• FERC Accepts and Suspends PJM’s Proposed Demand Response Changes; Will Hold Technical Conference
  • June 15, 2011 | Authors: William "Bill" R. Derasmo; Kevin C. Fitzgerald; Peter S. Glaser; Kevin C. Greene; Lara L. Skidmore
  • Law Firms: Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Portland Office
  • On June 3, 2011, FERC issued an order (the “Order”) accepting and suspending PJM Interconnection L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff (“OATT”) and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region (“Reliability Assurance Agreement”).  In its Order, the Commission accepted and suspended PJM’s proposed changes for a five month period, to be effective November 7, 2011, subject to refund, and to the outcome of a technical conference and a further order of the Commission.

    On April 7, 2011, PJM filed proposed revisions to its OATT and Reliability Assurance Agreement.  PJM’s filing stems from issues surrounding the measurement of capacity curtailments, and PJM made the filing in order to clarify the rules that apply to values for particular load reductions by demand response resources offered and cleared in the PJM capacity market during emergency and testing conditions.  In its April 7 filing, PJM proposed to remove incentives for aggregators (such as Curtailment Service Providers (“CSP”)) to register end-use customers with no or little ability to curtail loads and ensure system reliability by requiring an end-use customer’s actual load reduction result in a metered load which is less than the customer’s Peak Load Contribution (“PLC”).  PJM described the PLC as the average of the end-user’s actual load during the five coincident peak hours of the preceding delivery year. PJM filed the proposed revisions after EnerNOC, Inc. (“EnerNOC”) sought a declaratory ruling from FERC that as a CSP, EnerNOC could continue to register customers in demand response programs and settle under Guaranteed Load Drop (“GLD”) baseline methodology without threat of a Commission enforcement action.  GLD is when load is reduced by a predetermined amount upon notification from the market operations center or its agent. 

    In its Declaratory Order on March 3, 2011, the Commission stated that the PJM OATT could be clearer on whether a curtailment greater than an end-user customer’s PLC could be counted by a CSP as an over-performance to off-set an under-performing resource. Thus, in its April 7 filing, PJM’s proposed OATT revisions would limit the value given to demand response load reduction by only recognizing load reductions made below PLC.  PJM indicated that a limited number of CSPs have interpreted PJM’s existing rules to allow Load Management “performance” in excess of PLC; however, that could be a detrimental to reliability.

    In its June 3 Order, the Commission found PJM’s proposed OATT changes have not shown to be just and reasonable, may be unjust, unreasonable, unduly discriminatory, preferential or otherwise unlawful. The Commission accepted and suspended the filing for five months to become effective on November 7, 2011, subject to refund, and the outcome of a technical conference.  The Commission directed Staff to convene the technical conference within 60 days of the Order and establish post-technical conference comment procedures.