On October 1, 2013, FERC accepted and suspended PJM Interconnection, LLC’s (“PJM”) demand resource offer revisions to its Open Access Transmission Tariff (“OATT”) and Reliability Assurance Agreement, and set the matter for a technical conference.  FERC stated that the technical conference will explore issues raised in the proceeding that warrant further discussion.

FERC’s actions arose from a complaint filed by the Demand Response Coalition against PJM for newly adopted provisions of its Manual 18 that revised demand response procedures.  Those revisions required a demand response provider to submit certain information to PJM before submitting a demand resource offer into PJM’s forward capacity auction.  The complaint stated that the revisions affected jurisdictional rates, terms and conditions of service, and therefore should be filed with FERC pursuant to section 205 of the Federal Power Act.  FERC agreed with the complaint and directed PJM to submit the required section 205 filing.

In its section 205 filing, PJM proposed that every demand response provider submit, at least 15 business days before the Reliability Pricing Model (“RPM”) auction, a completed demand response Sell Offer Plan (a template document that is supplied in the PJM tariff), and a demand response Officer Certification Form (a form attesting that the information supplied in the Sell Offer Plan is accurate).  In addition, PJM proposed to require an end-use customer to provide site information in areas that PJM believes have the greatest risk of demand response offers that rely on the reductions from the same end-user.  PJM will review all submitted plans and notify an end-use customer of the maximum amount of demand response that customer is allowed to offer.  Finally, PJM proposed a safe harbor rule, whereby a demand response provider that offers 10 MW or less in an auction is not required to provide site information, nor are customers that have cleared less than 10 MW in previous auctions and remain below 10 MW for the current auction, required to provide customer-specific information.

FERC received numerous comments on the filing, including protests arguing that the proposed changes are not just and reasonable.  In rendering its order, FERC determined that the changes to PJM’s OATT had not been shown to be just and reasonable and directed staff to convene a technical conference within 60 days of the order.  FERC stated that the technical conference will include discussion on numerous issues raised in the proceeding, including “whether the proposed requirements for demand response are reasonable, given the resource development cycle used by curtailment service providers to provide demand response inside PJM and given the overall reliability objectives of the RPM.”
Commissioners Philip Moeller and Tony Clark issued a joint concurrence that supported PJM’s efforts to ensure reliability requirements are met, and stated that their initial assessment of PJM’s approach was that it was a “balanced approach.”  However, the Commissioners also expressed interest in discovering “whether additional mechanisms are needed to ensure the reliability of PJM’s system and its capacity products.”

A copy of the Order is available here.