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PJM Seeks to Add Two Demand Response Products to RPM Auction
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December
6, 2010
PJM has petitioned FERC for approval of two new demand response products for the Reliability Pricing Model capacity auction, which PJM said would enhance PJM's emergency dispatch options while recognizing, through capacity resource commitments, the expanded response capabilities that are latent in many existing demand resources.
"PJM's analyses indicate that the PJM Region has entered a phase of demand response development in which these legacy limitations on the response of demand resources threaten to become a legitimate reliability concern. Moreover, as discussed below, if PJM waits too long to implement the types of product changes described in this filing, it increases the risks of significant product price separation in the first year of implementation, which could potentially be more disruptive to the continued orderly development of demand response resources," PJM said.
"In order to avoid a market disruption, the correct response is not simply to eliminate the legacy demand response product definition, or to cap the level of demand resources that may commit in RPM without providing other alternatives," PJM added.
Specifically, PJM proposed adding an Annual Demand Resource product and an Extended Summer Demand Resource product, which have fewer limitations on when the resources may be called versus the current demand response product.
PJM is retaining the existing Demand Resource product, but renaming it to Limited
Demand Resource to distinguish it from the two new products. This legacy product
may only be called on non-
In contrast, resources under the Annual Demand Resource product must be available on any day of the year and for an unlimited number of interruptions during the year. The Annual Demand Resource product still has limits on the hours of the day when it must be available: 10:00 a.m. to 10:00 p.m. for May through October and 6:00 a.m. to 9:00 p.m. for November through April.
The Extended Summer Demand Resource must be available on any day of an expanded summer period, which is May through October (instead of June through September). The hours of the day that it is required to respond to a call for interruption are expanded, relative to the Limited Demand Resource, to 10:00 a.m. to 10:00 p.m., and the maximum duration of interruption is increased to ten hours from six. The Extended Summer Demand Resource accommodates the many existing demand resources in the region (such as air conditioning cycling programs) that can physically exceed PJM's current legacy tariff rule limitations on demand response capabilities but that are only available in the summer, PJM said.
PJM's auction clearing process will select Extended Summer Demand Resources or annual resources out of merit order if needed to procure the minimum quantities, similar to the way in which RPM auctions today can select resources out of merit order to address locational constraints.
PJM sought approval of the new products by February 1, 2011 to allow for them to be included in the May 2011 RPM auction for the delivery year starting June 1, 2014.
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