PJM weighs new offer flexibility for generators

OREANDA-NEWS. March 23, 2015. PJM Interconnection stakeholders will consider whether to give generators more flexibility in how to price their energy in the day-ahead energy market so power plants could vary their offer prices each hour of the day.

The change would affect all generators but most directly affects gas-fired power plants. PJM's existing rules requires generators to offer energy at a single price for the 24 hours covered in the day-ahead market, even if fuel prices during that period could change significantly. Natural gas often has high intraday price volatility, particularly during the switch to a new gas operating day at 9am CT.

The main electric grids in California, New England, New York, Texas and the US midcontinent have already started allowing generating resources to vary their prices during the day. PJM is the largest US electric grid but only recently started to let generators not committed in the day-ahead market to update their offers up to three hours in advance of the operating hour.

PJM's markets and reliability committee plans to discuss generator offer flexibility at a meeting next week in Wilmington, Delaware, where the merchant generator owner Calpine has submitted a problem statement on the issue. Calpine owns about 5,000MW of mostly gas-fired generation in the grid, which covers the mid-Atlantic and several Great Lakes states.

The problem statement said adding flexibility could benefit market results, given that generators could provide more accurate prices throughout the day. Calpine in a presentation prepared ahead of the 26 March committee meeting said if the committee agrees with the problem statement, it would like to implement rules changes by 1 December 2015.