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PJM Says Market-Based Mechanisms Should Be Explored For Fuel Security, In Releasing Final Report

December 17,2018



PJM Interconnection today released its full Fuel Security Analysis

PJM previously previewed results of the study in November (see story here)

PJM's study states, "While there is no imminent threat, fuel security is an important component of ensuring reliability and resilience -- especially if multiple risks come to fruition. The findings underscore the importance of PJM exploring proactive measures to value fuel security attributes, and PJM believes this is best done through the competitive wholesale markets."

The report did identify, as described by PJM, "some extreme but plausible future scenarios," which could impact the system. This report provides additional details of the approach, assumptions and results of the analysis.

PJM in the report said, "The findings underscore the importance of PJM exploring proactive measures to value fuel security attributes, and PJM believes this is best done through competitive wholesale markets. In order to enhance the fuel security of the grid into the future, PJM believes market-based mechanisms for retaining or procuring resources with the necessary fuel secure attributes should be explored."

"[T]here remain significant issues for policymakers to consider regarding the level of resilience that should be expected to be borne by customers of the grid. PJM is hopeful that the FERC resilience docket may provide some policy guidance in this area. Nevertheless, the market design should, in PJM’s view, be adapted to incorporate locational fuel security requirements with determinations of the exact point in time and set of conditions to trigger use of those mechanisms also subject to additional discussion and ultimate consideration by policymakers," PJM said in the report

The report concluded the following:

• The PJM system is reliable today and will remain reliable into the future.

• The analysis results showed some risks and vulnerabilities associated with fuel security.

• The key variables that have the most impact are:

          - On-site fuel inventory

          - Oil deliverability

          - Availability of non-firm natural gas service

          - Location of a pipeline disruption

          - Pipeline configuration

In terms of next steps, PJM said in the report, "This report is intended to be a more detailed explanation of the approach, assumptions, and results of the analysis, which can be used to further inform more in-depth stakeholder discussions scheduled for 2019. In parallel, PJM has engaged U.S. federal agencies to define further scenarios for PJM to analyze using the model developed for this analysis. PJM will also continue to engage FERC in the national consideration of fuel security issues addressed in FERC’s resilience docket."

Link to report

Technical appendix

Tags:
PJM   Fuel Security  

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