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PJM Seeks to Remove Certain Facilities from Marginal Loss Calculation
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October
4, 2010
PJM has filed tariff changes at FERC to eliminate from the PJM marginal loss
calculation model all lower voltage facilities that PJM does not control or operate
for congestion or reliability, as well as generator step-
The removal of such lower voltage facilities was requested by certain stakeholders which argued that there were more facilities included in the calculation than necessary, because all of the facilities that are in the State Estimator which runs the entire network model need not be used in the loss calculation. These stakeholders had argued that including additional facilities results in a larger total amount of marginal loss revenue, thereby increasing the amount of the surplus which must be allocated back to PJM members with no discernable benefit in system dispatch efficiency.
PJM proceeded to conduct an analysis which indicated that the removal of the low voltage facilities, which are largely radial to the transmission system and therefore not networked with the higher voltage transmission facilities, from the calculation of marginal losses would have a "negligible" effect on optimal generation dispatch because the vast majority of generation in PJM is connected to the higher voltage transmission system.
PJM's analyses indicate that the maximum hourly average additional MW dispatched in any of the executed study cases including the low voltage facilities is 17 MW, which is "a negligible amount on a system the size of PJM," PJM said.
At the same time, however, the removal of these low voltage facilities from the marginal loss calculation will result in an approximate savings of 20% to PJM Members on the amount of Transmission Loss Charges that they are assessed, which translates to approximately $200 million dollars per year.
PJM elected not to establish a specific voltage cut off for the lower voltage facilities, instead proposing the metric of whether the facility is controlled or operated by PJM for congestion or reliability.
PJM said that the proposed revisions will have no impact on the interaction between transmission and distribution losses at the wholesale level given the manner in which PJM has implemented its loss accounting mechanism. In settlements, PJM currently removes all losses calculated in its State Estimator out of the physical load that is paid for at wholesale by Load Serving Entities because all facilities in the State Estimator model are included in the loss price calculations and all losses are therefore paid for financially by the LSEs through the loss component of the LMP. With the proposed revisions, PJM will continue to remove loss MW from the physical load that is paid for at wholesale by LSEs, but will no longer remove the physical losses associated with the underlying facilities being eliminated from the loss price calculation.
Therefore, the losses on these underlying facilities will be included in and paid for as physical load by the LSEs rather than financially through the loss component of the LMP.
PJM proposed an effective date of June 1, 2012 for the revisions. PJM said that
the start date was driven by its focus on implementing its Advanced Control Center
project for 2011 and delays in its go-
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