + higher of (.2 * Party's WARCP for such resource OR $20/MW-day) MW Amount of Shortage Daily Weekly during DY Pro-rata basis to those LSEs who were charged Daily Locational Reliability Charge based on their Daily UCAP Obligation (BLI 2661) Qualifying Transmission Upgrade Delay Penalty (BLI 1663) QTU Delay Penalty Rate = higher of (1) 2 * Locational Price Adder of LDA into which QTU is cleared or (2) Net CONE less the RCP in LDA from which QTU is provided Cleared MW Amount of Incremental Import Capability Not Delivered Daily Weekly during DY Pro-rata basis to those LSEs who were charged Daily Locational Reliability Charge based on their Daily UCAP Obligation (BLI 2663) Peak-Hour Period Availability Charge (BLI 1665) Daily Peak-Hour Period Availability Charge Rate = Provider's Weighted Average RCP in LDA Daily Peak-Hour Period Availability Charge Rate = weighted average of resource clearing prices across all RPM Auctions for the LDA encompassing zone of FRR Entity, weighted by quantities cleared in RPM Auctions Net Peak Period Capacity Shortfall for RPM Resource Commitments in LDA Net Peak Period Capacity Shortfall for FRR Capacity Plan Commitments in LDA Daily Retroactively for entire DY in August bill (issued in September) after conclusion of DY Resource providers that have negative Net Peak Period Capacity Shortfalls (capped at excess shortfall * Daily Peak-Hour Availability Charge Rate). Remaining Charges to LSEs based on their Daily UCAP Obligation (BLI 2665) Charge = Rate * MW Amount PJM

33 Deficiency & Penalty Charges Charge Rate MW Amount Assessed Billed Allocated Generation Resource Rating Test Failure Charge (BLI 1662) Daily Deficiency Rate = Party s WARCP for such resource + higher of (.2 * Party's WARCP for such resource OR $20/MW-day Daily Deficiency Rate = 1.2 * weighted average of resource clearing prices across all RPM Auctions for the LDA encompassing zone of FRR Entity, weighted by quantities cleared in RPM Auctions Daily ICAP Shortfall for RPM Resource Commitments * (1-Effective EFORd) Daily ICAP Shortfall for FRR Capacity Plan Commitments * (1-Effective EFORd) Daily Retroactively for entire DY in June bill (issued in July) after conclusion of DY Pro-rata basis to those LSEs who were charged Daily Locational Reliability Charge based on their Daily UCAP Obligation (BLI 2662) PSM Compliance Penalty Charge (BLI 1664) Daily Deficiency Rate = Party s WARCP for such resource + higher of (.2 * Party's WARCP for such resource OR $20/MW-day Daily Deficiency Rate = 1.2 * weighted average of resource clearing prices across all RPM Auctions for the LDA encompassing zone of FRR Entity, weighted by quantities cleared in RPM Auctions Daily PSM Shortfall for RPM Resource Commitments * (1- Effective EFORd) Daily PSM Shortfall for FRR Capacity Plan Commitments * (1-Effective EFORd) Daily Retroactively for applicable peak season days in June bill (issued in July) after conclusion of DY Pro-rata basis to those LSEs who were charged Daily Locational Reliability Charge based on their Daily UCAP Obligation (BLI 2664) Charge = Rate * MW Amount PJM

34 Deficiency & Penalty Charges Charge Rate MW Amount Assessed Billed Allocated (For non-cp) Load Management Event Compliance Charge (BLI 1660) On-Peak LM Event Compliance Penalty Rate = Lesser of (1/actual # of events during summer period OR 50%) * Party s Weighted Annual Revenue Rate ($/MW-day) Off-Peak LM Event Compliance Penalty Rate = 1/52 * Party s Weighted Annual Revenue Rate ($/MW-day) If a Party s Weighted Annual Revenue Rate = $0/MW-day, a PJM Weighted Annual Revenue Rate in such zone will be used Net Compliance Aggregation Area Under- Compliance MW LM Event basis Third billing month after the LM event occurs DR Resource Providers that over-complied (capped at MW amount of overcompliance * 1/5 Party s Weighted Annual Revenue Rate). Remaining Charges to LSEs based on Average Daily UCAP Obligation during month of LM event. (BLI 2660) Load Management Test Failure Charge (BLI 1666) Daily LM Test Failure Charge Rate = Party s Weighted Daily Revenue Rate in zone + Greater of (0.2 * Party s Weighted Daily Revenue Rate in zone OR $20/MW-day) If a Party s Weighted Annual Revenue Rate = $0/MW-day, a PJM Weighted Daily Revenue Rate in such zone will be used Net Compliance Aggregation Area Under- Compliance MW Daily Monthly; however, lump sum assessed from start of DY to day charges are first reflected in billing. Allocated pro-rata to those LSEs charged a Daily Locational Reliability Charge based on their Daily UCAP Obligation. (BLI 2666) Charge = Rate * MW Amount PJM

35 Billing Examples PJM

36 RPM Credits PJM

37 MSRS Reports RPM PJM

38 RPM Auction Credits Cleared RPM Auction Capacity Capacity RPM Auction Make-Whole Make-Whole Customer Customer Date Resource ID Resource Name RPM Auction (MW) Price ($/MW) Credit ($) MW Credit ($) Version BDLLC 6/1/ ROCKY 1 BASE BDLLC 6/1/ ROCKY 2 BASE BDLLC 6/1/ ROCKY 3 BASE BDLLC 6/1/ ROCKY 4 FIRST BDLLC 6/1/ BORIS 1 BASE BDLLC 6/1/ BULLWINKLE 1 BASE BDLLC 6/1/ BULLWINKLE 2 FIRST BDLLC 6/1/ BULLWINKLE 3 BASE BDLLC 6/1/ AUSTIN 1 BASE BDLLC 6/1/ AUSTIN 2 BASE BDLLC 6/1/ AUSTIN 3 FIRST BDLLC 6/1/ AUSTIN 4 BASE BDLLC 6/1/ AUSTIN 5 BASE BDLLC 6/1/ POWERS 1 SECOND BDLLC 6/1/ POWERS 2 BASE BDLLC 6/1/ POWERS 3 BASE BDLLC 6/1/ ELLA 1 BASE BDLLC 6/1/ ELLA 2 FIRST BDLLC 6/1/ CLINT 1 BASE BDLLC 6/1/ CLINT 2 BASE BDLLC 6/1/ CLINT 3 BASE BDLLC 6/1/ CLINT 4 BASE BDLLC 6/1/ TIERINAN 1 BASE BDLLC 6/1/ TIERINAN 2 BASE Sum of the RPM Auction Credits and RPM Auction Make-Whole Credit columns for each day of the month = $88,898, Billing line item 2600 PJM

39 RPM Charges PJM

40 MSRS Reports RPM PJM

41 RPM Auction Charges RPM Auction Cleared Make-Whole RPM Auction Capacity Capacity RPM Auction Charge Rate Make-Whole Customer Customer Date RPM Auction LDA Product Type (MW) Price ($/MW) Charge ($) ($/MW) Charge ($) LTSWE 5/1/2016 FIRST RTO Limited LTSWE 5/1/2016 FIRST MAAC Limited LTSWE 5/2/2016 FIRST RTO Limited LTSWE 5/2/2016 FIRST MAAC Limited LTSWE 5/3/2016 FIRST RTO Limited LTSWE 5/3/2016 FIRST MAAC Limited LTSWE 5/4/2016 FIRST RTO Limited LTSWE 5/4/2016 FIRST MAAC Limited LTSWE 5/5/2016 FIRST RTO Limited LTSWE 5/5/2016 FIRST MAAC Limited LTSWE 5/6/2016 FIRST RTO Limited LTSWE 5/6/2016 FIRST MAAC Limited LTSWE 5/7/2016 FIRST RTO Limited LTSWE 5/7/2016 FIRST MAAC Limited LTSWE 5/8/2016 FIRST RTO Limited LTSWE 5/8/2016 FIRST MAAC Limited LTSWE 5/9/2016 FIRST RTO Limited LTSWE 5/9/2016 FIRST MAAC Limited LTSWE 5/10/2016 FIRST RTO Limited LTSWE 5/10/2016 FIRST MAAC Limited Sum of the RPM Auction Charge and RPM Auction Make-Whole Charge columns for each day of the month = $15, Billing line item 1600 PJM

42 Locational Reliability Charge Summary Customer Customer Date Zone UCAP Obligation (MW) Final Zonal Capacity Price ($/MW) Locational Reliability Charge ($) Version LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE LTSWE 6/1/2016 ZONE Sum of the Locational Reliability Charge column for each day of the month = $3,178, Billing line item 1610 PJM

43 PJM

44 Incremental CTR for required Transmission Enhance Credits Total ICTR for Transmission Responsible Total Responsible ICTR for Transmission Customer Customer Responsible Responsible Enhancement Zone NSPL Zone NSPL Enhancement ID Code Date Upgrade ID Zone Share Credit ($) (MW-days) (MW-days) Credit ($) 9999 BDLLC 3/1/2016 b0457_dom ATSI BDLLC 3/1/2016 b0487_ppl ATSI BDLLC 3/1/2016 b0559_trailco ATSI BDLLC 3/1/2016 b1507_dom ATSI BDLLC 3/1/2016 b1694_dom ATSI BDLLC 3/2/2016 b0457_dom ATSI BDLLC 3/2/2016 b0487_ppl ATSI BDLLC 3/2/2016 b0559_trailco ATSI BDLLC 3/2/2016 b1507_dom ATSI BDLLC 3/2/2016 b1694_dom ATSI ICTR for Trans Enhancements ($) = ( x ) x ( / ) Sum of the ICTR for Transmission Enhancements Credit column for each day of the month = $62.55 Billing line item 2640 PJM

45 CTR Credits Customer ID UCAP Obligation (MW) Customer Code Date Zone CTR MW Total Zone UCAP Obligation (MW) Traded CTR MW Zonal CTR Rate ($/CTR MW) CTR Credit ($) 9999 BDLLC 3/1/2017 ATSI BDLLC 3/2/2017 ATSI BDLLC 3/3/2017 ATSI BDLLC 3/4/2017 ATSI BDLLC 3/5/2017 ATSI BDLLC 3/6/2017 ATSI BDLLC 3/7/2017 ATSI BDLLC 3/8/2017 ATSI BDLLC 3/9/2017 ATSI BDLLC 3/10/2017 ATSI CTR Credit ($) = ( / )x( x ) Sum of the CTR column for each day of the month = $5, Billing line item 2630 PJM

46 Questions? PJM

47 PJM Client Management & Services Telephone: (610) Toll Free Telephone: (866) Website: The Member Community is PJM s self-service portal for members to search for answers to their questions or to track and/or open cases with Client Management & Services PJM

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