When you sell demand response back to the grid, how much capacity are you now not buying?
Bruce W. Radford is publisher of Public Utilities Fortnightly.
The first hint of trouble came in December 2009, when PJM revealed in a load management performance report that customers who bid demand response (DR) resources into the RPM capacity market for the 2009/2010 delivery year had actually over-performed—they had backed off 18 percent more capacity (1,299 MW) than promised.
Trouble, that is, because when PJM’s independent market monitor began to parse the data, that surplus started looking more like a shortage.
Led by its president, Joseph Bowring, the IMM Monitoring Analytics LLC had found that by taking advantage of a loophole in PJM rules, certain aggregators of retail customers (known in PJM as curtailment service providers, or CSPs) had figured out clever ways to assemble portfolios of demand-side resources so as to earn twice the credit for capacity relief that PJM ordinarily accorded to DR offers.
So in February of this year, PJM and the market monitor issued a joint statement declaring that any CSP choosing to exploit market rules by “double counting” the capacity credit earned by DR resources would seen as engaging in market manipulation. Two months later, PJM filed tariff amendments with the Federal Energy Regulatory Commission, seeking to plug the gap. (FERC Docket ER11-3322, filed April 7, 2011.)