After PJM filed its second compliance plan in September 2023, FERC approved and sided mostly with PJM in its July 25, 2024 decision. Even though FERC has a full bench of five Commissioners now, new Commissioners Judy Chang and Lindsay See did not participate in this decision for some reason. There is little discussion on the effective date in this decision because that’s part of another docket.
Overall, FERC sided largely with PJM. NEM resources co-located with non-NEM resources are now restricted to participating in the ancillary services market alone due to double-counting concerns. FERC also approved a 167 MW cap for multi-nodal aggregations as proposed by PJM over multiple parties expressing concerns. This FERC decision on PJM’s Order 2222 filing has implications for both MISO and SPP proposals, and it is not looking good for aggregators.
Net Energy Metering resources co-located with non-NEM resources restricted to ancillary services.
The big question in PJM’s second compliance filing concerns the participation of co-located NEM resources with non-NEM resources in PJM’s markets. FERC stated this regarding PJM’s first compliance filing, “PJM’s proposal excludes component DER that are not participating in net energy metering retail programs from providing injections in the PJM energy and capacity markets if they are located at a site where at least one other technology is participating in a net energy metering retail program unless the EDC and PJM determine during registration that their participation would not violate the restriction against double counting.”
However, in the second compliance filing, FERC was not satisfied with PJM’s proposal. FERC stated that PJM should specify the narrow restriction so that the component DER that participates in an NEM retail program with injections can participate in PJM’s ancillary services market but not in PJM’s energy and capacity markets. This is done due to double counting concerns. PJM has 30 days to comply with this requirement. This is not good news for DER providers and aggregators because it restricts component DER participation in the ancillary services market alone.
Multi-nodal 167 MW cap approved
Another major win for PJM and electric distribution companies is FERC’s approval of PJM’s multi-nodal proposal, which includes a 167-MW cap for multi-nodal aggregations. FERC bought into PJM’s explanation of analyzing 11,000 pricing nodes and 446 million hours of LMP data over the past five years (2018-23) despite aggregator concerns that this multi-nodal proposal is too restrictive.
FERC agreed with PJM’s methodology, which examined the price separation between nodes in its analyses. FERC found PJM’s explanation satisfactory that “significant price separation between nodes indicates that PJM would be unable to send accurate dispatch instructions — which are based on nodal LMP — to multi-nodal DER Aggregation Resources, and thus would be unable to effectively control constraints.”
FERC also approved PJM’s criteria for multi-nodal aggregation. The important aspect of this criteria regards self-scheduling multi-nodal aggregations in PJM’s markets. Over Advanced Energy Management Alliance (AEMA)’s objections, FERC has approved PJM’s proposal to allow only self-scheduled multi-nodal DER aggregations because FERC agreed with PJM’s explanation that without allowing for self-schedules, multi-nodal aggregations might cause transmission constraints.
Finally, FERC also approved PJM’s 167 MW cap for multi-nodal aggregations. This MW cap is 0.1% of PJM’s expected peak load in 2026. FERC took PJM’s word that PJM will take a look at the MW cap when DER aggregations exceed 90% of the cap – 150 MW.
Other changes
Other changes include FERC approving PJM’s proposal that DER aggregation resources under 10 MW participating in the energy market only are exempt from telemetry requirements. In a small win for aggregators and DER providers, FERC did not agree with PJM joint utilities to require PJM to convene a stakeholder meeting to clarify additional metering and telemetry requirements.
Additionally, for pre-registration and registration of component DERs, FERC stuck with the 60-day clock for the EDC safety and reliability study and did not side with the Joint Utilities. FERC took PJM at its word that PJM would develop a software program to facilitate communication between PJM, EDC, and the DER aggregator.
PJM’s proposal and FERC’s decision have implications for both MISO’s recently filed proposal and SPP’s proposal, which is scheduled to be filed in December 2024. Even though MISO did not propose an MW cap for multi-nodal aggregations, MISO has proposed Demand Response Resource Type I for multi-nodal, which has a size restriction of 1 MW, among other restrictions. SPP is leaning towards a MW cap in its preliminary discussions. Hence, FERC’s decision on PJM’s multi-nodal proposal leads me to conclude that stakeholder discussions will be robust at SPP’s multiple stakeholder meetings.
