PJM wants earlier time for day-ahead commitments

OREANDA-NEWS. April 23, 2015. The PJM Interconnection wants to notify power plants and other resources if they were committed to run in the day-ahead market three hours earlier than at present as part of an effort to make it easier for gas-fired power plants to buy fuel and reserve transportation on natural gas pipelines.

The change would solve a recurring problem in which gas plants only find out if their energy bids cleared PJM's day-ahead market after the 11:30am CT close of the timely nomination cycle, the most liquid trading cycle for securing gas for the next day. PJM right now posts the results of its day-ahead market at 3pm CT and the results of reliability commitments around 5pm CT.

The scheduling mismatch has been most problematic during winter's tight supply and price volatility. It has forced gas plants to either line up supply without knowing if their bids cleared or wait until their bids cleared and hope gas prices did not spike later in the day, in the next intraday nomination cycle.

The Federal Energy Regulatory Commission (FERC) last year started a process to address this mismatch. For the gas sector, the agency proposed changing the timing of the gas day. FERC separately told PJM and other grid operators they would need to start posting results of their day-ahead market and reliability commitment process earlier in the day.

FERC last week finalized the gas rule, shifting the close of the timely nomination cycle to 1pm CT but preserving the 6pm CT close of the evening nomination cycle. After the rule is published in the Federal Register, it will start a 90-day clock for PJM and other grid operators to file tariff changes detailing their new schedules.

PJM now wants to close the bidding window for its day-ahead market by 8:30am CT and post results by no later than noon CT, giving generators an hour to make nominations into the timely nomination cycle. It would also post results of its reliability commitment process by 5pm CT, an hour before the close of the evening nomination cycle.

The grid operator will discuss the changing schedule tomorrow at a meeting of its markets and reliability committee in Wilmington, Delaware. The grid operator expects to make its compliance filing with FERC by late July.

Coal last year accounted for 44pc of PJM generation, nuclear plants contributed 34pc while natural gas' share was 17pc. But gas' share should rise this year as almost 8GW of coal capacity shuts, mainly as a result of federal environmental rules.