Direct Energy Business Marketing, LLC urged FERC to direct PJM to work with stakeholders to resolve persistent Financial Transmission Rights (FTR) underfunding

Direct Energy Business was filing comments in support of changes filed by PJM concerning Auction Revenue Rights and FTRs, but cautioned FERC that, "the proposed solution may have little impact in enhancing ARR availability and funding."

"Direct Energy is concerned that the proposed revisions to the Stage 1A 10-year simultaneous feasibility process will result in limited benefits because the use of conservative modeling to address FTR underfunding does not address other fundamental causes of underfunding," Direct Energy said

Direct Energy urged the Commission to conditionally accept the proposed tariff changes and direct PJM to work with its stakeholders to identify and resolve issues that are driving persistent FTR underfunding, including, but not limited to:

1. Specific differences between the FTR market model, the day ahead energy market model, and the real time energy market model that lead to persistent negative balancing congestion and FTR underfunding.

2. Specific interregional coordination transmission facilities that contribute to persistent FTR underfunding, or circumstances that lead to the definition of such facilities in real time.

3. The impact of Up To Congestion Transactions (UTCs) on persistent FTR underfunding.

"As one of the largest electricity retailers and load serving entities in PJM, and commensurately the recipient of a proportionally large share of ARR eligibility, Direct Energy has experienced firsthand the negative consequences of PJM’s approach to dealing with FTR revenue inadequacy on LSE’s ARR allocations. As a result, Direct Energy supports PJM’s proposal to escalate the current ARR results using a zonal load forecast rate of +1.5% in the Stage 1A 10-year simultaneous feasibility process. ... PJM’s proposed modification will provide some incremental help to PJM in meeting its Tariff requirement to ensure the underlying transmission infrastructure can support the long term feasibility guarantee of Stage 1A ARRs. Specifically, the modification will trigger reliability upgrades in PJM’s Regional Transmission Expansion Planning (RTEP) process to ensure the transmission system can support expected future Stage 1A ARR allocations based on average load and eligibility growth rates. The upgrades will help to ensure the ability of the transmission system to support guaranteed Stage 1A ARRs and maintain or allow for additional Stage 1B ARR feasibility," Direct Energy said

"Although Direct Energy supports PJM’s proposed solution to modify the current process, the proposed solution may have little impact in enhancing ARR availability and funding. The Stage 1A 10-year simultaneous feasibility process has been in place since the inception of the ARR product and has triggered only one upgrade, the Grand Prairie Gateway. Considering the FTR underfunding and ARR feasibility issues PJM is currently experiencing, at first glance this result is counterintuitive, as one would expect many upgrades to have historically been identified and completed to address these issues. However, it is important to consider that the goal of the Stage 1A 10-year simultaneous feasibility process is to ensure the capability of the underlying transmission system infrastructure to support expected Stage 1A ARR allocations. For the reasons outlined below, Direct Energy believes that PJM’s ARR feasibility issues are not a result of transmission system infrastructure deficiencies. Such deficiencies would be identified and resolved by the Stage 1A 10-year simultaneous feasibility process (with or without PJM’s proposed 1.5% escalator). Instead, the ARR feasibility issues result from PJM’s conservative modeling to address FTR underfunding. It is this conservative modeling approach that warrants further investigation as a condition of accepting the revisions proposed in the instant proceeding," Direct Energy said

Docket No. EL16-6-000