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PJM IMM Files Complaint At FERC Over Non-Assessment Of Penalty By PJM Against Market Seller

December 31,2018

Monitoring Analytics, LLC, acting in its capacity as the Independent Market Monitor (“Market Monitor”) for PJM Interconnection, L.L.C. (“PJM”), has filed a Complaint at FERC against PJM Interconnection, L.L.C., in connection with PJM’s determination to not assess a Fuel Cost Policy penalty to a certain market seller (“Market Seller”) for not following their approved Fuel Cost Policy per Section 5 of Schedule 2 of the PJM Operating Agreement.

PJM should be directed to find that the indicated actions constitute a violation of a Fuel Cost Policy and to assess the required penalty, the IMM said in its complaint

The Market Seller was not identified in the complaint

On Saturday, January 6, 2018, the Market Seller used a natural gas cost value based on a method not defined in their Fuel Cost Policy. If that method had been specified in the Fuel Cost Policy, the Fuel Cost Policy would have failed the Market Monitor’s market power review. January 6, 2018, was the Saturday following PJM’s winter peak load day of Friday, January 5, 2018. Natural gas prices reached their highest levels of the winter during this first weekend of 2018. A winter peak coinciding with a constrained natural gas market created the conditions that make Fuel Cost Policies essential to the competitive functioning of the PJM energy market.

On February 6, 2018, the Market Monitor notified the Market Seller of the identified Fuel Cost Policy violation for the January 6, 2018, cost-based offer (“Fuel Cost Policy Violation”). On February 8, 2018, the Market Monitor notified PJM of the Fuel Cost Policy Violation.

On April 26, 2018, the Market Seller provided PJM and the Market Monitor arguments explaining why PJM should not penalize the Market Seller. The Market Seller asserted an interpretation of its Fuel Cost Policy to justify its January 6, 2018, fuel cost that was clearly not supported by, or consistent with the plain language of, the Fuel Cost Policy. PJM accepted the Market Seller’s argument.

On August 15, 2018, PJM notified the Market Monitor of PJM’s disagreement with assessing a Fuel Cost Policy penalty to the Market Seller for not following Seller’s PJM approved Fuel Cost Policy.

See the complaint here

Docket EL19-27

PJM   Wholesale  

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